View Full Version : questions on getting into coinop business
Anonymous
08-09-2003, 03:56 PM
Hi,
I am having doubts about a laundromat that I signed a purchase agreement. (My mistake to sign before thinking things through).
The location is good, it's in the city right around beacon, Kenmore, and Fenway in Boston(for those that know Boston).
It is surrounded by apartments(primarily occupied by hospital workers and college students). The place is not well maintained there are several machines that the business owner(not the landlord) didn't bother repair since not many people frequent this laundromat. They(sellers, broker and business owner) say that it's common to do that in this business since it is excess capacity. Unfortunately they wrote in the purchase agreement only the functioning machines(31 out of 41) meaning we have to do the repair. I suspect they pulled a fast one on me.
Also the landlord(not the tenant, the business owner) is trying to dump all the risk on me and requested a deed to my house to write up a lien on my house.
The other problem is that there is another laundromat that is far busier within 2 blocks(the blocks in this area of town aren't that big).
The balance sheets that the broker has shown is only 2002 which shows a slight loss, but all the other years the broker could not show(missing).
This whole situation is making me suspicious. I suspect the landlord being such a hardass(excuse the use of this word)
is scaring away potential buyers.
The rent is around 2700 but the landlord being the way he is will probably try to lock me in a long term deal(due to the current sorry state of commercial real estate).
It sounds like you didn't do much homework on this deal and also that you didn't have an attorney read the contents of this agreement. Just exactly what did you sign? Were there any contingencies in this agreement? Did you put down a deposit and how much? In addition I don't understand what you mean that the Landlord is going to force you to sign a long term commitment. How can anyone force anybody to do anything they don't want to do???????????? Give us more specific information, because it sounds like you need a lot of guidence. There are many ways of breaking up a deal, but we need to know exactly what you signed and how far along in the deal you are. Don't do anything else or sign anymore papers until you know what you are doing and why you are signing. Was this an offer agreement (letter of intent), or an Agreement of Sale, there is a big difference. Most agreement of sales have a contigency clause on securing funds for the purchase and the buyer, (you), getting a satisfactory lease, which is an easy way out for you if these contingencies are in the Agreement you signed.
Slow down!!
BWJR
Anonymous
08-09-2003, 04:37 PM
It's an offer to purchase.
This is my first time doing this.
I don't want to make the amount public on this board except for the amount of deposit at the time of agreement($1000).
It requires that the seller accept this offer within 24 hours(which he has done). Closing shall take place withint 30 days of acceptance. All valid agreements are to be written not oral.
All the equipment will in in working condition at the time of purchase. Seller states that the marketable title is being sold.
There is no date listed for when the sale should occure by(or before).
The addendum states that attorneys of buyer and seller accept the purchase and sales agreement and other closing documents.
Review all the financial information this to be completed by 2 weeks. Buyer is repsonsible for doing investigationsin regards to haxardous material. Broker is not libel.
In the brokers hand writting. Prior to Purchase and Sales all deposits will be refunded upon written request.
That's all I'm willing to divulge.
I have inspected the property multiple times, so it took me a while to figure out what the landlord's intentions are.
pete f
08-09-2003, 05:20 PM
I had a landlord that made me sign off on my homestead exemption when I assumed the lease when I bought the mat. In Florida the homestead exemption means nobody can get your house for any reason, except the bank if you defualt on your mortgage. By signing off it ment if I did not pay the lease payments the landlord could put a lien and force the sale of my house. I did not like it, but had no choice. I have since bought my own building and moved across the sreet. The landlord is looking to really have his teeth into you. Your call. The mat I bought made decent money so I was not that worried, I just did not like the idea. He was a real mean person.
What specifically does the lease you are asuming say in reguard to satisfying claims or putting up extra property for payment insurance? He may have no leagal right to put a lien on your house, but if you let him then he has an upper hand.
As far as the broken equipment, you probably will have to replace some stuff with new or newer anyway to make the mat busier. I always wrote in the seller had to mainatain all equipment in working order until closing.
Coinwash
08-09-2003, 05:21 PM
GET a lawyer quickly don’t walk RUN!!!!
Always use a lawyer especially for your first time.
It will cost you. But take this as a lesson get a lawyer you have to save you BUTT.
Please when this is all over let us know who this Ass is please.
They saw you coming we need to expose these creeps
Always check everything machines water heater you name it you check it who knows what else is waiting to come out of the closet and believe me there is.
This is just my opinion….
Good luck Sir
Are there any contingencies as far as financing and you as the buyer getting a satifying lease. This is key and may be your best way out with the help of a Real Estate Attorney. Keep us informed and Good Luck.
BWJR
Anonymous
08-09-2003, 06:53 PM
I haven't signed any lease yet. What got me thinking was him asking for the deed for a lien. The broker mentioned another thing instead of the deed is a statement of worth? How do I go about getting that done the statement of worth instead of submitting the deed. The landlord drives a hard bargain. I do have a lawyer but since it was recomended by the broker who knows the broker it may be 'tainted' by this associating so I am not sure how trustworthy he is in this situation.
Also how do I assess the location of a laundromat?How many regular customers I need to break even. I know that this area is a fairly good one since it is surrounded by apartments. The financial worth(gross, profit, etc...).
I think I may have come across a bit too alarmed, but I need to really assess the situation and the worth of the laundromat. I think the only thing that the seller(business owner not the landlord) is the list of equipment that he says is representing(which omits certain unused and broken equipment). Also I think I mentioned that the sales agreement states that I could get the refund back.
How do I make sure that there is a way out on this lease(like selling it) if things don't work out?
Request the following:
Three years of C Schedules on the business, this will give you a good idea of the true expenses.
Copies of all utility bills for three years - ( water, gas, electric )
A complete list of all equipment to determine usage per piece of equipment. A local Distributor for laundry Equipment can probably help with this info.
As far as volume, the best way to evaluate a business is to sit outside the laundry and count customers and amount of laundry that is brought in.
He gave you numbers for D.C., wash and fold, and coin laundry business. Require a two week period that you work the laundry with him as training, learning the business, and verifying the amount of volume that the seller claims he is doing. Also require a daily pull of money with the owner and you doing it each morning together. If you plan on getting there at 9am for the money pull, make sure you show up at 8am to make sure he is not stuffing the money boxes. Also keep an eye on the place as often as you can. I only say this, because in my opinion this does not sound like the type of seller you can trust.
Last but not least get a Real Estate attorney to review this whole deal. Make sure he is your Attorney and not the Brokers. Don't use this guy. Many of the questions that you are asking here should be directed and answered by your unbiased Attorney. Get a new Attorney!!!!!!!!!!!!!!!!!!!!!!!!!!!
Good Luck and be careful,
BWJR
Anonymous
08-09-2003, 07:41 PM
Further, make the entire thing contingent on getting a long-term lease that is acceptable to you, that way if the landlord won't meet your terms you have an easy out.
cesar
08-09-2003, 08:13 PM
I know the mat your talking about. That place is going to need a lot of work. I checked it out about 5-6 weeks ago. The owner doesn't live in town and has another job and ran that place into the ground. I was there a couple of mornings checking out the WDF and drop off dry clean both mornings no attendant people would wait outside with an armful of clothes for about 10 min and leave, I checked it out sat/sun nights and there were 3 people in both nights for about 3 hours. That mat down the street really is a killer right smack half on the street gets traffic coming from both ends. And your mat is at the very end of the street.
I would find a reason to bail out.
cesar
08-09-2003, 08:20 PM
Let me clarify something. The main reason I would try to bail is not the condition of the mat ( that is kind of place I'm looking for to fix up). I think the rent is too high, no parking, no growth in that area, high rents all around there, no families in the area, and the location of the mat on the street is not good. I don't think that area has enough renters w/o washer/dryers to support two successful mats.
ybu,
Cesar gave you the final piece to the puzzle. Based on his insight, it seems the prudent thing to do is to bail. Do it legally.
BWJR
I will say it also,
(just in case you want a second opinion :-)
Get your own lawyer, today, don't delay !
Cesar says "no go", trust his unbiased opinion.
You may have your finger tip caught in a meat grinder,
ponder your next move carefully !
You will lose a little money on this one, don't feel bad, it's called experience.
If you hadn't visited this board, you probably would have lost a lot more.
Anonymous
08-10-2003, 04:57 PM
Thanks for your opinion. I talked to other people and decided on rescinding the offer. I have prepped a short rescinding letter to the attorney of the seller. I will talk to my attorney before sending this letter. The worst thing that can happen to me at this point is lose all my deposit but I feel I do have a case asking for my deposit back. I expect the seller to insist on an explanation.
ybu,
That is probably your best move, but if you get bad advice from this attorney or they try to scare you into the deal, get your own Real Estate Attorney. This is an excellent business to get into for many reasons. Don't give up on your idea, just do it a little better next time and ask the important questions before you sign anything.
Good luck and keep us informed,
BWJR
Anonymous
08-10-2003, 06:36 PM
I hate to be blunt, but only a fool would use a lawyer that is recommended by the broker. Get a new lawyer fast. The broker is either getting a kick back from the lawyer or he knows this lawyer pushes his deals thru.
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