Is this mat a good deal?

[hn2704]

I'm thinking of buy a mat priced at $140k. I haven't look at all details but the owner, who is an acquaintance of mine said that the average net income is $4k/month. I'm thinking to take a $140k equity loan. Based on your experiences, is this a good buy? Thanks a lot for your help

[hn2704]

Here some more info about the mat:
1500 sqf.
24 dryers
12 top load washer
10 front load washer: 2 jumbo load, 2 4-load, 2 3-load, 4 2-load.
1 extractor
Most of them are about 10 year old.
Rent is 3500/month.
Fully attended mat
One other mat 1 block away and about the same condition, same number of customers
I have been there for a few days and the average gross is about 300/day.

Can someone please give me an estimate of how much the expenses would be? I'm looking for a net of 2000/month after all expenses (utilities, insurance, rent, labor, mortgage). Is it possible?
Thanks

[Coinwash]

renegotiate a new lease this is way to high.

The land lord wants to be you silent partner.

No wonder the guy wants to sell.

Once again this is just my opinion.....

[hn2704]

Coinwash,
Do you mean the rent is too high or the sale price of the store is too high? How much do you think is reasonable?
Thanks

[Anonymous]

You might look at what the price is for each washer and determine the price per 'turn'. For instance:

12 tops x $1.50 = $18
10 fronts x $3.00 = $30
1 extract x $4.00 = $4

For a total for 1 turn of $52. Then figure out what you'd make per day at 3 turns per day:

3 x $52 = $156

Add 45% of this number for dry:
$156 + (.45*156) = $226.20 per day

Of course you'd want to plug in your own numbers instead of my made-up ones.

It could give you a sanity check on your $300 per day figure. I think 3 or 3.5 TPD (turns per day) is probably industry typical.

You could also request seeing the utility bills to get an idea what they are running...

- John

[Coinwash]

This is a good way to get an idea :)You might look at what the price is for each washer and determine the price per 'turn'. For instance:

12 tops x $1.50 = $18
10 fronts x $3.00 = $30
1 extract x $4.00 = $4

For a total for 1 turn of $52. Then figure out what you'd make per day at 3 turns per day:

3 x $52 = $156

Add 45% of this number for dry:
$156 + (.45*156) = $226.20 per day

Of course you'd want to plug in your own numbers instead of my made-up ones.

It could give you a sanity check on your $300 per day figure. I think 3 or 3.5 TPD (turns per day) is probably industry typical.

You could also request seeing the utility bills to get an idea what they are running...

- John



Ok as I see it the rent is 28 dollars a sqf does the include CAM too (Common Area Maintenance)?
Have you used the search on the board?

3.5 X net is the way I do business.

One again we have differing opinions out there.

Have you sat in your car and watched the traffic ?

Let the other members chime in....

[KJD]

Your first post says 4K net, then your next post says you are hoping to net 2K. (please clarify)

1500 sf in my area would be less than $2000 with cam charges.

And yes, ask to see atleast three years utility bills and tax returns.

[Anonymous]

One more data point to confuse you:

my mat is about 1200 sq ft, 12 TL, 9 FL, and about 22 dryers (more or less). Unattended.

I pay 1991 per month for rent including CAM (common area maintenance).

I'm projecting to net $1500 per month, bringing in about $180 per day gross.

I'd do the water bill, tpd, dollar-per-turn analysis to see if your $4k monthly is in the ballpark with reality.

All bets are off if you're not grossing what you expect; to me that is the first thing to establish.

[hn2704]

The other way I figure it is:
Suppose the gross is 300/day x 365 days = 109,500.
The rent is 3500x12 month= 42,000.
Elec+Gas+water+sewer = 25% x 109,500=27400.
Other expenses (tax, insurance, CAM, repair...) estimated ~ 15% (IS THIS REALISTIC?)x 109,500= 16,400.
Total expenses would be 42,000 + 27,400+16,400= 85,800.
And the net income will be 109,500-85,800=23,700.
This is not include labor and I have to pay the mortgage. It sounds like a NO NO to me.
Is my calculation sound reasonable?

Thanks for all the help. I really appreciate it.

[Anonymous]

I think you can request the utility bills from the city. In mine you have to go in and fill out a freedom-of-information form then wait a couple of days.

Since you say the owner is an acquaintance of yours, will he freely share information?

I'd get every concrete number possible, like utility bills, rent, CAM, then estimate income from water consumption and machine mix, THEN make your projection of what your income will be.

If you are looking to finance 100% of it, you might end up just scraping by in the cashflow department - just my opinion / guess.

[IPSOTECH]

The other way I figure it is:
Suppose the gross is 300/day x 365 days = 109,500.
The rent is 3500x12 month= 42,000.
Elec+Gas+water+sewer = 25% x 109,500=27400.
Other expenses (tax, insurance, CAM, repair...) estimated ~ 15% (IS THIS REALISTIC?)x 109,500= 16,400.
Total expenses would be 42,000 + 27,400+16,400= 85,800.
And the net income will be 109,500-85,800=23,700.
This is not include labor and I have to pay the mortgage. It sounds like a NO NO to me.
Is my calculation sound reasonable?

Thanks for all the help. I really appreciate it.

I was going to give the same calculation to you but you answered your own questions. The place isn't making 4k or even close to that, no way. I would be surprised if it made 2k net.

[Coinwash]

The other way I figure it is:
Suppose the gross is 300/day x 365 days = 109,500.
The rent is 3500x12 month= 42,000.
Elec+Gas+water+sewer = 25% x 109,500=27400.
Other expenses (tax, insurance, CAM, repair...) estimated ~ 15% (IS THIS REALISTIC?)x 109,500= 16,400.
Total expenses would be 42,000 + 27,400+16,400= 85,800.
And the net income will be 109,500-85,800=23,700.
This is not include labor and I have to pay the mortgage. It sounds like a NO NO to me.
Is my calculation sound reasonable?

Thanks for all the help. I really appreciate it.

Your calculation sound reasonable to walk away.

Elec+Gas+water+sewer :This is not a fixed price---Elec+Gas+water+sewer = 25% x 109,500=27400.

Rent: The rent is 3500x12 month= 42,000. and will only go up

Net:And the net income will be 109,500-85,800=23,700. This will shrink

WALK AWAY

[pete f]

way to high rent and employees, a bad combo no matter what the price. Rent needs to be 25% or less in most cases to make any money in this biz

[hn2704]

He is currently have 2 WDF business customers with the toal income 1200/month. Together with walk-ins drop off, is it possible to make $100/day in WDF?

[Coinwash]

He is currently have 2 WDF business customers with the toal income 1200/month. Together with walk-ins drop off, is it possible to make $100/day in WDF? Anything is possible.
BUT THE RENT IS TO HIGH.
as Pete f. told you bring it down 25%

How old are the machines and what kind are they???

Take a step back and be the devil advocate.

why is he really selling the mat?
Think
Anything is possible.
BUT THE RENT IS TO HIGH!!!!!!!!!!!!!

[William]

Do you have any pricing power? Are you higher or lower than the mat down the street? Is there vending on site? Is this mat nicer than the other one?

If you can figure out a way to make more money, and pay less rent, then perhaps it will fly. Otherwise you are cutting it mighty thin.

You can ask for a lower purchase price, or lower rent, or try to increase revenue. I would go for all three.

[hn2704]

Thank you all for your valuable advice. I will walk away.