Laundry for sale - very interested in your opinions

[winnjim]

There is a small laundry for sale near by, and I'd be very interested in getting your opinions. I am, unfortunately, out of the country for the next few weeks for work so I haven't had a chance to drive by and see it myself. My brother lives nearby and has said that it's in a decent area, about 5 minutes from a the local university, and is reasonably clean. The owners have little official record of revenue, as apparently everything gets rolled in with the other coin businesses they own. I have a copy of the listing below, as well as some of the correspondence from the listing company. Considering that they don't know the age of the machines, or exactly much much business the business is really doing, I think 40K is pretty high. If the anyone has a minute or two to provide their opinion, it would be much appreciated!

Thanks everyone!
Jim

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Original Listing: Buyer has the opportunity to either buy the assets only or take over the on-going business and assume the current lease. Rent is $1,140 per month, while Gas, Electric, Sewer and Water combined have averaged $1,500 per month. The owners are absent; however, the business still brings in yearly revenues of $60,000 to $90,000. Inventory is included at $2,000. Asset sale only or buyer can assume business. Assets Include: 6 Digital Speed Queen Top-loads 2 Speed Queen 40lb 2 Speed Queen 60lb 20 Maytag Top Load Washers 14 Maytag 30lb Stack Dryers 4 IPSO 50lb Washers 3 IPSO 35lb Washers 5 IPSO 35lb Card Operated Washers 2 VTM Vend Rite 9 Column Soap Vendor Standard SC-62 Charger Water Heater System.



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Correspondence with listing agent - 1:
Its 24/7, unattended. He owners bought the facility in 2006 so they don't know the age of the machines. Lease is 2016 but the landlord has treated the owner as month to month and would happily redo a new lease. Please visit and let me know if you have any other questions or would like to make an offer, thanks.

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Correspondence with listing agent - 2: When it was being run properly it was generating $60k+ in sales, I would be very surprised if it was doing that now, however unfortunately there's no way of knowing. Tax returns wont shed much light because they own several businesses together so the numbers will reflect all of them. Basically you're buying the assets on the cheap and hoping the business will (and should) generate around a $15-20k profit. I think the potential is there but unfortunately there's no financials.

[Adamski]

Jim,

The way I read it, it's an asset sale and you can negotiate a new lease and keep the assets in place after you buy them. That's generally a cheap way to get into the laundromat business. On the other hand, $40,000 might be a little high if you're just buying the equipment. It depends on the age/condition of the equipment. From the description, it sounds like a hodge/podge of mixed and match stuff of varying ages.

This seems like a possible candidate for a complete rehab. I'd be looking at the possibility of negotiating a new lease for the space with Mr Landlord and let the current lessee move out. Of course, you would want to evaluate the market before moving in this direction.

Any offer on the existing equipment should be based only on the pieces that have value to you because you will reuse them in your rehabbed laundromat.

[winnjim]

Good to know Adamski, I was kind of thinking along the same lines. Things are a little gray, as they don't seem to know the exact age of the equipment, but if you had to make a rough estimation, what would you approximate the value of this equipment. 40k seems awfully high, but what might be a more realistic dollar amount?

Thanks again!
Jim

[Adamski]

Jim,

This is the best I can do with the information provided:

6 "digital" Speed Queen toploaders - 1 to 20 years old
2 Speed Queen 40# frontloaders - 1 to 12 years old
2 Speed Queen 60# frontloaders - 1 to 10 years old
20 Maytag toploaders - 1 to 30 years old
14 Maytag 30# stacked dryers - 1 to 25 years old
4 Ipso 50# washers - no estimate
3 Ipso 35# washers - no estimate
5 Ipso 35# washers, card operated - no estimate
2 VTMs - 1 to 25 years old
1 VendRite soap vender - 1 to 40 years old
1 Standard changer - no estimate
1 Water heating system - no estimate

The 40# Speed Queen model was introduced about 12 years ago and the 60# model about 10 years ago. I'm not familiar with the Ipso stuff so no estimates for that. Maytag toploaders have been available forever and the older models were very durable, hence the wide estimate range on those. There is no way I can estimate value without seeing the stuff. The new cost for this stuff would range between $200,000 and $300,000.

What really surprises me is the large amount of equipment that is apparently stuffed into the small building. Also, the parking seems very limited judging by the photo (just 3 spaces). I have to assume there is more parking on the side with a side entrance maybe?

It appears the owner thought that the more equipment he put in there; the more customers he would have. This is a common misconception that often leads to a laundromat's demise as seems to be the case here. Can you save this laundromat and bring it back from the precipice of death? Maybe.

[ldm]

IMO, the owner knows what his income / expense runs on this business. To think he has operated for 6 years in the dark is unreasonable...expect the worst, and if the seller is not willing to provide the info, then he deserves a low ball offer. If he does not like it then he should justify his price. I would figure he makes zero or less and go from there with your research. Les

[Adamski]

Originally Posted by ldm

IMO, the owner knows what his income / expense runs on this business. To think he has operated for 6 years in the dark is unreasonable...expect the worst, and if the seller is not willing to provide the info, then he deserves a low ball offer. If he does not like it then he should justify his price. I would figure he makes zero or less and go from there with your research. Les

Les,

That's exactly the attitude I took when I made a recent offer on a 5,000 sf laundromat. In this case, however, my "blind offer" was an attempt to buy the place before someone else got the opportunity to buy it. It was not officially For Sale. At the rate they're going, it may not be officially For Sale in my lifetime.