When to ask for more details

[Alex Alleva]

I recently got some info on a laundromat for sale from a broker in my area. He gave me the address and a simple break down of the income. Here is what he gave me:
Gross:156,000
Rent:35,400
Water/Sewer: 8000
Gas/Electric: 18000
Payroll(2): 24000
Insurance: 1500
Supply:3600
Internet:1500
Maintenance:1800
Total Expenses 93800
Net:62200

Now obviously with these numbers the laundromat looks good but these are very basic number. The asking price is also very reasonable. However i probably will not pursue this laundromat because of a couple factors.

Location- Its in a very rough neighborhood with alot of nicer laundromats near by. It is also kind of hidden in a side street neighborhood with no real parking etc.

There are some other reasons but that definitely a big one.

My question is do you think its worth it to ask for more info on the location from the broker just to better learn how to fully evaluate laundromats? Keep in mind i dont want the broker to think i am just stringing him along. Also does asking for utility bills, the lease, machine make and model, etc constitute me needing to formally enter a “due diligence phase”? If that makes sense. I basically want to window shop this business but dont want the broker to feel duped by me. Maybe i am over thinking this.

[Jordan Berry]

You generally aren’t going to be able to get too many more details/documents until you have an accepted offer. You can ask, just don’t be surprised if they decline to give you more details until you make an offer. You’re not the first window shopper 🙂 With that said, I always recommend practicing your analysis and getting familiar with what to look for and with the process.

[Alex Alleva]

Can I assume I will need to put up some earnest money with my offer in order to get additional info?

[Alex Alleva]

Thanks Jordan. Its funny because it seems so backwards compared to how you buy anything else.

[David Tiseo]

From my recent experience both the broker and owner want to give as little information on the business without an offer being made. What gets me is I do not know how you can actually make a fair, reasonable offer without at least knowing the age of machines and the utilities for the past 12 months. Jordan’s book made me feel better about just making a best guess offer next time and then really attacking the hard information during the due diligence phase. The offer is non binding and at no cost so if they still do not want to provide the utility bills, etc. after the offer is made well then they are hiding something and it’s time to move on. It’s a fine line between being excited to invest in the business and making the right decision to avoid the problems that Jordan spoke about from his experiences.

[Alex Alleva]

Thanks David. Its sad how shady everyone is in this process but I guess that’s the game.

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