Route valuation

[andrewm451]

hello

Just wondering if could get a few opinion of a route near me I am thinking of buying.

I have basic details and have entered into a dialogue with the seller. The route has been forsale for about 1 month so for. There are 31 machines in total, 21 on locations selling for $1100 “negotiable” All are single head gumball machines by Vendmax ( http://www.vendmax.com/ ). Vendmax is a biz-op that seems prevalent here in Canada. I have not owned any of their machines myself, but they are pretty cheap and mostly plastic. Every now and then you see someone in the local classified trying to ditch them for way too much money. The going reasonable used rate for them seems to be about $30 including the stand.

The owner claims to make about $225 per month off the located machines. They donate $50 a month flat to a local charity and get a tax receipt although they claim i could reduce that if i wanted, which i am sure their charity would the thrilled about. (income tax here goes up to about 42% so that donation should have a cost of about $35 depending on my final tax bracket, am i am not in the 42% yet)

All machines are gumball only located in “Restaurants, car dealerships, pet stores, hair salon, tire stores, muffler stores” and they claim to be selling because quiet a few of their locations have closed and they have not gotten around to re-locate them.

I am going try to set up a phone call to see if they have any verification of their income, although it does seem to be close to the “national average” or at least the U.S. National average. Is there any other info i should try and get at the same time?

The route is a little less than 100 miles from me. The trip would cost me about $20 in fuel not including the in town driving.

Here is my ruff income break down.

$225 x 4 = 900 gumballs x $0.03 is $27 for the gum sold

charity fees 50

Gum 27

fuel to get there 20

in town fuel (huge estimate) 10

Total expense $107

That leaves $118

That leaves a 10 month repayment period but does no include attrition, or any other expenses i missed.

I have a bunch of machines that i am almost done referbing into doubles and triples that could upgrade some of the better locations.

I have never bought a route before and only currently have 18 heads out so this would be a huge boost.

Thanks for any help

Andrew

[biggmike]

I love the deal at about $900 - $950 but the 100 miles does concern me though. I think people also tend to give the upper averages when trying to sell their route so I would assume the $225 per month to be the most it has made in a month. Is there any chance to locate the other 10 machines somewhere between your home and the first location. That might make it more worth your time and money. I'm also very new at this so take it for what it's worth. I'm sure you will get a lot of help here. Good Luck.

[Hillbilly]

I would probably view this as an equipment purchase. Being that far away, unless you relocate the other 10 machines to be on the way it will be costly to service.

What are you going to do if a location calls to say the machine is broke? That means another trip. You already stated they are lower quality bizop machines. Be prepared for trips to fix the machines. However, if you could relocate some of them and extend your service out to 6 weeks or 8 weeks, then it might be doable.

I would start at $750 and work from there, which is the approximate value of the machines.

[JEREMYTINA]

I would probably view this as an equipment purchase. Being that far away, unless you relocate the other 10 machines to be on the way it will be costly to service.

What are you going to do if a location calls to say the machine is broke? That means another trip. You already stated they are lower quality bizop machines. Be prepared for trips to fix the machines. However, if you could relocate some of them and extend your service out to 6 weeks or 8 weeks, then it might be doable.

I would start at $750 and work from there, which is the approximate value of the machines.

You can value routes several different ways. I always look at the national standard a general comparision, and to find out if their monthly avg is BS, then I pick the cheapest and knock 25-30% off for my inital offer because I refuse to pay more than I have to. EVER.

national average $7 * 21 heads * 12 months= $1764

used equip cost plus locator fee ($35*31)+(21*30)=$1715

50% of expected gross with verification = $1350

equipment cost only used $35 * 31 machines=$1085

$1085*.75= $813.75

$1085*.70= $759.50

Hillbilly is a man after my own heart. $750 would be my offer too.

[Team Mass]

I've been looking at this post which caught my eye. I bought a similiar account (size) for approximately $700 last month. I was lucky enough to collect $250 because they ignored servicing it which made it a sweeter deal. I was able to buy all new stock and still have some cash for my trouble. I've taken most of these accounts and upgraded the machines. It was worth more to me just to get the accounts. I would put a low price $700 and a high of $900.

[andrewm451]

Thank you all for the fast and informative replies.

I am going to run a cost comparison to place the other machines and use the $7 a month figure if the income can not be verified.

I was thinking of doing collections every 8 weeks since it is gum only. Also there is a major supplier about 70 miles on the other side of the route from me. They have the cheapest prices in the area and best selection if I can pick it up myself so going there could kind of be two birds with one stone.

Thanks again for the advice.