just to get an idea of leasing, is this a good price?

[JohnnyG]

There is a laundrymat that is up for sale, they are asking for $420,000. here is the info.


RENT $3,867 LEASE EXPIRES/OPTIONS 2 five year options; Terms TBD
RENT & CAM / sq ft $1.61
RENT INCREASES Increases annually 4.5% OPTION:
LEASE EXPIRES 1-20-2014
LEASE DEPOSIT
6 Speed Queen 2007 $1.25
13 Speed Queen 2002 $1.25
3 Speed Queen SWT 2008 $1.25
2 Wascomat 50 lb 2007 $5.25
4 Wascomat 40 lb 2006 $3.50
5 Wascomat 20 lb 2008 $2.00
7 Wascomat 30 lb 2007 $2.75
2 Wascomat 60 lb 2007 $4.75
4 Wascomat 40 lb 2007 $3.50
1 Wascomat 80 lb 2007 $6.50
4 Huebsch Stack 1998 $0.25 13 min
14 Speed Queen Stack 2004 $0.25 13 min
2 Speed Queen Single 2005 $0.25 08 min
EQUIPMENT COMMENTS:
Owned Vending: -1 Soda
-1 Water Vending
Leased Vending: -1 Snack
-1 Soap
-4 Videos
Other Equipment: 1 Rowe Changer, 1
American Changer
Expenses Revenue
RENT $3,867 WASHERS REVENUE 16,000
GAS 1,561 9.8% DRYERS REVENUE 0
SEWER/WATER 701 4.4% VENDING REVENUE 900
ELECTRIC 965 6.0% VIDEO 150
TRASH COLLECTION 102 OTHER 800 Water Vending
INSURANCE 184 OTHER 0
PERSONAL PROPERTY TAX 92
CAM, R.E. INS. & R.E. TAX 0 TOTAL MONTHLY GROSS REVENUE $17,850
VENDING EXPENSES 0 TOTAL MONTHLY EXPENSES $10,377
VENDING EQUIPMENT LEASE 120
PARTS 200 MONTHLY CASH FLOW FROM OPERATIONS $7,473
PARTS LABOR 300
ATTENDANT/JANITOR 2,000
PHONE 110
NIK O LOK 0
GENERAL SUPPLIES 70
MISC, BUS TAX AND LICENSE 30
ALARM AND SECURITY 55
DRAIN SERVICE 20
OTHER 0
OTHER 2 0
TOTAL OPERATING EXPENSES $10,377

[Adamski]

Johnny,

Using the cashflow you provided indicates a 21% ROI based on a sale price of $420,000. However, you noted that there is just 19 months left on the lease and the option rate must be negotiated so that's an unknown. The current rent is running at 24% of gross sales. Utilities are running about 20% of gross sales. Also, the labor cost of $2,000 (13% of gross sales) is low unless this is an unattended laundromat. If you will not be doing your own machine repairs, the $300 repair labor cost is too low. A lot depends on what your business plan will be, what your competition is like and what your market looks like. Without knowing these things, it's difficult to gain much insight here.

[Howard]

I have not looked at anything past the word lease deposit - because none of that matters.

It sound to me like you are renting a business for 18 months for over $400K. Often times options are not transferable to a new owner, which means you could loose everything in 18 months. A rent increase of 4.5% a year will kill you. In ten years your rent will increase by 55%, plus increases in CAM costs. Further you have no clue what the rent will be in 18 months, even if they extend the options to you. Could be the same, or could be much much higher. They can charge you anything they want, and you have no choice. They know it would cost you a fortune to move, so beware.