Would you buy this laundry?

[Andy1409]

The lease is a five year firm with two five year options. Rent is $850.00 per/month. Owner payes property tax. Equipment is ten to fifteen years old. The laundry currently has 8 20lb emerald series, 8 W124 good shape, 18 thirty pound driers, with two wasco stack driers. 10 old tops that I will replace. Change machine AC1002. New 5-ton AC, all furniture and fixtures. They are asking 50K. They reported 50K gross last year. All utilities were 13,000 for last year. Comp. two miles through traffic that does 5K per week. (I know this figure from a reliable source). The laundry is a dump. But I was their this past Sunday and there were nine cars out front. All the working machines were being used. Ceiling tile falling down, tile floor is peeling up. Inside and out needs paint. Two doubles out, One W124 out and four dryers need repair. One will need a trunnion replaced. One stack will need a new drum. No drink machine, snack machine or video machines. There is no survallance cameras in laundry at this time. The parking lot needs repair of pot holes and where a fuel storage tank used to be. I was there at lunch today and saw three customers. All input need for me to make a sound decision. Thanks!!!!!!

[mike]

Sounds like a possibility with only a cosmetic rehab. Don't judge only by sunday though. Why was this store not kept up ? Find out. The equipment and rent sound good (make sure the 5 year options are at a predetermined rent or formula, not "to be agreed upon".

I'm curious, keep us posted

[Anonymous]

Sounds like the type store I like, one that does ok inspite of itself - could be a star with attention.

[buddy]

Considering low rent and owner paying property taxes and existing customer base. All it needs is a new owner to fix the place up to convert this into a winning outfit. It seems this place was neglected for too long but with right owner it could be a big Winner.

[Anonymous]

Why can't I find something like that??

My only concern would be the part about the old storage tank. It seems that the current owner would be responsible for any EPA issues, but this may not always be the case. My wife use to work for a company that did hazerdous waste removal/disposal and the EPA is after anyone who has ever even been around a storage tank of any kind.

If it were me, I would be real sure that even by renting the facility you would have no obligation/responsibility for anything remotely having to do with the former storage tank.

Otherwise, I would be all over this one.....

[pete f]

If a dump does 50k then a redone will do 100k
Based on your down the street number, this makes sense

If you bt the store, it sounds like a major redo and about $100k would make the place blaze. And still get a decent return on total investment. Cheaper than a new one, with instant income.

[Howard]

I agree with Pete (i.e. it could be a goldmine). However, you need to do a lot more study vis-a-vis current and potential gross revenues, as well as expenses.

I wouldn't assume a 200 % increase in revenues (taking 20% from the comp) and I wouldn't base the current estimate of gross on one or two drive-bys. Additionally, I would seriously reaffirm your "reliable" source of the comp's $250K a year gross.

You should do some real customer counts over a varied weekly period (as often as you can), note the type of customer (i.e. how much each one appears to be spending), pay attention to their direction (what direction are they coming from, as in from the opposite direction of your comp), and get a handle on the utility rates, potential impact fees for your upgrade, the storage tank liability mentioned previously, and condition of plumbing, electrical, hot water system, and drains. With this kind of info you can then make a much better guesstimate.

Check out the competition more. They will not sit still and lose 20% to you without fighting back. What advantages do they have that you can overcome quickly (cleanliness, equipment, etc.)?

Still, sounds like a great opportunity based on what you have discovered so far. Is the business for sale on the open market? If so, for how long?

I usually get worried when I don't know why other people have passed on the same opportunity.

[Fred50]

I'm with Howard if this place has been for sale for any length of time.

Anything worthwhile for sale will be offered to friends and family first. Why would anyone spend the time and $$$ advertising a sale or using a broker unless they had to?

Every mat that I have seen for sale on the open mkt in the past yr or so had some major insurmountable flaw. Most of these flaws were not discovered until I dug much further. Some examples; dry wells, fuel or some other contamination, new major competition that applied for permits, legal liabilities related to perc or other substances, falsified revenue statements (a common one), and last but not least - major lease issues.

FYI, the most common BS reasons that I have been given for selling:

1- My full-time job requires more travel
2- I am retiring and moving to "fill-in-the-blank".
3- I need the $$ because I am bldg a trillion dollar mat somewhere else.
4- Health reasons - Wasn't he out jogging this morning? :D
5- I have other interests that are not allowing me to focus on this business. This comment usually comes from the guy that says he spends a total of 1 hr per wk on the mat!!

Good luck and beware!

[Kitty]

I liked the pitch I got from some woman owner....

She kept saying that I need to leave Dave and venture to her store, buy it for 295K. A little TLC would steal more of DAves biz into these doors, she says. During the conversation she tells me how profitable the biz has been. She has seen a profit since day one, she claims. When I viewed her books they were off, and had a tinge of burning smell to them.....Anyway she kept saying how easy this business is and how profitable it is. I simply asked, then why praytell are you selling????? The whole conversation was BS, trying to rid herself of a very bad business decision she made that has consistently lost her money. I may be stupid, but I am not dumb.

Pertaining to a purchase deal......If it smells too good, or sounds too good, then it probably is. DIG DIG DIG, until you find some solid information as you could be getting yourself into something that isn't very nice.

[JeffLange]

Just take a chance and buy it. It is only $50k.

[pete f]

I should add to my last comment, I am sure you will verify the water & gas usage to come up with a guesstimate of his revenue. I also had assumed it was mostly coin revenue, not w/d/f revenue. If that all checks out, then it may be a nice remodel situation. I would not worry about why nobody else has bought it, alot of people are tire kickers and really do not understand the business anyway.
The only issues I agree with Mark on are leases and dry wells. Everything else is cheaper to fix than build new. As far as someone else bulding new nearby, what is going to stop that from happening after you build a new store a year later?
Can't pick your neighbors very well. If the place has rentals/trailers nearby, drive up parking or single building then double check the water meter (take a reading every week) and start your research.
Also, the reason for selling is of no value. It should not even be brought up, you are unprofessional to even ask, as it makes no difference. Buy the mat on it's merits, not on the sellers' reasons.
Given Marks' and Kittys' posting, you can see why.

[Kitty]

Im not suggesting this would not be ideal, it sounds as if it could be a great investment. What I suggest is to be very aware of every aspect of the deal. Leave nothing to the surprise......and as it is only 50k in a mat purchase, and finding that is very attractive. However, you must still remember it is a risk., In my opinion, the more you know, the better you can make an educated desision.

[Fred50]

I also think this sounds like a great deal on the surface but keep several things in mind:

- It's not like a passive investment where you are going to put in $50K and hope for an above-market return

- The mat needs a re-do which can cost plenty

-You are going to have to commit to several years of lease payments which can amount to several hundred thousand dollars

- You will have to spend a tremendous amount of time on this biz, especially at the beginning.

-Taking all factors into account, you have to ask yourself if this is still a good deal.