Commerical Deal with Seller Finance, Hard Money & Down Payment Assistance????

Hello to all,

I 've located a laundromat in Illinois with the real estate attached and the asking price is $700K. The seller is requesting 25% down with remaining balance as Seller financing. I have a source who claims he has DPA secured for me and I can obtain funding through a hard money lender.

Is this at all deal possible to be structure without me coming out of pocket???

I don’t want this guy pulling my leg, wasting my time and the seller’s time.


Is it that you don’t want to come out of pocket or you don’t have any money to put into this deal? Is the attached real estate another lot you can sell to lower the price of the laundromat? Just how many washers/dryers do you get for 700K?

No kidding. it will take A LOT of quarters to pake the payment on a $525K loan. Not to mention the power bill every month. Don’t get caught up in the “Seller Financing” and ignore profitabilty. If you can come up with 25% then you should be able to find someone to finance this deal at 75%.

Justin0419 I stopped by briefly this weekend to view the laundromat and spoke with the Owner. I didn’t count the washers & dryers. However, I’m expecting a call from the Owner today to discuss the deal and I need the full breakdown w/documentation of the income vs. expenses. If it doesn’t make sense and I’m in the negative it’s not a buy, especially if I’m going with a hard money lender. I don’t have the 25% cash down, but supposedly I have been approved for DPA and the source will charge me 10% to be paid back at closing of the 25% down payment borrowed.

The Owner purchased the property in 1991 and built the laundromat. He wants to retire, and I’m sure the asking price is more than double in which he paid for the property. I’ sure he acquired expenses from the purchase of the equipment. The two commerical spaces attached to the property he is not even currently renting. Christopher the current mortgage is probably so cheap it doesn’t matter if the 2 commerical units are not rented.

I definetly don’t want to get the short end of ths stick on this deal. He owns a restaraunt a few doors down that is for sale as well. You never really see a large number of customers purchasing food.

Not sure if this is a good deal. I guess I need to ask for a recent appraisal along with the financials to justify the asking price of 700K??


I think you may be confused about what a DPA is. Down Payment Assistance is typically a grant or a gift funded by a non-profit organization or a city/state. From what you are saying it sounds as if you are getting an HML to loan you the 25% down-payment. If this is true then you are in effect getting 100% financing. If this is the case then you will need to get a fantastic deal on the place to probably break even. Especially if you are paying 10% for the use of the down payment money at closing PLUS paying interest on the $175K (the 25% down payment). 10 points seems like a very high price to pay for that amount of money.

I would proceed very carefully from here. I don’t own anything like this, but here are the things I would be worried about. How are you going to effectively measure the income from this business? Consider you have someone stocking a coin machine and emptying quarters out of the washers & dryers. How do you know how many times those coin boxes get full? There are a couple spaces not rented that could have potential income there, but if your town is like here and many other areas of the country - there are probably plenty of empty commercial spaces as many businesses have shut down. You could check property taxes, get insurance quotes, and have the owner show you utility bills, but I don’t see how you’re going to reliably verify the income. A lot of times commercial RE is priced based on the potential value of the land. Maybe that 2000 sq ft building is several hundred thousand dollars because it’s located on a lot with several hundred feet of frontage on a busy road. Maybe that’s where the value is with this property?

It’s no wonder that the current owner is offering financing terms as you’d have a heck of a time trying to find a commerical loan for the property with the empty units…do you have any ideas yet on how to fill those vacant units? like justin said, right now its only POTENTIAL income from those units, and the property will probably have negative cash flow until they’re occupied.

Yes, the Owner of course neer called me on yesterday. so I’m sending him an email to request the P&L and past 2 years tax returns on the business.

The commerical space above the laundromat should probably be a residential unit, because commerical spaces are not renting I just terminated my lease as a small business owner.

I have a gut feeling that the asking price +cash flow+ hard money rate(s) will = negative. I will keep you guys posted with the breakdown if the Owner provides those details.

The Owner did suggest that he opens 7 days a wekk 6:30am - 8pm and I can probably open 24 hours???

You should be able to calculate some of your own numbers. Is the laundromat real busy? Used 50% of the time? How much money would each machine generate in 1 day? There should be some kind of industry standard for this, so you can independently evaluate it. You are looking at a business that has many others like it. You may have to segregate the various components–laundromat, commercial rentals, land.

It seems to me that a business worth almost three quarters of a million dollars would need to pull in several thousands of dollars a day. There will be utilities, taxes, insurance and salaries for cleaning and maintenance staff. There will be a large mortgage payment.



I seriously doub that this laundromat brings in any where near thousands a day. The laundromat is located in s small suburban community where there are basically homeowners. Ther emayube a couple of apartment complexes, but they probably have washers and dryers.

The Owner is not as serious, because we were suppose to speak on Monday, and he hasn’t even responded to my request. I beleive this deal maybe a pass for me the Owner is asking a bit too much than it is probably worth or producing.

Now, I have two other laundromats of interest. One the asking price is 200K and the net profit is 80K, and I’m not sure if this is leased or real estate attached. The second laundromat asking price is $125K for 2500 sq ft and it brings in $10K a month. The Owner advised me the water bill is $600 every 2 months, lights & gas is $1,500 a month and the rent I beleive is around $1,200??

I was told that it’s best to purchase a laundromat with the real estate attached, but recently an investor/private lender advised me it doesn’t matter they look at the cash flow.