anybody here invested in special real estate ? primarily laundromat or dry cleaners or anything similar to that nature. do you only rent out the space or are active in the business yourself ? how is the experience ? cost to startup or reno ? I see a lot of potential in a laundry rehab where I'm from I just want to get more insight in the business. anything is appreciated thank you !
Hi Jesse, I've never executed an investment in that sort of real estate. However have looked at some properties which were occupied or near dry cleaners. One thing to be aware of when acquiring this type of property is the risk of environmental contamination of the property by chlorinated solvents. If buying an existing property (currently occupied or previously occupied by a Dry Cleaner) you should definitely evaluate the existing risk and make sure any mitigation is factored in your offer.
75%-80% of dry cleaners have impacted the site where they are located. many laundrys also use chlorinated solvents for spot cleaning, etc. that can result in contamination as well. You would be well advised to perform sampling before you agree to purchase such a business or real estate with such an operation. You should have a due diligence "out" in your contact if the results of the phase 2 detect contamination.
I would stay out of dry cleaning & laundry, unless it’s only a drop off storefront and you send everything out to be laundered elsewhere - I know a guy who has 4 of those in surrounding towns and he just pays another company to pick the clothes up, launder it, and either deliver it or bring it back to his stores. Contamination can cost you dearly and government decisions are not really appealable. If you want to strech beyond residential then check out self storage.
@Jesse Barahona I own laundromats and real estate. I think there is a lot of potential in this combination. Despite what some of the comments above say, there are no contamination threats with laundromats, only with dry cleaning, so don't be afraid of the laundromat route. In fact, laundromats produce incredible cash flow that's tough to beat. And when you combine it with real estate it can really accelerate your wealth growth.
Not a lawyer or CPA, but by setting up two separate entities (business and real estate), and drawing up a lease between them, you can dramatically increase the value of the property by structuring it properly.
Laundromats aren't for everyone, but it looks like the nay-sayers above aren't doing it themselves. Talk to people who are doing it to get advice about whether you should or not. Glad to answer any questions for you.
Jordan Berry- you have been lucky with laundromats. I'm an environmental lawyer and have seen plenty of laundromats that have contaminated sites. need to do thorough due diligence before acquiring any of these types of businesses. The contaminants do not degrade quickly and sink into the groundwater. Since they are often located in residential neighborhoods, they can pose significant toxic tort claims. even if groundwater is not used for drinking purposes, vapors can migrate into homes. Some site have zones of contaminated groundwater that extends for a mile. Plaintiffs' lawyers love dry cleaner lawsuits. ..and California just tightened its standards. Buyer Beware!
I agree, phase 1/2 study may prove to have contaminants and not allowing certain uses later
I tried to buy a daycare that was behind a laundry facility and the bank required a phase 1, it came
Back as a risk and we were not able to do another day care or restraint due do the ground contamination of the neighbor.
So dry cleaning is what causes this but normal laundry like quarter machines are ok?
Plenty of people like them, but once you have real capital, mostly not worth the risk.
@Trevor Turnbow Yeah,dry cleaners are the businesses that cause contamination. Laundromats are clean. No pun intended haha