Not sure if these numbers add up

[Jes]

Hi all,

I have an opportunity to purchase a MAT, but I'm not sure that the owner's numbers are adding up. Here's what I have so far:

Gallons per month: 54,000 (about $300)
Gas&Electric: $550 per month
Lease: $1200 per month

He states that he is currently losing money and it is unattended. Under some calculations that I've read from this board, I'm going to assume 22% for utilities costs. Which means that the business is grossing roughly $3800 per month. No outstanding loans on equipment, etc.

3800
-1200 (lease)
-850 (utilities)
-180 (insurance assumption)
-50 (phone assumption)
-------------------------------
=1520 net per month.

Wants cost of equipment alone ($50k).

What do you all think? Any help is greatly appreciated.

Thanks in advance,
-Jes

[Kitty]

Need more info on this store? Location, machine mix, age...

[mike]

Jes, He SAYS he's losing money, and what, you don't believe him ?
I don't understand your thinking !

[CharlieS]

#1 - Forget what he wants. The only thing that is important is How much is it worth to you. When that matches what he wants, GREAT! When it doesn't, offer what its worth to you, and no more.

#2 - How much are you willing to pay for the privilege of losing money every month? How much would you pay to get rid of it?

Actually, this is potentially a great scenario. If the reasons he is losing money are obvious and remediable, then there may be a great deal in the making. If they are not remediable, or not obvious, you have a tougher deal. Most laundromat owners are not good at their business. Attend CLA conferences and listen to this board. The basics will work.

Remediable and classic problems - Lousy equipment, bad hours, bad attendants, dirty facility, dingy facility, poor lighting, dark walls, no visibility inside due to offices up front, bad dryers due to poor maintenance or reduced nozzles and pressure.

All of these things are fixable. Yes, it will cost money, but spiff it up and a money loser can become a big winner. However, don't buy at the high price, because you still have to fix it up! The owner has already decided not to fix up. He deserves to take it in the shorts. You should not pay him for the privilege of taking his dump that he created and still have to fix it up. Remember, he is already losing money. Make a low ball offer.

Non--remedial - Everything is right, clean, bright, friendly, good equipment. However, there is no parking, no visibility from the road, only 3 people live in this town (demographic just won't support a 'mat), a huge brand new 4500 square foot mat just opened across the street and is offering free everything, the lease has only 3 months left and the landlord wants to go month to month. RUN RUN RUN !!!

I recently talked to a guy who wanted 60K for a mat that he has on a month to month lease, grosses 200K, makes 0, all equipment is 40 years old. I would never buy this mat from him. He owns nothing. The equipmentis junk and the landlord can terminate his lease in 30 days. In this situation - TALK TO THE LANDLORD !!!


Charlie

[pete f]

why would you want a phone ($50 a month) if it is unattened?

There is probably good and bad points about the mat, I have some above and below 55k gal range that do OK. There are those that do that much gals a day here. Depends on where you are at.

Your numbers add up, you are missing a couple things, but way more info would be needed to quantify the purchase.

[Jes]

He has moved away from the business to take care of his ailing mother. I'll leave that up to you to believe or not.

Thanks,
-Jes

[Jes]

I'm not sure what happened to my 2nd post, so I'll post it again.

The mat has been open since 1979 in a suburb on the west coast of Florida. I have the demographics for 1mi 3mi and 5mi radius. Let me know what numbers you would like to see and I will post them. As for equipment here goes:

7 - 18# Wasc Front Loaders
13 - Top Loaders
19 - 30# Dryer Pockets
1 - 30# Wasc
1 - Milnor
2 coin machines, 1 counter
Games and soda machine.


If the lease terms are favorable, what do you think if I was able to talk him down to $20k? As stated before, he left the business for someone else to run to take care of his ailing mother 1200 miles away. Maybe the person is ripping him off???

Also, the mat is 3.5 hours away from me. I am 28 years old and have been layed off twice in the past year (IT business layoffs). I have posted another question about the distance.

Comments?

Thanks in advance,
-Jes

[CharlieS]

To get more specific would take lots of analysis and inspection. Is the equipment relatively new? What models and generations are the washers and dryers? If this stuff is less than 5 years old, you might be OK. Demographic analysis depends greatly on making accurate assumptions as to market share you can reasonably expect, but can tell you lots about the neighborhood and its capability to produce income. Some areas just aren't good.

Of course, that 3.5 hour drive will kill you. Unless you are planning to move, forget this deal.

But- still run the numbers, look at your demographics, and try to get your hands around the numbers. This will help you to better understand your next deal.

Charlie

[Kitty]

Wanna move closer? 3.5 miles away is just too darned far!

When looking at a mat I have found demographic studies to be unclear. I have driven around the location and view the area myself. Nothing is more attractive than seeing a radius of welfare housing and small mill housing communities within the area of the mat you are looking at. It is nice to know the average income for the area you are looking into as well as the hispanic population. THe hispanic community is the saving grace for the 3 mats I manage. It is hard to market a mat to individuals who do not need a mat, or need one sporadically. You need to be front and center in an area that needs one. A mat that uses 54K gallons a month is not used very much. One mat we have does over 300K gallons per month, around 16K+ gross per month.

Only if you are considering a move should you continue with your investigation. Too many things will make you old very, very quick if you try this so far away from your home. The current owner is 1200 miles away and you think someone could be ripping him off? Would you want the same? Figure out the distance thing first.....

[Jes]

Thanks to everyone for your comments... I have heeded your advice and decided against this mat. I am glad I have joined this board, and I am greatful for the support it provides!

Thanks again,
-Jes

[pete f]

where is the mat? I live on the west coast of Florida.

It sounds like the one in Port Richey. we all know it as the Ebay l'mat. I think it has alot of potential for a remodel and re equipt, but I am 1.25 hr away and won't mess with it.
If the one you looked at ios closer to me I would like to know about it. I am in ST Pete

[Lar Hylobates]

I went to 6th grade in New Port Richey!!

[mike]

Please say it wasn't your last year at school.

Sorry, I can never resist a straight-line.

[pete f]

for cryin' out loud I am talking about Port Richey, not New Port Richey..but an interesting factoid..