Home Forums Laundromats What should my offer price be?

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    Hey All,

    I’m currently in due diligence on my first store and am at a bit of a crossroads.  The owners annual profit is equal to that of his expenses according to his P+L.  I believe he’s actually losing money because his machine maintenance costs are averaging $1k+ a month.  The store generates $159k gross, but needs some work.  It’s exactly what I’m looking for in a value-add store.  

    Two questions:

    1) How should I come up with an offer price if I’m not using a 3-4x multiple because profit is zero/negative?

    2) There’s 2 years left on the lease and the monthly cost is cheap for the location.  The landlord isn’t thrilled on signing another ten years at that price because he may sell the building.  What would be a good way to structure the lease so the landlord will be open to another decade with a few options at the end of the term?



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