Are all brokers snakes?

[MordyRo]

First of all, thank you all for your posts to the site. I decided several months ago that I would like to get into the laundromat business and all of your posts have been so helpful and educational!

My initial strategy for entering the industry was to buy an existing mat. That way I could cut my teeth on a business that has an existing customer base and cash flow. Unfortunately, the only way I can seem to find an existing mat for sale is through business brokers who are never straight with me. Just last week I went to put a good faith deposit down on a facility only to find that the broker had grossly misrepresented the nature of the lease. The lease says that if the landlord wants to redevelop the property, he has the right to reduce the laundromat's space without any reduction in rent! Clearly, this was a deal killer!

I am starting to think that the only way to get into the business will be to build a new facility from the ground up and am starting to search for vacant retail space.

Any thoughts?

[Joshp615]

Yes, all brokers are snakes. Keep your chin up, I went through 6 contracts before I hit the home run! Keep being persistent, you will learn a lot in the process.

[pete f]

You are buying from the seller, the broker is the person to market the place. The process is. for the umteenth time:

1. check the fact sheet, ie, sales, expenses, etc given by the seller ( broker)
All the seller is obligated to give is a simple revenue and expense sheet, hopefully with lease terms and equipment list.
2. make your offer based on what you feel that is worth to you, with DUE DILLIGENCE CLAUSES
3. prove the seller right or wrong and get lease and make sure it is acceptable to you have inpsections, etc durring your due dilligence period
4. go to closing if everything is OK.

Everyone wants tax returns, leases, talk to landlords, etc before ever making an offer. This is just not how the process works. Your due dilliagnce clause gives you the chance to verify everything. IF the numbers do not add up then renegotiate or walk.
If you get a good broker, he will work towards the closing, setting up a meet with the landlord over lease issues, getting water/gas bills, etc.

[MordyRo]

Thanks, Pete. I have especially appreciated your posts on the forum -- your vast experience in the laundromat business provides a wealth of knowledge to the site.

In fact, the process you describe is exactly the one I was about to begin -- I put a bid on the mat that was accepted and went to the broker's office to drop off a good faith due diligence deposit (I'm not sure if this is customary or not). Once I was at the office, I asked to see the lease and learned that the general terms that had been described to me were false.

Oh well -- easy come, easy go ... on to the next one!

[William]

It is possible that the broker just took the word of the seller and did not read the lease. Perhaps the broker was just as surprised as you! Still a deal killer though.

[DuboisLaundry]

you can get help from a broker without placing blind trust in him

keywords: blind trust

[William]

I am wondering if it really is a deal killer. I am in the process of selling two mats, despite having a lease I expect the buyer will get a new lease when I sell the businesses. Why not ask for a new lease and take out the language you don't like?

[MordyRo]

That's a great thought. The problem with this one is that the landlord really has no motivation to change this clause. It is a facility in NYC, so the landlord wants to keep his redevelopment options as open as possible.

[TTLES]

Are you sure you want to buy a mat in NY and you live in "the Garden State" ?? Going across the river once in a while is ok BUT when you HAVE to do it !!!! It could never make enough money for me !!!

[pete f]

Thanks, Pete. I have especially appreciated your posts on the forum -- your vast experience in the laundromat business provides a wealth of knowledge to the site.

In fact, the process you describe is exactly the one I was about to begin -- I put a bid on the mat that was accepted and went to the broker's office to drop off a good faith due diligence deposit (I'm not sure if this is customary or not). Once I was at the office, I asked to see the lease and learned that the general terms that had been described to me were false.

Oh well -- easy come, easy go ... on to the next one!


If you like the mat you contact the landlord to see if that clause can be taken out.