Newbie needs advice!!!

[nschwaber]

Hi all,

I am looking at purchasing a mat down the street from my house. On the surface it seems like a good deal. Older 2000 sq ft store with some updated equipment:

Gross Sales = $225k
Owners Annual Net = $95k

Monthly Rent = $3600 - Includes water
Gas & Electric = $900
CAM = $200
Employee Payroll = $2500

Asking price reduced to $99k

30 Washers and 19 Dryers - not sure of the machine capacity breakdown but they do have 5 brand new dryers that have not yet been installed that are part of the deal.

So here's the dilema. The store is in a large strip center that has a number of vacant stores. The center still generates a large amount of traffic and the mat seems to be doing OK anyway. 3 tenths of a mile down the street one of those mega super humongous brand new laundry mats is going to be built. They tore down a Taco Bell and have their sign up "Coming Soon 250+ Machines" Do you think that's going to kill this little store?

This mat also does WDF and a fair amount of commercial pick-up accounts. The super duper mega laundry that is going to be built does not do WDF and I am pretty sure they don't do commercial accounts. The mat that I am looking at also offers Drycleaning and Alterations that they outsource to another company to have the work done.

Any thoughts that you guys/gals have on this deal would be greatly apprciated.

Thanks,

Nathan

[Kitty]

250 machines.........check the building dept and planning dept and see what is up. Check the demo for the area. 1 mega store competing with an outdated shopping center would be a toughy

[Coinwash]

Hi all,

So here's the dilema. The store is in a large strip center that has a number of vacant stores. The center still generates a large amount of traffic and the mat seems to be doing OK anyway. 3 tenths of a mile down the street one of those mega super humongous brand new laundry mats is going to be built. They tore down a Taco Bell and have their sign up "Coming Soon 250+ Machines" Do you think that's going to kill this little store?

This mat also does WDF and a fair amount of commercial pick-up accounts. The super duper mega laundry that is going to be built does not do WDF and I am pretty sure they don't do commercial accounts. The mat that I am looking at also offers Drycleaning and Alterations that they outsource to another company to have the work done.

Any thoughts that you guys/gals have on this deal would be greatly apprciated.

Thanks,

Nathan

Your going to start off in a deep hole.

Are you going to jazz up this old mat ? and what kind of washers and HOW OLD ??

Rent $3600.00 + Cam $200.00 = $3800.00 ?
as Kitty said what about the lease?
Offer $50,000 or walk He is bailing your going to take on water for the first 1 to 2 years

Just My opinions that all....

[nschwaber]

Points well taken guys...

I passed on this one.

Thanks for the advice!!!

Nathan

[pete f]

I would look closely at the store. You are talking a store doing 225k a year, that is big volume from where I come from. Why do you think the mega a lo mart is comming? BUT..what is the risk? they may take 30% of coin, and you state the store has good w/d/f and commercials. Right now the store does 18,750 a month with $7200 hard expense (rent,water.gas, eletric, payroll) So is you lost 25% of coin gross, the store would be in the 14/15,000 a month range. Some of the gas, electric will drop also. The water being part of the rent won't change. Still, it looks like 75k a year profit, so he is selling for about 1.5 times future cash flow. Even if the store dropped to 50k a year net, you are buying for 2x cash flow. I have had a big mat built across the street from me 3 years ago so I have experianced what happens, and my little store has remained profitable. The mat has some potentail which is not reflected in the price from the info you gave. The store will not go out of business, it will have less revenue. It appears the owner is pricing that in.

[nschwaber]

Why do you think the mega a lo mart is comming?


They tore down a closed Taco Bell and put up a huge sign that says "Coming Soon Sudsville 250 Machines"

Sudsville is a chain around here that builds these 10 -15 Thousand Square Foot Stores (they may be larger) with lots of neon and glass and mirrors. Actually their stores remind me of a diner (open 24 hrs and neon everywhere).

Petef - you make some very valid points, frankly they support my initial thinking when I first started looking at the place. But then fear sets in and I look at the situation. It's one thing if you own the place already and then the Jolly Green Giant of Laundrymats comes along. But's it's a whole 'nuther ball game to buy the place after he has his sign up saying I'm coming to get you.

Being that this will be my first store, I would like to not take on such a large uphill battle from the get go. If I was already stable in this industry and I was looking to purchase a 2nd or 3rd store this may be a good canditiate but as a primary source of income for my family it's a bit too risky.

I do appreciete everyones helpful comments and thoughts. I have another one that I am going to look at this week. Hopefully it will be more promising.

Thanks,

Nathan Schwaber

[Fred50]

Nathan,

Keep an eye on this place. You may be able to get it at a deep discount after the mega mat comes in. You are always better off buying a place after the impact of new competition is known.

[nschwaber]

Mark -

Good point, I'll keep an eye on it. I don't expect them to sell very quickly.

Nathan

[anonymous]

After all that is being said here about this store, Does anyone think the gas and electric is low for a store doing 225,000 a year?

[pete f]

After all that is being said here about this store, Does anyone think the gas and electric is low for a store doing 225,000 a year?


probably some due dilligence needs to be done. Yes, it sounds very cheap, but not knowing all factors, what can you say.