My First Investment: I Need Advice from Experienced Investors.

Hello investors,

I am very new to investing. I have read many books, but never took action on it. Today is my first day of actually getting started. I looked in the paper for some type of opportunity that would bring me some type of passive income.

I ran across an ad that said Laundry Business, approx 2500SF, turn-key, all equip included. I decided to take action and call.

When I called, it was an agent representing someone else. He said the owner was selling due to major health problems. He said that the asking price was $165,000, but he could get the owner to go for $135,000. I never gave an offer. He said there were 27 washers and 15 dryers in the building.

He said the owner could not keep up with the business. He was opening late and closing early. He said the business is in a good location, but needs new management.

It is in a busy area with a very big parking lot that I could lease out to someone for a little extra money. Maybe a bar-B-Que vendor or something.

I asked him if the owner had a mortgage on the property. He said yes. Then he asked me why. I told him that I wanted to know everything about the property in order to get the financing that I need.

He said that the owner does have a mortgage, but he did not know how much the mortgage was. He also stated that the seller would pay of the mortgage with the proceeds from the sale. He said the loan was not assumable.

He wants 20% as a down payment.

I am very new to this and I need step by step advice on what I should do next. I need creative real estate techniques and thoughts from experienced investors on how to go about acquiring this property. It seems like a good investment that can help me build a column of assets.

I need help on everything, from creative techniques, to creative financing, to paperwork, to negotiating a good price, to whatever else, to closing the deal.

Please advise me…I am but a Young Grasshopper searching for food, because I am young and hungry.

You’ve basically told us little…

  • Does the ‘owner’ own the building or does he lease it?
  • Have you seen the property?
  • What sort of repairs maintenance are needed ? (If the seller is opening late and closing early, you can bet he is/has deferred maintenance/repairs).
  • What kind of condition are the machines in? How old are they?
  • What sort of insurance costs are you looking at?
  • How much are the taxes?
  • How much are the utilities? (This is a biggie! The washers and dryers most probably run on electricity - some commercial dryers are gas. With the jump in utility fees, how is that effecting the cashflow?). How much is water? It takes a lot of water to run 27 washers.

You need to keep digging…you’ve just scratched the surface. You need to see the financial records for the business for the last few years. Has the business even made any money? With a laundry, you’re literally paying the mortgage with bags of quarters. Are there enough quarters to pay the bills?

Just my quick thoughts…


asking price was $165,000, but he could get the owner to go for $135,000

Wow, some agent, I don’t think my clients would like me very much if I did that on the first call.

I am not sure what you are buying? real estate or a business or both. You said you are looking for some passive income, well if the owner is opening and closeing that is not passive income that is a job. The agent stated it needs new manegement sounds to me like it has no manegment at all. That is a warning sign that it is not a very profitable business. Profitable and good business’s atract good manegement. The most important ?'s are what is the total gross sales income of the business and then what is the owner netting in to his pockett. You can get an idea by looking at the schedule e of his tax return. A good rule of thumb for valueing a business oppurtunity is simply the asking price of that business. An asking price around 100,000 dollars is usually just buying yourself a job on the other hand to purchase a dennys restaurant it is 1 million dollars to start and a taco bell is about 3 million to start and to buy a lexus car dealership it will set you back many millions of dollars but these business’s are actual stand on there own without you needing to be there type business’s. DON"T TOUCH THIS UNTIL YOU LEARN A LOT MORE!!!