Laundromat

21 Replies

Has anyone ever purchase a property with a laundromat in it. If so how was your experience I'm looking  into purchasing a property with a laundromat as a investment. Just wanted to know if anybody has done it before.

It doesn't look like this gained any ground but I'm commenting in case anything does come of it.  Currently evaluating a commercial building purchase, which also would own the laundromat, and have two residential units and a commercial fitness studio.  It's a messy evaluation, and curious if anything happens to pop up on this subject.

@Mitch Brunette I own a couple of laundromats and commercial property. I have a website /YouTube /podcast for laundromat owners and prospective owners, too. I'd be glad to answer any questions and /or send you the link to the site for that part of it if you'd like

Hello,

In case anyone ever needs this for help, here's where I've ended up thus far and am still forging ahead. If you've never read a detailed P&L it can be a bit daunting, but at the end of the day a laundry and real estate P&L can be fairly simple. Here's what I've done thus far:

1. Saved two copies of the existing P&L. One for the Real Estate and one for the Laundry

2. I started making assumptions about where expenses and income belonged. If it belonged to the laundry I removed it from the real estate and vice versa.

3. I found some expenses that I had no idea or thought might be more laundry than real estate and just chose a percentage and assigned some of the expense to both but totaling the original amount.

4. Figured out the debt service costs over 20 years amortized at 4% interest.

5. I had the laundry pay $1400 in rent which is comparable to what the pilates studio is paying, similar square footage, different use, seemed like a reasonable starting point.

6. Came up with a final cash flow number for both the real estate and the laundry.

The Result:

They both potentially stand on their own, and the total Cash on Cash Return after all expenses and debt service divided by down payment and some small up front expenses will range between 19%-22%. We think there may be wiggle room in the price and could grow that cash on cash return.

Next: Figure out if that is a good COC or not, age of equipment, if its over 10 years how soon we'll have to figure in replacement and that might zap the cash flow pretty quickly in planning to reinvest.

Thanks @Jordan Berry I’ve listened to the first couple episodes of your podcast. Great job on it, it’s definitely better than the others that are out there. I’ll have to take you up one a coaching session in the future. I want to absorb more information and work on my plan first. I think I have a great opportunity to start something where I live. We’ve been without a laundromat for 7 years, the town keeps growing and we’re a major travel destination for Telluride and Ouray.

Originally posted by @Jordan Berry :

@Steve Haag Thanks for the compliment on the podcast! Sounds like you have a good opportunity in front of you potentially. Definitely let me know if I can help out in any way!

I have looked at a number of laundromats and I can not get beyond the cash management.  I do not have the time nor desire to go and collect money every day.  I do not think hiring someone to manage cash is a wise idea, it would be easy to skim.  I have a day job as an agent selling RE to investors.  By night I have my own growing portfolio of 15 properties.  

It would have to be a largely passive activity for it to work for me.

 

@Lesley Resnick

The way to make it much more passive is to buy a card store. Or buy a coin store and convert it to a card store. The card payment systems simplify the already simple business dramatically. No fussing with coin collections, much richer data available, remote machine management, and accountability and tracking systems are some of the perks.

For me, as an investor in real estate and laundromats, it's tough to pass up the significantly higher cash returns of a laundromat for the inconvenience of a couple of hours of management a week (that can mostly be outsourced). But it's also definitely not for everyone.

Originally posted by @Jordan Berry :

@Lesley Resnick

The way to make it much more passive is to buy a card store. Or buy a coin store and convert it to a card store. The card payment systems simplify the already simple business dramatically. No fussing with coin collections, much richer data available, remote machine management, and accountability and tracking systems are some of the perks.

For me, as an investor in real estate and laundromats, it's tough to pass up the significantly higher cash returns of a laundromat for the inconvenience of a couple of hours of management a week (that can mostly be outsourced). But it's also definitely not for everyone.

Do you have the card readers in your laundromats?

I have looked into the card readers and love the idea.  The fundamental problem is most people here who use laundromats do not have bank accounts and even fewer have credit cards.  How do you address that?

 

 

@Lesley Resnick that's definitely a concern. The way to address that is to install a card system that uses a branded card that can be loaded with cash or credit and is used only at the laundromat. You can incentivize customers to embrace it by offering promotions like a free wash every X number of washes, discounts on certain days/times, buy $22 on your card for $20, etc. 

@Jordan Berry - just signed up to your site and added your Podcast to my Spotify list. I just relocated to Jacksonville, FL, from Boston, MA where I just flipped my first RE property prior to moving. Looking to gain a bit more education into the laundromat sector but once I am there, will be looking to purchase my first one. Thank you!