Wednesday, July 27, 2011

Water Bill Analysis Using Monthly Water Bills

Perhaps the most commonly used method of using utility bills to establish a range of income in a Coin Laundry is monthly water bill analysis.  Almost every buyer is told about - or attempts to verify by reading - through their own efforts or those of their agent, the analysis of monthly water bills to verify the income of a Coin Laundry.

Depending on the method - and the skill of the person reviewing the monthly water bills - the results are worth noting, and although not precise, they can be one item to consider in your evaluation.  

The idea behind monthly water bill analysis t is simple.  Washer machines at a Coin Laundry use a measurable volume of water each time they are turned on.  The water bills show you how much water has been purchased by the Coin Laundry in a specific period of time and therefore by dividing the water usage of the washers into the total amount of water purchased, you are able to determine how many times washing machines were started.  This allows you to estimate the revenue that can produced from the consumption of this amount of water.

Water companies sell water in Hundred Cubic Feet (HCF) units. One cubic foot of water is equivalent to 7.48 gallons of water. Therefore, 748 gallons of water per HCF (Hundred Cubic Feet).  Some water companies provide the actual number of gallons used as opposed to listing the use of units of HCF.

To perform the calculation, determine the total number of HCF for 30 days (check to see the number of days inthe billing cycle) and multiply the number by 748.  You then divide the total number of gallons of water by 30, which would give you the total number of gallons of water used per day.

Although dryer income in a Coin Laundry can vary by the number of minutes sold - eight minutes for twenty-five cents, for example - a standard used and supported by some agents is 25% to 40% of monthly washer income.  This estimate of dryer income is based on the experience of agents who specialize in Coin Laundry brokerage.
Although water bill analysis is one method of income verification, it does have the potential to be wrong.  Water meters sometimes are not accurate, the water meter may also be connected to other businesses or the house (water flowers and landscaping) water supply.

In addition, since seller are aware that water bills are used in the verification of income, there are the stories that seller's can leave a faucet running in the back room in the months before they offer their Coin Laundries for sale in hopes of throwing off the water bill analysis.  Requesting two years of water bills can frequently discover this trick.
Since there are several other inside pieces of information used in water bill analysis, It is often best to have a professional assist in the process.  The fees to review - or assist in the due diligence process - all the items prior to a purchase range from $300 to $800 for most professionals.

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