New Business-Please Help

[SeanKaufman]

Hi Everyone-

I am trying to re-invent myself and am looking for a new business. Any help would be appreciated. In New Jersey, there is a laundromat for sale with a gross of $140,000 and a net of $89,000. The person also owns the building. The building has a gross of $82,000 and a net of $60,000. Total net income is $149,000. Does anyone have a formula for how much this would cost to purchase? I have heard for the laudromat business--the net times 2.75 is the formula to use...is that correct?

Any help is appreciated.

[Amex]

Sounds like those numbers are BS.

[Rich]

I agree with Amex

[SeanKaufman]

Can you guys ellaborate...are the numbers crazy high? Thanks.

[Rich]

Net just seems to high. Is the mat paying rent? If not then I guess the net could be right. But to put a value on the mat you would have to figure in what it should be paying in rent. The realestate and mat should be 2 seperate businesses.
And good luck finding anything half decent here in NJ for less then 3.5 X net. I have but you got to be in the right place at the right time, and be real lucky.

[SeanKaufman]

The mat is paying rent, so the seller is probably not being so truthful with his numbers. You say 3.5 Net is good what is the average for a mat in the NJ/NY area.

Thansk Again.

[MordyRo]

Sean,

I am also new to the industry, but I have heard that normal profit margins in the laundromat business are in the low 30% range (rent and utilities alone can be 50%-60% of your gross!). Assuming that the seller's gross of $140K is correct (also a big leap of faith), you would expect to net about half of what the seller has indicated based on this equation.

Can you ask the seller to breakout the expenses?

What are the other sources of revenue from the building?

[Palmyra Jim]

Sean,
Once you put in an offer or even before you offer, the books and expenses should be broken out very clearly for you. I was able to get a full break down even before I put in an offer. The due diligence process will give you all the information you need...what you need to go forward with putting your signature on the loan...

Good luck..

Jim

[SeanKaufman]

Thanks Everyone,

You all have been great. So I have learned that a normal wash net's 30% ?. To buy is apprximately 3.5 Times Net? . The one that I was looking at, it appears the guy is nuts but here are the details.

Grosses: 140,000
Nets: 89,000 (Seem High)
The Rent is 30,000 a year.
Gas and electric 20,000.
Trash removal: 1,500.

He has a Water Well and does not pay for water. Is this normal????
Is there a book any one would recomend I buy on laundromats???
He has no costs for repairs or payroll or supplies.

Please keep helping me.

Thanks So Much,

Sean

[pete f]

stand alone mat with building 10x net so $890k or so.

[Palmyra Jim]

That seems like a very low utility bill for a $140,000 gross...or my energy efficiency rating is really bad. Even without water $20,000 is low. Mine is about $30,000 with a much lower gross....my water heaters are 15-20 years old though...

Jim