New potential owner

[setthrust]

Hi

New here and would like to benefit from some of the wisdom provided on this board.
I am seriously considering closing on a Mat very soon. Please advise if there is a red flag that I am missing

Location.......suburban College town very high Apartment density
Space..........1300 sq feet
equipment.....20 speed queen front load (5yr old) I believe they are 20lbs
5 top load water hogs (at least 5 years old)
20 dryers at 25cents for 7min

Rent is $800month with a five year term reneable
utilities are average that I have calculated with 8 mos of bills provided.

elec.........$381 average
Water.......$505 average with about 51000gal used
Gas..........$303 average

$1189 total Average utilities

There is no vending at all in this location (which I would change)

Seller Claims $1080 to $1230 Net per week

I believe I can purchase this Mat for the neighborhood of $60k as the owners are absentee and have an hour drive to maintain it .

I believe they will even finance a small portion if need be.

Am I missing something here? I have done my due diligence I hope. I have checked all city and future plans for conflicts . I have sat outside the mat and observed traffic of customers (80% hispanic 20% students) .
Mat is open 7am to 12am 7 days a week.

Opinions?

[CanCanCase]

Just observations and speculation:
- I might not use such a laundromat because I would feel "crowded." 25+ washers in 1300 sf is pretty tight.
- $1000 per week net will get eaten up quickly by insurance, maintenance & repair, advertising, labor, etc.
- Not that you want to be "greedy" but $1000 per week net (even if other expenses don't eat it all up) equals working for wages. Is this your main job so you can put in 60-80 hour weeks?
- Have you watched the place to determine how busy you'll be when all of the students go away? What happens if you can't quite make rent or the note payment during the summer months when business is down 20-30%+?

Overall impressions: small, cramped, slow business, not very profitable. On the other hand, it's very hard to tell much based on what info has been provided.

-Case

[KJ]

Why only 8 months of utility bills.

As Case brought up, summer months may be lean depending on the student percentage of use.

The seller may be trying to hide that fact.
Better to get 2 years utility usage.

[couvsuds]

When you say "net," do you really mean "gross" income? Because if it's really "netting" 1000-1200 a week, then it's probably worth pursuing. If that's the gross income, then like Case said, you're just buying yourself a job ... and not a very high paying job.

How much are they budgeting for cleaning? That's an expense to figure in, whether they do it or not. And since they live an hour from the store, they probably have someone clean.

I realize the store space is small, but given the lousy mix of washers, I'd consider what it would cost to dump the top loaders and put in large washers (40-80 pounders).

[bodman]

I would like to see the tax returns , if the utilities are correct 1189 x 4= 4756 in gross income not much net there to be had, What are the vend prices of the speed queen? Look at it this way 20 fl @ 2.25 times 2.5 washes a day = 112.5 times 31 days = 3487.50 gross washer add 40 % for dryer income 1395 that = 4882 month gross . can you pay all the bills and the loan and still make money. Bills are rent, loan, clean up, utilities, ins, fees,phone, cable, security, taxes, repairs, supplies. I am not concearned about the size of the building I have a 1500sq ft mat that rocks .

[setthrust]

I believe these Numbers are correct < $1189 average UTILITIES

$1080-1200 net per week

My Ins would only be 115 per month.

If it brought in just $1100 per wk X 4.3 =$4730.00 per month/ $51600 a year

That does not seem bad as a side gig for additional income to me.

And whoever said above is putting in 60-80 hours a week at there mat needs to get a different Mat or career.....I barely work 80 hours a month at my Main job.

The two who do own this mat say they put in about 15 hours a week at most as it is absentee for the most part and they just do some cleaning and collect twice a week.

There would be no loan service If i were to pay cash.

[Adamski]

Originally Posted by setthrust

...The two who do own this mat say they put in about 15 hours a week at most as it is absentee for the most part and they just do some cleaning and collect twice a week...

setthrust,

Right ... and I believe in Santa too.

[Sudds]

Hi Setthrust,

I think that for what you are looking to do, supplimental side business income, this might suit your needs. There are some people on this site where this is all they do for a living and in a reasonable amount of cases it does well for them.

I for instance am in a similar situation as you. I got into the business primarily as a means to suppliment my income. I have a very good job that pays me exceptionally well. I have full medical, dental, pension, and a 401k that has been steady growing since I was 18 years old (when I started working for this company). I have no desire or illusions to hit the ball out of the ballpark with this mat but it works for me. That being said, I have worked my mat to the point that my customers have become loyal. My numbers are generally steady but growing in direct proportion to what the econimic conditions in this area dictate. That works for me. And.. I guarantee you my competitors certainly wish I was not there because I am taking a piece of their pie. LOL..

If your goal is to suppliment your income and you have verified and confirmed the numbers to be accurate then I would say, that this opportunity for you is not a bad idea.

You didn't state what area you are in and that is kind of important because the cost of your utilities, water specifically is not bad. In my area 50,000 gallons of water usage equate to a water bill between 700.00 - 800.00 per month. Gas and electric seem to be close to average. My electric bill close to doubles in the summer months which will soon begin.

So depending on your long-term plans and financials, you may have found a viable source of steady income and a suitable write-off that will also help add to your bottom line.

And I don't know about the 60 -80 hour a week part either. When I first bought my place and spent some time getting it ready to satisfy my goals I spent no more than 20 hours a week. Now that things are kept in order, clean, and running, my mat takes anywhere from 7 - 10 hours a week.

I would negotiate with the owner though, maybe you could knock some off the selling price. You could base it on the fact the lease will end in about 5 years. Theoretically speaking that will be about the length of time needed to recoup your original investment.

Feel free to contact me if you wish. Thanks and good luck.

[couvsuds]

Originally Posted by setthrust

I believe these Numbers are correct < $1189 average UTILITIES

$1080-1200 net per week

My Ins would only be 115 per month.

If it brought in just $1100 per wk X 4.3 =$4730.00 per month/ $51600 a year

That does not seem bad as a side gig for additional income to me.

And whoever said above is putting in 60-80 hours a week at there mat needs to get a different Mat or career.....I barely work 80 hours a month at my Main job.

The two who do own this mat say they put in about 15 hours a week at most as it is absentee for the most part and they just do some cleaning and collect twice a week.

There would be no loan service If i were to pay cash.

Once again, something doesn't add up. Are you sure those numbers are NET? Because if they are, 60K is a steal. The store should be worth more like $200-250K. I'm betting those are weekly gross numbers. Besides, no one I know figures out their "net" by the week. You pay rent, utilities, etc. by the month.

As for working 60-80 hours a week, yes it's possible, at least at the outset. You need to learn the store from top to bottom, and it takes time. If you're not willing to spend a lot of time working your store for the first year or two, then I'd suggest not buying it.

[STOUT]

I saw $ for water but not sewer. Is this included in the price or was it overlooked?