Need advice on exisitng mat for sale

[miniload]

There is a laundry for sale in my area and the owner ( or his rep) is asking $290k for the following.

The is 2 years old

26 dryers
16 top load
10 front load
No drop off service and one soda machine.
No video games

Gross is $8 to $9k a month...Net is supposedly around $3 to $3.5k a month. The laundrymat is only two years old and the machine are relatively new.. But I think he asking way too much using conventional 4 to 5 times monthly net.

Am I being unreleastic in thinking this place is worth only $150k to a max of $180k. The sellers agent claims the owner is unwaivering in asking for $290k and is unwilling to come down in price.

Any suggestions on how to get this laundrymat at the right price and get this guy to come down in price. Or is this a good price to pay since the place is only two years old..Any suggestions ????

[anonymous]

No one' s forcing you to buy it of course. You should consider what the replacement cost is...what it would cost to build an identical laundry nearby. Since it's only two years old, it's not likely that he has significant goodwill built up in the area.

[anonymous]

He is asking way too much money. I would not pay more than 4 to 5 times the annual net with newer machines. I would submit a low ball offer and wait on it. He probably isn't motivated and is just fishing around. Or, he's motivated because he has a hefty note on those brand new machines and it's barely (or not) getting covered by his revenues.

[pete f]

The cost of reproducing the mat is not all important, you are buying cash flow. After 2 years, he has hit his level of business. Figgure hard cash flow and maybe 6 time, possibly 7 times, as in this low interest rate return age it may be worth it. I know a mat they want around 300k for, it may have cost 400k to build but it don;t make any money, so is worth bare equipment cost.

[IPSOTECH]

The guy or his rep must be on drugs. 290k, LMAO. Please don't be stupid. 125k to 150k would be generous.

[anonymous]

Just to clarify. I don't disagree with Pete...my point is that the 5x net is not written in stone, the multiple is supposed to evaluate the riskiness of the cash flow in the future and if you do some due diligence and determine that no one can build in the area for anything less than some outrageous figure, the multiple can very likely be higher than 5x.

[anonymous]

The price is subjective right now here in southern California it is a sellers market and it is not unusual to find an owner who is asking 4-5 times or more the net.

I would research further why the owner is trying to sell. Is there a change taking place in the neighborhood or where the laundromat is located? Perhaps he isn't making any money. You need to find the answers. Try to enquire further. If you find out anything then there might be a chance you can use the information to bring the price down a little.

If possible try talking to a laundromat distributor to see if they can give you any answers or direction.

Keep in mind that equipment is expensive (just check the prices) and it needs to be paid off and not to mention he may want a little money in his pocket.

Moreover, it seems to me that he is not profiting but, perhaps you can add to the business and turn it around.

Good luck.