How to Check Your Coin Op Landromat's Profit Potential
I sure hope you're not like me when it comes to your rental's coin op laundry room. I've been so focused on discovering non-obvious income ideas that I neglected to see the full potential of my complex's laundry mat.
My laundry room currently grosses $73.39 each month. But how much should it gross? Would it be worthwhile to invest in a renovation? I want to say "yes" and launch into a fun project, but I really should evaluate the profit potential first.
The best way I know to get a sober perspective on potential profit is to run Monte Carlo Simulations. I learned that lesson the hard way. Click
Comments (4)
Good suggestion. Extremely good point. In my case, I'm already at the top of my market regarding rents. The neighborhood is still the lid for rents. Thus I focus on community building.
Al Williamson, about 10 years ago
Al, While analysing your laundry room, did you model the additional rent you can command with en-suite laundry versus the revenue from a common laundry room?
Roy N., about 10 years ago
Al, It's not just for trips to the laundromat, take the Monte Carlo out of the garage when you are analysing / forecasting the discounted cash flow potential of a new acquisition. How will that property perform under a variety of vacancy rates, maintenance events, debt service loads, etc. Being software geeks, when we first started looking at real estate we wrote our own in-house analysis simulator to run all these variations and present us with the most probably success scenarios and the boundaries of where the property would be successful. When analysing a typical property, there are hundreds of scenarios run, but typically less than 6-8 in the resultant set of successful scenarios ... a number with which the human brain can actually deal.
Roy N., about 10 years ago
You nailed it Roy. Acquisition is the first place to use this technique. However, it's needed everytime you want to make a good decision in a sober way. I get carried away with my ideas. Running Monte Carlos make me pump my brakes - saves me from costly "I told you so" comments from my spouse.
Al Williamson, about 10 years ago