Reply To: Acquisitions and identifying true value

[Dan Vineis]

Hey Dev yes I am actually closing on the laundromat this week. I ended up getting him down to $20,000 but I am paying cash. I ended up figuring out my own way to source his income so I was fine paying cash. I used the fact he didn’t have any bank statements to talk him down in price a little bit. The way I figured out his income was I went to the water department. I looked at his usage of water over the past year. Then I looked at the average gallon per wash for each machine in the laundromat. Divided the usage of water by how many gallons per wash to figure out how many turns a year he was getting. Then I multiplied that by the vin price. I ran a few different scenarios and they kept adding up to around what he was saying the gross revenue was. The real value to this store was how bad it was managed. He was paying someone $75 a week to unlock the store and turn on the lights. He was paying someone $100 a week to turn off the light and lock it up at night. First day of ownership I have my lock smith set up to put a timed lock on the door and I’m going to install a timer for the lights. This will cost me between $900 and $1,000 to do depending on if I want to install the timer on the lights my self. Instant $9,100 a year profit increase. There is a lot of value add potential like that example that made me fell more comfortable moving forward with the deal. Any questions fell free to ask 9735132571.