Financial info of existing mat.

[JNWRIGHT25]

Im looking at buying my first mat and speaking with the broker for the seller, she informs me they dont have any financial documents for the business. How can I find out if this mat is a good investment without this info? Asking price is $50000 36 front load washer, 15 front load dryers.

[CanCanCase]

If they can't produce any financial records, then they're not selling a business. That's an important distinction to make once you realize that you're not looking to buy a business (in this particular situation) but rather you're buying a bunch of used equipment and possibly the remainder of a lease.

Based just on that, the only way to know if it's a good investment is to treat it as if there weren't a laundromat there already... run the demographics, study the other mats in the area, write a business plan, pray a lot and hope for the best.

-Case

[couvsuds]

I know I'm talking to the wall here, but what the heck is with these people wanting to sell their laundromat(s), yet have nothing to show the buyer other than the physical assets? Do they think people are that vapid that they'll just believe whatever they're told?

OK, OK, just ignore me. I just had to vent a little about the stupidity of certain people.

But I agree with Case. If they don't have the data, start doing other areas of due diligence, like hanging out at the mat to verify traffic, demographic study, competition in the area, etc.

36 front load washers and 15 dryers? I'm assuming those are stacks, or that's a bad mix.

[ldm]

So these folks have a business, but they don't file taxes. Not credible, get three years tax returns and have your accountant help out if you don't understand them completely.

The shape of the Lease is every bit as or more important as the shape of the equipment. Get help with the interpretation if you have any problems with the Lease terms.

[STOUT]

JN;

Be very careful. You could be liable for back taxes from federal and state. Especially if there is sales tax involved.
You need to make the people prove the amount of $ they are asking.

[Adamski]

Originally Posted by JNWRIGHT25

Im looking at buying my first mat and speaking with the broker for the seller, she informs me they dont have any financial documents for the business. How can I find out if this mat is a good investment without this info? Asking price is $50000 36 front load washer, 15 front load dryers.

JNWRIGHT,

First, we're a friendly sort of Bulletin Board so a first name would be nice.

Getting to your immediate concerns ... the offering is what it is. Obviously, the tax returns do not reflect the true gross sales so Mr Seller does not want to bring them into the open. For just 50k, you wouldn't be risking much so a cursory evaluation should be adequate.

Start by checking out the market. No, not the fruit market - the laundromat market. What does the competition look like ... what is the price structure at the competing laundromats ... how does that compare to the subject laundromat?

Next, read the lease ... now read it again. Try to understand what each paragraph is actually saying. When does it expire? When does the rent increase? How much are the CAM fees? Is the lease transferable?

If things look okay to this point, try to get a feel for gross sales. Spend some time doing your laundry in the subject laundromat. Talk to the customers but don't tell them you're a prospective buyer. Ask them why they chose that particular laundromat. Ask them how often they use that laundromat.

Still interested? Then develop a business plan for the laundromat. How will you rehab it (if it needs a rehab)? How will you pay for it? Will you have to hire attendants? Who will repair the equipment? What will you change? What issues will be difficult to overcome?

While you're working on the business plan, get the lease to a lawyer and ask him to explain what it says ... especially any areas that became a concern while you were reading it. If you buy the place, have your lawyer verify that all business taxes are paid to date so you're not on the hook for back taxes.

I'm curious ... why do you think you are qualified to run a laundromat? What attracts you to this industry?

[Xiong]

having investigate the industry for many many years, i can tell you that you will heard all kinds of stories.

before i bought mine, many on this board think i'm overboard/laughing stock (and some probably still do)

if you're that interested in it, do laundries there over a long period and you should have a feel for the business volume of the place.

there are honest owners and there are more dishonest people too, this is a cash business and even the distributors debate with me why the hell i worry so much about what the previous owners made as it is not even my money. as they said in stock market, historical performances do not necessary guaranteed future performances, your success depends on you.

this forum is awesome for gathering information, you have to make the final decision.

one very very important information that i got from the pros here is that "location" is important.

firstly, take care of the important things and others will fall into place.

depends on what you want to do...for me is
1. location....good traffic flow, right demographics, etc.
2. longevity...how long has it been there
3. cash flow...gross revenues, operating expenses, net revenues

good luck....and know that if you ask the mat owner next to that one, he/she will tell you not to buy it with mostly negative points.

i'm just beginning to wakeup on my theory that this industry wants new blood, but the old blood won't tell you the whole truth either