Buying a Route, Is it a good deal?

[FairwayVend]

I am buying a 10 machine route from a friend. It nets roughly $1,000 a month and I am purchasing them for a total of $18,000. $400 in change and about $100 dollars in product included. He paid $36,000 for the machines.

No money down, I just have to pay him 50% of profits per month until its paid off. The machines are 1 year old and under a 50% warranty for 6 more years. 2 machines are not in use, so there is room for more profit.

I'm a college student, so I won't be relying on the income to live.

Does this sound like a good deal?

[G-Vending]

Do you really think if it was making 1000 net a month he would sell it to you with no money down?

If he does change all locks a s a p

[FairwayVend]

Its legit. We are very good friends and he is moving to vegas because he got a really good job as a financial advisor. That being said, does it sound like a good deal?

[NinnJinn]

If all 10 machines together nets a total of $1,000  How has he managed to pay off $18000 of the loan in 1yr?

If each machine is netting $1,000 EACH a month, then why is he selling it?  

If a location boots you out, do you have the resources to move the machines out asap?

Those are the things I would be wondering.  Even if the seller was my best friend.

Sorry to say, but something just isn't adding up.  Something seems fishy to me.  

[NinnJinn]

Ahhh, well since he is moving away, that clears up some questions and wonderings.  I am new to the Full line of things, but what little I know, if that case presented itself, I think I might actually have to consider it.  But I would still wonder about a lot of things though.

[FairwayVend]

It was a loan from his uncle. It is not paid off yet, but I will not be dealing with any banks or creditors. He is going to be paying him off with the 50% a month I give him, as well as the money he will be making in his new job. He will be in a 100k+ job so money wont be a problem for him.

[dogcow]

if he is willing to finance it, go for it, if you make no money he makes no money

realistically it is the best situation you could be in

[mission vending]

For relatively new equipment with extended warranty and locations and easy financing terms it's something I'd look at very hard. Just make sure that if you proceed that EVERYTHING is in writing so there will be no misunderstandings a year from now. Especially with a friendship involved.

my .02

[BenG]

I say go for it if he is willing to finance it. And willing to only that half of the profits. He seems fairly confident that it will make some money.

[Technivend]

What type of equipment is it? A 7 yr warranty is not a normal parts warranty. You need to take into account the type of equipment it is. Be sure they are from a reputable dealer and not a blue sky seller.

[agrantha]

Fairway

I wish I had your wisdom when I was a college student.  You are wise enought to come to this board and ask questions.  Don't worry...You will be a 100k + earner soon enough 

[mission vending]

What type of equipment is it? A 7 yr warranty is not a normal parts warranty. You need to take into account the type of equipment it is. Be sure they are from a reputable dealer and not a blue sky seller.

I'm willing to bet there are Wittern machines, they were selling extended warranties with new equipment a couple of years ago, don't know if they still do. Of course it would cost extra.

I don't know about the 7 year part, they did sell a 5 year, so it would be worth your while Fairway to check exactly what the warranty covers and how much longer it will run.

[royalforest]

Wait a second Mission! I thought you said  a fair deal is 50% of gross. So if it makes 12000.00 a year, I thought the going price would be $6000.00????

[lurtsman]

Wait a second Mission! I thought you said  a fair deal is 50% of gross. So if it makes 12000.00 a year, I thought the going price would be $6000.00????

You've mixed gross and net. The claim in original post was 1k net profits. Sales would have been over 24k per year to establish those numbers. If you expected to get it for 50% of gross that would only be 12k, however given the financing and the value of having problem free high quality equipment should be figured in. I have vendstars that do over 50$ a month. If the machine gets booted, it isn't worth 50$, let alone 300$. The kind of machine is important because it determines future costs in both time and cash outlays.  I'm not a full line vendor, but I'd certainly look at something like this. If it is was all soda (for simplicity sake) I'd certainly look long at hard at it--probably take it to given the favorable financing terms.

[royalforest]

Ok. I thought it was gross.

[mission vending]

You've mixed gross and net. The claim in original post was 1k net profits. Sales would have been over 24k per year to establish those numbers. If you expected to get it for 50% of gross that would only be 12k, however given the financing and the value of having problem free high quality equipment should be figured in. I have vendstars that do over 50$ a month. If the machine gets booted, it isn't worth 50$, let alone 300$. The kind of machine is important because it determines future costs in both time and cash outlays.  I'm not a full line vendor, but I'd certainly look at something like this. If it is was all soda (for simplicity sake) I'd certainly look long at hard at it--probably take it to given the favorable financing terms.

Agreed, the 50% figure is a good "rule of thumb" to start with. As mentioned the new equipment, warranty and financing terms, IMO, makes it worth more. How much more is between the buyer and seller.

[NinnJinn]

Never really looked at it that way.  Glad no one listens to me!