Laundromats for the newbie

16 Replies

So we have single family rentals. But are looking to branch out. Where we live there is one landromat. It has horrible reviews for not being clean and things not being fixed. And the owners of it, own the one in the next town over (small town living). 

We are talking about reaching out to see if they are looking to sell, or build our own. But taking that first step seems to be difficult to figure out. Form a corp? Reach out? 

It just seems like such a good time with a bunch of real estate being build. Apartments. Town is expanding. But it is a new area for us so we are stuck in analysis paralysis. 

Any suggestions on starting out/first steps?

Be very careful in this space. There are a lot of environmental issues that accompany laundromats. Be sure to dig in and do your homework prior to making any concrete decisions.

Originally posted by @Leah Stuever :

So we have single family rentals. But are looking to branch out. Where we live there is one landromat. It has horrible reviews for not being clean and things not being fixed. And the owners of it, own the one in the next town over (small town living). 

We are talking about reaching out to see if they are looking to sell, or build our own. But taking that first step seems to be difficult to figure out. Form a corp? Reach out? 

It just seems like such a good time with a bunch of real estate being build. Apartments. Town is expanding. But it is a new area for us so we are stuck in analysis paralysis. 

Any suggestions on starting out/first steps?

 I would estimate financial performance based on size and pricing. Get an idea of what you think revenue and income is. Consider that most people run them as a full time job so be wary of trading one job for another. That said, i have clients in this space who purchase, renovate, increase income and have a clean, profitable, handsoff business. owning the underlying real estate has great potential for growth.

My husband runs our property management side of things full time. So we have the time. 

Owning the land would be great. We are in TX so land is not as expensive as other places. I have found one or two for sale a few towns over. It would be nice to have it closer. 

Thanks for the advice. Just need to take the jump

@Leah Stuever I own a couple of Laundromats. There are definitely some things to consider but a great first step would be to reach out to the current owners to see if they're willing to sell. Laundromats are typically valued at 3-4x the Net Operating Income.

Performance is based on a metric called "turns per day", which just mean how many times, on average, each washing machine is used. The typical laundromat does between 2-4 turns per day, so you can run your estimates of the performance of the laundromat on those numbers until you can get more accurate numbers.

I'd be glad to answer any other questions you have! Best of luck!

@Jordan Berry . Thank you! I am working on getting the contact info for the owners and reaching out. I think they own two, one in my town and the one in the next town over. Also the only one in that town. I would love to buy both but obviously have no real idea what their NOI is. Should I just say I am willing to purchase one or both? I am fairly confident I have people I can reach out to for the money if I needed.

This is really my first foray into commercial.  Only been in single family rentals. 

@Leah Stuever , do a bit of googling on a guy named “Danny D’Angelo”... laundry operator out of Arizona. He will tell you NEVER pay for someone’s failure (why would they actually “sell” a performer?)

His $199 course is well worth the investment if your serious about the laundry space.

@Matt Avila

Thanks. I will check it out. The laundromats in our area are certainly not failing. They are literally the only game in town. Looking at the reviews and the place, it is not cleaned regularly or maintained to a high standard. It looks like they have just got complacent. We also have a ton of new development coming to town that will increase the rental population. It seems like a good move to make. Of course price is important. 

But thanks for the info. I will check out Danny D'Angelo

@Leah Stuever

My 2 cents, there are plenty of reasons to purchase an existing laundromat as opposed to strictly following Danny's advice. It's true, you can get laundromats with little money down, and sometimes that's the best way to go, but there are also good reasons to purchase a laundromat, as well. In your case, it probably makes sense to buy the laundromats and improve operations (and maybe increase prices) since there are no other laundromats in town. 


Danny is a salesman who is trying to sell a course. There is absolutely nothing wrong with that, but one hard lesson that I've learned in this business is that you can't solely rely on the input of people who benefit from you choosing a certain path. This includes brokers (which I am one), unfortunately. I always ask myself, "What does this person have to gain if I go with their advice?" If it's something substantial, it doesn't mean they are wrong, it's just prudent to seek out input from other sources, as well. Just my 2 cents.

@Leah Stueverundefined

@Leah Stuever

Look into the coin laundry association website. They have great valuation metrics.

I own two laundromats and being a cash business, do not trust the current owners financial claims in my opinion. It is an extremely water dependent business, so an easy way to determine turns per day on an older mat, is to look at the water bill. The water company will actually print you the water usage amount and you can calculate usage from there, often times without the owners permission as it is just numbers.

Example:

10 washers at $2.5 that use 21 gallons per load

5 washers at $4.00 that use 18 gallons per load

So in this example:

67% of washers use 21 gallons

33% of washers use 18 gallons

Water department says avg 10,000 gallons per month

So:

67% = 6,700 gallons/21=319 loads x $2.5 = $798

33% = 3,300 gallons/18=183 loads x $4 = $733

According to coin laundry association dryer revenue is at least 50% of washers. (Mine is actually floating at a solid 75% of washer revenue) so dryers at 75% would be = 1,148

Making estimated monthly income in this scenario= $2,675

Obviously this method has flaws, such as if 50% of customers use the $4 washers, it may result in a higher or lower income, but it is a pretty easy method to quickly calculate an estimate of income, also the owner can’t claim more income than he has water usage, for example if all customers in this scenario used the $4 washers and he had a 100% dryer to washer income rate his nearly max income would be, $4,444 per month, so if he claims 6k you can check that water bill and be like “uh-uh”!

A common misconception with laundromats is that they are passive. They require a lot of work. Particularly an older one with older machines. I have a client that owns a laundromat in our town and it's a constant struggle between finding good employees and repairing machines. He makes a living, but it's not much. If you talk with the owners, you'll want to get financial statements or tax returns.

Hope this helps,

@Jordan Berry

No. Sellers are not interested in selling right now. And I don't know that opening a new one is in the cards right now either. I may look a little farther out then our small town.

Thanks for checking back!

@Leah Stuever Keep checking back with them, too. You never know. Also, not selling anything but I have a little website that has a bunch of free resources I've developed for myself that you might find useful. Laundromatresource.com if you're interested :)

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