Looking to buy an existing laundromat

[zbarnoy]

I found a place that sounds like a good opportunity...I would like to know thoughts about this and things I should potentially ask to avoid pitfalls. Current owner is selling to reinvest in better machines in a bigger laundromat that he owns.

Area is a nice middle income neighborhood(Smaller place-775 SQft)
Asking Price: $55,000
Lease term: 10yrs
Gross Sales: $91,000/yr
14 Washers/Waskomat and 10 Dryers/Huebch that are about 16 years old
100% absentee owner
Rent: $2000/month
Payroll: $20000/year
Additional income: Dry Cleaning-$1,700/yr and Vending Machine-$4,500/yr
Total Income: $97,200 yr
Total Expenses: $58,835 yr
Net Income: $38,365 yr

[ldm]

I would ask for 3 years tax returns to verify the information provided. Les

[couvsuds]

Rent is $24K a year and payroll is $20K. The rest of the expenses add up to just $14K? Utilities, insurance, repairs (and if the guy is absentee, he definitely has a HEFTY repair bill with machines in their mid-teens). Like Les, I'd want to see tax returns to back that up.

Not having seen the mat, not sure I'd be comfortable with such a small space.

[BMWHD3060]

Originally Posted by zbarnoy

I found a place that sounds like a good opportunity...I would like to know thoughts about this and things I should potentially ask to avoid pitfalls. Current owner is selling to reinvest in better machines in a bigger laundromat that he owns.

Area is a nice middle income neighborhood(Smaller place-775 SQft)
Asking Price: $55,000
Lease term: 10yrs
Gross Sales: $91,000/yr
14 Washers/Waskomat and 10 Dryers/Huebch that are about 16 years old
100% absentee owner
Rent: $2000/month
Payroll: $20000/year
Additional income: Dry Cleaning-$1,700/yr and Vending Machine-$4,500/yr
Total Income: $97,200 yr
Total Expenses: $58,835 yr

Net Income: $38,365 yr

If, & I say this with a Big "IF" his Net Income is $38,000.00 a yr this place should sell for between $76,000.00 & $114,000.00 & Gross sales of $91,000.00 in a 800 square foot store is a hard thing to pull off.

[petefritz]

How many hours is the mat open? Is it unattended part of that time? If not the payroll is way to low.

[Ralphie]

Contact the water company and get the exact gallon usage each month.

Look at the machines and determine the gallon usage per turn. Divide this number into the water company total. This will give you the number of turns. All you have to do then is multiply this by the price to use the machine.

Sellers know that potential customers are going to do this, so I would look at water for the last 3 - 5 years, to prevent them running the water to make their business look good.

Good luck,

[dimpledample]

I agree with everybody else. I absolutely do not believe that gross sales are above $90,000 on a 775 sqft mat. Just can't happen based on my own humble experience. Research his mat carefully, loiter in the mat for a month straight and watch operations, document washer & dryer usage, (my daughter did this for me), request to help for one month with the coin counts, or you may find yourself crying for two months straight after you make the purchase. I did all of the above and I still cried with buyers remorse after I bought my mat. Sorry to be such a downer and I do wish you luck with finding a mat at the right price. After 2 years of ownership I can finally say I am happy I bought my mat.
Rani