All Forum Posts by: Kera Covani

Can you vet a potential tenant depending on how much their voucher is?

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What purchase price makes this a good deal...would you buy at this price? 

@Ken Barrett thank you.

@Mark Gibbs thank you for the detailed and informative response!

@Michael Glaspie. Thank you for your response.

Is it a good business move to assume a business knowing it is unlikely to turn a profit for the first few years?

With rentals, I am more educated and well versed on evaluation of a "good rental" cash flo, NOI, returns. I am unsure of the equivalent when it comes to a coin laundry.

Seller is willing to offer financing at 75k down loan for 25 12 month payoff at 6%. So walking into 0 profit. In addition the landlord was to raise rent 500/ mo. This would also tie up all my cash.

Any thoughts?

Kera Covani

I have recently sought interest in another possible income stream, the Coin Laudry business. I have found a couple in my area and am starting to analyze to determine if this would actually be a profitable and passive income business (after start up).

The current business I am looking at is one that is currently operating at about a 25K net profit. The owner is moving out of town. From what I have read, the best way to determine an offer price is the following formula net profit x 50/60 = offer price. (50 or 60 would be selected as the multiplier depending on the current state of the business and repairs needed.

The owner curtly has 2 PT emp. There is a folding service and also some nearby commercial accounts. There is definitely a value add component, such as vending machines, play are for kids and converting the coin machine to an electronic system as well as just some cosmetic updating to make the business more appealing. It is in a great neighborhood, well established area.

So, using this formula the offer price expected would be about 100K, which is the listing price. Although, after calculating the expenses, to included the loan amount, the profit would be 0, until the load is paid due. However, after that, one could expect about 2500/3000k /month profit.

Does anyone have a experience in this industry? Thoughts/comments/concerns??

Sincerely,

Kera Covani

We are financing the deal and will have to pay the extra 35kupfront. All of the units can use an update to the kitchen and bath - which I have allotted 20k to do - adding value to the property, moving forward. 

I have increased the vacancy, repairs and cap ex to 5%. 

After all expenses paid, each unit will profit 350/month. Possibly more, depending on how high I can increase the rent. This complex does not offer any amenities and is just a small circle with several buildings. So larger apartment complexes, with a pool, etc would be my competition for rent ants. 

My intent is to keep the property at least 5 yrs. This is a good area with good schools. I hope to purchase more buildings in the complex as they come up for sale. 

With the above info, would any of you move forward with this deal? 

Thank you for all of the wisdom, advice, and suggestions!

@Steve Vaughan Rental income is 4800. Total expenses 3181. NOI 40,016. Vacancy, cap ex and repairs 3% Ins - 150 Taxes - 433 Water - 325 Lawn, pest - 125 I was also thinking of back pay towards water.

My plan is to hold onto it for several years. The cash flow is about 400/unit. There are other 3/2’ s in the complex. So, if I bought this one at this 420 - would it be a comp for others, thereby increasing the value of mine to at least purchase price then higher in years to come? Am I making sense?