Laundromat good investment?

Question

Denver, 130k asking price, leased property. 24 washers 30 dryers and dry clean laundry service cash flow just under 80k. Thoughts? Questions I should ask?

Andre Debs · Answer

Get info on the equipment brand/age/maintenance performed. You’ll also need the financials to pour through. When looking at the financials you’ll need to determine if NOI is including any drop off or full service work. The best ways to verify financials is to look over tax returns,  water usage data, etc. you’ll want to know if the laundromat is QO, DC/token, card system or a combination of all of these. Each payment system has its own advantages and disadvantages. A laundromat’s value is typically derived from a multiple of its NOI, usually 3-6x, depending on the length and terms of its lease, age and spread of equipment, location, and other factors. For a sale price of 130K, I would expect NOI to be somewhere around 25-35K. Many laundromat owners don’t “pay themselves” so make sure to check to see if the financials include owner compensation. If you’re looking for a truly passive investment, the laundromat business might not be the best fit. Don’t get me wrong, some owners have it down to a science and need to invest very little if any time into it, but as a newbie to the business, you’ll likely have to put significant hours into it.

Bill S. · Answer

@Zachary Michel it's not how much you make it's how much you keep. You need to figure out how much is the net cash flow from the operation. Since it's not a real estate play you need to get business advise. There are some web sites dedicated to helping folks self manage laundromats. Use google and do a crash course in the business and that should answer your question.

Jay Johnson · Answer

Jason: You hit the nail on the head!

Jason D. · Answer

@Zachary Michel if you're looking for something truly passive, purchasing notes is the closest you'll get. Most everything else will take work on your end

Zachary Michel · Answer

@Jason D.

The maintenance was a concern for me as well, however I am looking for my first investment to be one that is essentially passive. As I have a full time job for now.... ( trying to escape) lol any other ideas on passive income?

Jason D. · Answer

@Zachary Michel I spent some time looking into laundromats and self serve car washes. I found the overhead and maintenance for laundromats to be exceptionally high. It just wasnt a good for me.

I think the first thing I would look at are the financial statements, to see how much possible deferred maintenance I'd be looking at.

Laundromat good investment?

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