How to value a laundromat / self-storage / real estate combo?

[Gretchen Roberts]

Looking at a deal that's combination laundromat and self-storage with owned land. Broker and owner didn't break out the parts but priced it as a whole; however, since self-storage generally includes real estate but with a laundromat it depends, I'm wondering what the best way to break out the value is.

Real estate + Self storage as one, and then Laundromate + market value rents? 

Any other ideas? TIA! 

[John Leake]

If I were looking at it I would want to evaluate it on a cashflow basis as it is. Then I'd try to determine a value add situation, can you add additional storage space/does the market support it, what are current rents compared to competitors, can the units be resized to better capture your markets need, what is the current security situation, and are their other things you can offer such RV parking or boat storage.

For the laundromat:
What is the current income at the laundromat, are the machines leased or owned, what are the prices for using them, how far is the nearest alternative location if you decide to raise prices, and is the laundromat the highest and best use of the property. 

These are just general thoughts that come to my mind and you may have already considered them all but wanted to put them down in case you hadn't.

[Tim Delaney]

@Gretchen Roberts if they can’t provide you a breakdown of revenue and/or costs based on the different businesses they are operating then there is a chance that there is value add opportunity in management. You are going to have to just evaluate the deal on overall cash flow for now, but be sure you see opportunity to increase profitability or create additional revenue streams (selling boxes and packing supplies for example). Once you take over be sure to keep detailed books for the storage business vs laundromat so you can ensure both are profitable and the best use of the space.

[John McKee]

You can look at biz buy sell for how much laundrymats are selling for.  Generally small business trades at 2-3 times income if it's a small mom and pop.

[Ronald Rohde]

How is title held? That will guide the bank accounts, so you may be able to get statements and do your own ratios.

Ultimately, try to split into component valuations. Otherwise as noted above, just look at totals, can you sell the pieces for more than the whole?

[Henry Clark]

@Gretchen Roberts

Unless the laundromat is a small part of the business and you can close it, don’t do the deal unless your mechanically inclined and you have free time to manage and fill in at the laundromat.   It can be a profitable business but you can’t be hiring repairs and since it’s a cash business you have to manage the cash.