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Message
Anyone have experience with laundromat purchase?
Posted on 7/12/23 at 10:10 pm
Posted on 7/12/23 at 10:10 pm
This always felt like the kind of business I'd like to start with. There are several for sale in my area, but I don't know how to even begin to validate the numbers.
Here's a sample one: LINK
BUSINESS DESCRIPTIONExcellent - Well Established Coin Laundry/Laundromat in Dallas, Texas!
BUSINESS ONLY
Dallas, Texas 75216
+/- 4,500 SQ FT Space
Current Monthly Revenue: +/- $20,000
Additional Monthly Income: +/- $6,400
Rent: $3,000
Total Washers (Primus Commercial Washers): 54
Total Dryers (American Dryer Corporation): 60
Approximate Annual Net Income: +/- $170,000
Asking Price for Business: $725,000
SBA Loan may be possible for qualified purchaser.
____________
What's the catch here?
Here's a sample one: LINK
BUSINESS DESCRIPTIONExcellent - Well Established Coin Laundry/Laundromat in Dallas, Texas!
BUSINESS ONLY
Dallas, Texas 75216
+/- 4,500 SQ FT Space
Current Monthly Revenue: +/- $20,000
Additional Monthly Income: +/- $6,400
Rent: $3,000
Total Washers (Primus Commercial Washers): 54
Total Dryers (American Dryer Corporation): 60
Approximate Annual Net Income: +/- $170,000
Asking Price for Business: $725,000
SBA Loan may be possible for qualified purchaser.
____________
What's the catch here?
15
Posted on 7/12/23 at 10:39 pm to Thundercles
Only selling business, not real estate. You would have to get number on possible rent and a very long term lease with stable rates.
Posted on 7/12/23 at 11:42 pm to Thundercles
I’ve heard you need to know how to fix the machines yourself to make any money. Cause they break often.
I assume they make good money off of the vending machines in those places (snacks, laundry’ supplies, and such).
I assume they make good money off of the vending machines in those places (snacks, laundry’ supplies, and such).
Posted on 7/13/23 at 6:25 am to Thundercles
Does it offer wash and fold service? If not that might be an additional service to make money.
Posted on 7/13/23 at 8:21 am to GeauxTigers123
quote:
I’ve heard you need to know how to fix the machines yourself to make any money
This was the biggest hangup I had when I first started looking at this a year ago, and might be what slows it down for me.
Posted on 7/13/23 at 9:24 am to Thundercles
you are exposed not owning the RE.
tell him you will give him TREE FIDDY. take it or leave it.
750k? he wants?
tell him you will give him TREE FIDDY. take it or leave it.
750k? he wants?
Posted on 7/13/23 at 9:52 am to Fat Bastard
All in the maintenance and cleanliness. Otherwise cash cow. Just need to understand age of machines and how much they cost to replace.
Numbers look ok. 4x multiple on earnings you’d need to see if that’s in line with industry standard. A business appraisal will tell you that (SBA would require it too).
On an sba debt deal, you’re looking at debt service of around $108k/yr financed over 10 years. Email me if you want to talk more on the sba financing front (Lnobles@redstickag.com)
Only think I would look at is:
- is there additional revenue that can be made? Full service, vending machines for food, detergent etc etc.
- look for small incremental price increases. What if you increase cost of wash and dry by .25 a load, .50 a loan and where are NEARBY competitors. people using laundromats aren’t driving across town to save .50 a load. Do enough incremental pricing to increase top line revenues without pissing off the clientele
The key is understanding the useful life of the machines and where they are in that cycle. If you’re going to buy the business for $750k and then have to do immediate capital improvements (new equipment) out of the gates then you’ve got to factor that in as that debt service number will jump rapidly eroding any excess cash flow.
Other risk as mentioned is the lease. How long remains, terms etc. these are more specialized facilities so that goes both ways. Landlord isn’t going to want you to leave as he doesn’t want to retrofit it to a new business. And it would cost you a fortune to move somewhere that requires a ton of TI to fit it to your business. And if you work in TI to the new lease you’re rent us going to have to adjust upward for that landlord to essentially self finance the TI for you.
Numbers look ok. 4x multiple on earnings you’d need to see if that’s in line with industry standard. A business appraisal will tell you that (SBA would require it too).
On an sba debt deal, you’re looking at debt service of around $108k/yr financed over 10 years. Email me if you want to talk more on the sba financing front (Lnobles@redstickag.com)
Only think I would look at is:
- is there additional revenue that can be made? Full service, vending machines for food, detergent etc etc.
- look for small incremental price increases. What if you increase cost of wash and dry by .25 a load, .50 a loan and where are NEARBY competitors. people using laundromats aren’t driving across town to save .50 a load. Do enough incremental pricing to increase top line revenues without pissing off the clientele
The key is understanding the useful life of the machines and where they are in that cycle. If you’re going to buy the business for $750k and then have to do immediate capital improvements (new equipment) out of the gates then you’ve got to factor that in as that debt service number will jump rapidly eroding any excess cash flow.
Other risk as mentioned is the lease. How long remains, terms etc. these are more specialized facilities so that goes both ways. Landlord isn’t going to want you to leave as he doesn’t want to retrofit it to a new business. And it would cost you a fortune to move somewhere that requires a ton of TI to fit it to your business. And if you work in TI to the new lease you’re rent us going to have to adjust upward for that landlord to essentially self finance the TI for you.
This post was edited on 7/13/23 at 9:54 am
Posted on 7/13/23 at 9:54 am to Thundercles
quote:
Anyone have experience with laundromat purchase?
quote:are you looking to join the mafia?
This always felt like the kind of business I'd like to start with
Posted on 7/13/23 at 11:30 am to Thundercles
Posted on 7/13/23 at 12:19 pm to Thundercles
Plan on having to replace each washer & dryer every 5 years
You have to find a niche (extra services, smaller community, laundromat/pub combo) or Coinmach will eat your lunch
You have to find a niche (extra services, smaller community, laundromat/pub combo) or Coinmach will eat your lunch
Posted on 7/13/23 at 11:37 pm to Sterling Archer
quote:
Check this one out in Austin are
Posted on 7/14/23 at 9:32 am to Thundercles
Beware of crackheads
Posted on 7/14/23 at 10:05 am to Thundercles
I think it is funny seeing people at laundromats on their $800 iPhones. They'd rather spend money on an iPhone than a washer and dryer to use at home, which will last much longer.
Posted on 7/14/23 at 10:09 am to leeman101
quote:
I think it is funny seeing people at laundromats on their $800 iPhones. They'd rather spend money on an iPhone than a washer and dryer to use at home, which will last much longer.
Most of those people live in shitty apartments or homes with no space or hookups for washer/dryer.
Posted on 7/17/23 at 7:03 am to dome53
I’d suggest visiting the CLA association’s website . They have a lot of free resources there that are well worth the review.
IMO, the keys are
1. Good location
2. Favorable Lease
3. Reasonable utilities (water, sewer)
You’ll also need to account for these in you business plan:
- attended or unattended?
- equipment and maintenance …. these newer commercial machines are relatively low operating cost if they are routinely maintained. The routine maintenance isn’t hard …. tons of YouTube vids .
- cash, card, or both? …. the most expensive systems will allow mobile phone payment …. while cash is universal.
- security plan
- daily cleaning regimen
IMO, the keys are
1. Good location
2. Favorable Lease
3. Reasonable utilities (water, sewer)
You’ll also need to account for these in you business plan:
- attended or unattended?
- equipment and maintenance …. these newer commercial machines are relatively low operating cost if they are routinely maintained. The routine maintenance isn’t hard …. tons of YouTube vids .
- cash, card, or both? …. the most expensive systems will allow mobile phone payment …. while cash is universal.
- security plan
- daily cleaning regimen
Posted on 7/17/23 at 7:13 am to leeman101
quote:
I think it is funny seeing people at laundromats on their $800 iPhones. They'd rather spend money on an iPhone than a washer and dryer to use at home, which will last much longer.
How is it that you are seeing people at a laundromat?
Posted on 7/21/23 at 7:05 am to Thundercles
Equipment lease vs purchase example:
Posted on 7/21/23 at 10:25 am to Thundercles
The multiple is too frickin' high. Investment banker here.
You should be looking at a multiple of SDE for this type of business in the 2.7-3.5x range. You will want to get hold of the recast financials to see if that $170k is real discretionary or made up. Then you will want to look at your debt service and how big of a chunk it takes from that number. Without the commercial real estate, it will be a chunk because now you have a 10 year amortization with SBA loan rates in the 10-11% range.
If you have that much free cash, that changes the math but I'd still likely find something else to do with that $.
Edit: Most paid appraisals are BS. You get a more accurate number from a reputable broker, unfortunately there are a lot of them who aren't that reputable or at least knowledgeable.
WRT to that listing in Austin, I wouldn't touch it with a 10' pole. That is obviously an owner who doesn't know WTF he/she is doing, likely has a very unrealistic view of the business value, and may well be up to something shady.
You should be looking at a multiple of SDE for this type of business in the 2.7-3.5x range. You will want to get hold of the recast financials to see if that $170k is real discretionary or made up. Then you will want to look at your debt service and how big of a chunk it takes from that number. Without the commercial real estate, it will be a chunk because now you have a 10 year amortization with SBA loan rates in the 10-11% range.
If you have that much free cash, that changes the math but I'd still likely find something else to do with that $.
Edit: Most paid appraisals are BS. You get a more accurate number from a reputable broker, unfortunately there are a lot of them who aren't that reputable or at least knowledgeable.
WRT to that listing in Austin, I wouldn't touch it with a 10' pole. That is obviously an owner who doesn't know WTF he/she is doing, likely has a very unrealistic view of the business value, and may well be up to something shady.
This post was edited on 7/21/23 at 10:31 am
Posted on 7/21/23 at 11:39 am to Thundercles
My wife had one for a couple of years. It is a very low margin business. We did better than the previous owners, but that's not saying much. I learned a lot about maintaining the washers and driers treating them like my electric train set.
Most of the income didn't come from people doing their own wash, but from wash and fold services, dry cleaning contracted to an outside service and even some tailoring.
It was low margin, high labor expense and high machine maintenance. When the threat of a big NY minimum wage hike loomed, we got out. It would only make sense then if we became full time owner/operators which was out of the question since it was only our side toy.
One of the big banes of the wash and fold service was getting people's clothes mixed up. What a headache. Worked out a big, bold color coded tagging system which eliminated almost all of the screw-ups.
Drier fires required constant maintenance to prevent. People with little kids would dry clothes that had crayons in the pocket. Melted crayons were a royal pain to clean up.
Ps. Our entrance price was in $130k range about a 10 minute walk from where we lived. Location was good with lots of apartments without ability to own a home laundry. Co-ops often banned home machines as they can leak and ruin the apartment below. Our machines were 25 years old, but we had a good mechanic who could keep them running seemingly forever. They were industrial/commercial machines after all.
Most of the income didn't come from people doing their own wash, but from wash and fold services, dry cleaning contracted to an outside service and even some tailoring.
It was low margin, high labor expense and high machine maintenance. When the threat of a big NY minimum wage hike loomed, we got out. It would only make sense then if we became full time owner/operators which was out of the question since it was only our side toy.
One of the big banes of the wash and fold service was getting people's clothes mixed up. What a headache. Worked out a big, bold color coded tagging system which eliminated almost all of the screw-ups.
Drier fires required constant maintenance to prevent. People with little kids would dry clothes that had crayons in the pocket. Melted crayons were a royal pain to clean up.
Ps. Our entrance price was in $130k range about a 10 minute walk from where we lived. Location was good with lots of apartments without ability to own a home laundry. Co-ops often banned home machines as they can leak and ruin the apartment below. Our machines were 25 years old, but we had a good mechanic who could keep them running seemingly forever. They were industrial/commercial machines after all.
This post was edited on 7/21/23 at 12:05 pm
Posted on 7/24/23 at 1:07 pm to Thundercles
quote:
There are several for sale in my area,
There are several for sale in the Houston area and other areas as well.
When everyone is selling, that should be telling.
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