Rick Posted January 4, 2015 Share Posted January 4, 2015 Have any of you ever purchased a bulk route on 100% financing from the owner? How many years/months gross did you pay. I know it's obviously much more than paying cash, but I'm curious how others have structured financing on mid/large size route acquisitions. Thanks. Link to comment Share on other sites More sharing options...
rodney69 Posted January 5, 2015 Share Posted January 5, 2015 I think it's best to be able to pay it off with in a year, but stretch to 2. Is that makes sense. I try to buy it so that it pays for itself with in 10-12 months, but stretch it out to 2 years of there is no interest just in case something shows up that I didn't count on. I've bought 2 like that with no interest. Link to comment Share on other sites More sharing options...
jerrybrooks vending Posted January 5, 2015 Share Posted January 5, 2015 I purchased a route. Talked to the seller and we both agreed on the final month and year I make my last payment...just not the amount..which makes no sense since we have different amounts..I was going to pay it all off in 2015..not anymore since the seller can't add..I will make my payments instead! Sent from my Ally using Tapatalk 2 Link to comment Share on other sites More sharing options...
shepherdsflock Posted January 5, 2015 Share Posted January 5, 2015 I bought a route 100% financed by the seller. We agreed to one year's gross as the price structured the payments over 2 years with 5% interest. Worked very well. I just paid it off. Link to comment Share on other sites More sharing options...
hanihotdog Posted January 5, 2015 Share Posted January 5, 2015 I have found the best way to detach emotion from the equation of any purchase is to ask myself this question... Would I rather someone give me cash equal to the selling price, or the item that I wish to buy. For instance, if the selling price of this route is $20,000, would you rather someone give you 20,000 dollars today, or would you rather have the route. if you are answer is cash, it means that you should not buy.. because the opportunity cost of your money is too high. Link to comment Share on other sites More sharing options...
Rick Posted January 5, 2015 Author Share Posted January 5, 2015 Well based on the above I might be reaching then. I found a route that's 22% candy, 7% arcade, three or four 5-hr. energy (of all things) and the remaining 60-65% of the route is 40-45 Oak/NW racks and 3-4 claw machines in restaurants. Annual gross this year is coming in at $53,400, commissions are between 0-50% averaging 25% routewide. He's reporting a very lackluster net of $15,000-$17,000 annual (28-31.8%) after EVERYTHING - taxes, COG, storage units, gas, etc. He blamed this on the fact that some of their commissions are too high and should be renegotiated which, in my experience - good luck with that! Once you've trained a location owner on a certain % they are rarely willing to move down. But he also said their vend amounts on candy are way out of whack and need to be dialed back. Also, they run VERY few stickers/tats and no interactive equipment. The route doesn't have any shootin hoops or sportsblasters. Their racks are strictly 1in. and 2in. so I'm bullish on being able to boost the net. Still, as the numbers are today I'm looking at a 30 month ROI. Route also comes with 20x10 and 10x10 storage units filled with extra equipment. Most junk, extra U-turns (which is what they're using for their candy UGH!), extra 5-hr energy, bill changers, 35 generic 1" heads, extra racks, etc. I know that's high, but is it UNREASONABLY high considering I'm leveraging the entire investment and it it wouldn't cost me a dime up front? Thanks for the responses. Link to comment Share on other sites More sharing options...
RikaKazak Posted January 5, 2015 Share Posted January 5, 2015 Leverage is like a double edged sword. It'll cut for you, or just as easily cut against you. My main business is real estate, and I can tell you that in 2008 a lot of people wished their sword wasn't nearly as big, nor as sharp. With that said though, I have leverage on my real estate. But it's not even close to the levels I've had in the past, and I'll never go back to that amount ever again. Link to comment Share on other sites More sharing options...
shepherdsflock Posted January 5, 2015 Share Posted January 5, 2015 Do what I did: buy on contract. Basically you lease the machines until the original purchase price is paid. In the event of default, all equipment and locations revert back to the seller. Just something you could try. Link to comment Share on other sites More sharing options...
hanihotdog Posted January 5, 2015 Share Posted January 5, 2015 Rick, unlike baseball, you don't get a strike for not swinging. if you are apprehensive, its for a good reason. We have passed on some great bargains because they did not fit our business model. Ask yourself if it fits your business model... from the tone of your post, it sounds like it does not fit.(high commission, u turns) certainly the lease to own approach makes the most sense if you decide to move forward! Good luck Link to comment Share on other sites More sharing options...
rodney69 Posted January 5, 2015 Share Posted January 5, 2015 Rick, I think you know how I feel about Uturn's. If not, pm me! I've used them a long time. I would consider all the storages as nothing unless you have a lot of time. The candy settings on a Uturn are harder to get down where you want them on some candy like PMM or Chewy stuff. It gets jammed in the machines more from my understanding. I haven't used Oaks with candy yet, but I know how they react with Uturn's. I think with the cost of the route, you could buy new and build. Link to comment Share on other sites More sharing options...
Rick Posted January 5, 2015 Author Share Posted January 5, 2015 Shepherd's, that's exactly what I'm doing. Ownership woud remain 100% with the seller until the loan is paid in full. I could walk away whenever I wanted and lose nothing (well, very little) but my time. The U turns aren't a huge factor to me because I have a ton of equipment I could swap them out for. @Rodney, I hear ya. The biggest problem with buying new and building is all of that money needs to be invested on the front end. A slight peoblem when you don't have it. In this situation, the route is covering the debt repayment for no money out of my own pocket. Link to comment Share on other sites More sharing options...
rodney69 Posted January 6, 2015 Share Posted January 6, 2015 good point and understandable. That's why I did it. BUT, I also wish I didn't pay as much as I did. And I also made sure that the money coming in was at least 30% above the payment and possible cost of running business. In the end result, it worked. In the slow months it covers cog's and the payment with no excess. There is only 2 months like that though. It works if the payment is low enough compared to sales, if not...... I changed a lot of equipment over to adapt. Like one location had an 8 select Uturn. Next month it will be a 6 way Oak rack. Link to comment Share on other sites More sharing options...
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