Coin Operated Laundry or Car Wash? Question please.
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Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
14yGreg you would need to check water and sewer rates for the city or county you want to buy this in.
How much are the water rates compared to other areas?? Are there special assessments coming to fix the aging water and sewer systems at the the roads??
Have they been increasing water rates over the last few years or have they not increased the water rates for years and a big jump is fixing to take affect??
Have you looked into add backs?? If the owner is operating the business and you won't be you will be employing a manager so will lose that profit off the top as an absentee owner.
Those machines are expensive to replace so you would need to see how old they are.It's just like an old house or building with deferred maintenance.Everything might work when you buy it but the chance of things stopping to work will happen very soon and cost a bunch of money to fix.
You always buy the assets and NOT the liability.I can tell you I have had people come to me AFTER the fact buying partial ownerships into corps etc. and they are stuck.I do not know who advised them to do this but they were an idiot.
Now I have had to help them pick up the pieces.With the coin laundry or car wash make sure the building is owned so the lease doesn't keep going up or renegotiate the lease as part of the purchase.
Looking at books is fine but owners tend to manipulate the books and not the tax returns.The tax returns are usually more telling but people can lie on those as well but that takes big balls and doesn't happen often.If the coin laundry is older make sure if you own the building there is not galvanized going to the street for the water main.It's very expensive to dig up the road and replace with a copper line.You will also want to have the EPA phase one to make sure there is no contamination of the soils.
For competition you can look at applications for permits,businesses and new site plans in the city or county you are buying in.
You can also instead of buying outright have a 3 month period of running it with an option to purchase at the end of that 3 months.This way you get to see how it runs and decide if it was everything as presented or they were trying to "dump a dog" on you.
If they strongly oppose this they might be hiding something.I can see losing a small amount of option money if you walk away and not exercise the option but that is better than being stuck in a bad property.
30 Replies
- Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes14y
Interesting that this should come up today. I read this morning of a court in California were the new owners of a car wash were held liable for wages and salaries of the previous company's employees. Didn't matter that there were no records. It also didn't matter that the new employer paid employment taxes timely since taking over.
Purchasing businesses can be profitable, but you certainly want to do your due diligence. Typically though I would suggest only buying the assets though. There can be many hidden liabilities when purchasing the business out right.
- Hatfield, PA · Member since 2012 · 1k+ posts · 629 votes14y
Originally posted by Charles Perkins:
the new owners of a car wash were held liable for wages and salaries of the previous company's employees. Didn't matter that there were no records. .That is why you only do an asset purchase and your contract spells out clearly that this is the prior owner's obligation. More importantly, proper legal counsel is needed to avoid such scenarios.
Also for car wash or coin op in a small town, I watched a new laundromat come into a small town, and put the older one out of business. Be REAL careful.
- Real Estate Investor · Toronto, Ontario · Member since 2010 · 413 posts · 114 votes14y
Met a guy who would start up coin operated car wash in strategic areas and once he showed a profit for a number of months would flip the business to one of the big franchise car wash companies. He did this a few times and did very well from what I hear.
- Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes14y
Greg you would need to check water and sewer rates for the city or county you want to buy this in.
How much are the water rates compared to other areas?? Are there special assessments coming to fix the aging water and sewer systems at the the roads??
Have they been increasing water rates over the last few years or have they not increased the water rates for years and a big jump is fixing to take affect??
Have you looked into add backs?? If the owner is operating the business and you won't be you will be employing a manager so will lose that profit off the top as an absentee owner.
Those machines are expensive to replace so you would need to see how old they are.It's just like an old house or building with deferred maintenance.Everything might work when you buy it but the chance of things stopping to work will happen very soon and cost a bunch of money to fix.
You always buy the assets and NOT the liability.I can tell you I have had people come to me AFTER the fact buying partial ownerships into corps etc. and they are stuck.I do not know who advised them to do this but they were an idiot.
Now I have had to help them pick up the pieces.With the coin laundry or car wash make sure the building is owned so the lease doesn't keep going up or renegotiate the lease as part of the purchase.
Looking at books is fine but owners tend to manipulate the books and not the tax returns.The tax returns are usually more telling but people can lie on those as well but that takes big balls and doesn't happen often.If the coin laundry is older make sure if you own the building there is not galvanized going to the street for the water main.It's very expensive to dig up the road and replace with a copper line.You will also want to have the EPA phase one to make sure there is no contamination of the soils.
For competition you can look at applications for permits,businesses and new site plans in the city or county you are buying in.
You can also instead of buying outright have a 3 month period of running it with an option to purchase at the end of that 3 months.This way you get to see how it runs and decide if it was everything as presented or they were trying to "dump a dog" on you.
If they strongly oppose this they might be hiding something.I can see losing a small amount of option money if you walk away and not exercise the option but that is better than being stuck in a bad property.
- 14yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
Good post Joel! I guess the thinking of the OP is that the car wash and laundromat can both be part time kinda passive business investments. Well, if it's a full service car wash (vs self service coin op) then it won't be. However, the laundromat bares little resemblence to owning real estate. A self service car wash is somewhat real estate related in that the land is usually owned, not leased. Sometimes, the car wash is used as a tax payer while the land is ultimately held for a higher and more profitable use.
Other, buisness/investments along similar lines are golf course paractice facilities, surface parking lots, outdoor flea markets, gravel and dirt pits, christmas tree sales, and tent furniture sales.
- Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes14y
Joel Owens very good perspective. I'd just like to add that you will want to check out the environmental laws and regulations associated with those businesses. Many times there are changes coming that can be very costly, much like with gas stations having to change out tanks etc., and before changes go into effect, owners sell them. Just get to KNOW everything about car washes and laundromats there is as far as regulations.
- Investor · Mission Viejo, CA · Member since 2012 · 627 posts · 204 votes14y
Get a Phase I Environmental Site Assessment - the car wash could have been a gas station, and the laundry may have been a drycleaners.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes14y
Just fyi, people over load washers and dryers, you need to be able to make repares, they also wash the nasty stuff at a laundry mat so it's not in the`washer at home. like dirty dog beds.
I have finanaced both, they can make money, but it is earened, the car wash folks said they found everything but human body parts in the pits. Want to clean out your horse trailer......go to the car wash.
Both can be everyday labor intensive. Nothing is easy money at retail........with the public.
- OH · Member since 2011 · 38 posts · 4 votes14y
Greg P.
I looked at a laundry mat about a year or so ago. I really liked the property and would have purchased if I had not move. What I really liked is that I was buying the business and the PROPERTY at the same time and it included a smaller separate building on the property that had a hair salon and auto repair shop renting. I would have been getting income from two rentals while running the laundry. This was very appealing.
I asked for 3 years of utilities so that I could see trends in how much they costed and whether I could save money. I was going to keep the current employees that they recommended and get replacements for the others. I wouldn't have changed much for the first few months.
If you want PM me your email and I'll send you the excel stuff I did. Nothing that great but it will give you an idea of what I was looking at and possibly a template for future due diligence.
I know that a lot of the posters above caution the purchase of a coin op laundry but they can, and many times are, sound investments.
Good luck.
- Pomona, CA · Member since 2013 · 9 posts · 2 votes12y
Originally posted by @Michael X.:
Greg P.
I looked at a laundry mat about a year or so ago. I really liked the property and would have purchased if I had not move. What I really liked is that I was buying the business and the PROPERTY at the same time and it included a smaller separate building on the property that had a hair salon and auto repair shop renting. I would have been getting income from two rentals while running the laundry. This was very appealing.I asked for 3 years of utilities so that I could see trends in how much they costed and whether I could save money. I was going to keep the current employees that they recommended and get replacements for the others. I wouldn't have changed much for the first few months.
If you want PM me your email and I'll send you the excel stuff I did. Nothing that great but it will give you an idea of what I was looking at and possibly a template for future due diligence.
I know that a lot of the posters above caution the purchase of a coin op laundry but they can, and many times are, sound investments.
Good luck.
Hello- Just came across this post. Do you still have those documents? I would love to take a look at them. I am currently looking to possibly invest in a laundromat.
Thank you in advance.
-Jason
- Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes12y
Originally posted by @Jason Nevaril:
Originally posted by @Michael X.:
Greg P.
I looked at a laundry mat about a year or so ago. I really liked the property and would have purchased if I had not move. What I really liked is that I was buying the business and the PROPERTY at the same time and it included a smaller separate building on the property that had a hair salon and auto repair shop renting. I would have been getting income from two rentals while running the laundry. This was very appealing. I asked for 3 years of utilities so that I could see trends in how much they costed and whether I could save money. I was going to keep the current employees that they recommended and get replacements for the others. I wouldn't have changed much for the first few months.
If you want PM me your email and I'll send you the excel stuff I did. Nothing that great but it will give you an idea of what I was looking at and possibly a template for future due diligence.
I know that a lot of the posters above caution the purchase of a coin op laundry but they can, and many times are, sound investments.
Good luck.
Hello- Just came across this post. Do you still have those documents? I would love to take a look at them. I am currently looking to possibly invest in a laundromat.
Thank you in advance.
-Jason
Jason pm me with your email and I will send you my tpd worksheet. I was very close to closing on a laundry. 3 months of due diligence disappeared when the appraisal came back way low. It was going to be financed by sba.
- Pomona, CA · Member since 2013 · 9 posts · 2 votes12y
Hi Frank,
Thank you much for your quick reply. My email address is [REMOVED] The system would not let me PM you.
Looking forward to this potential investment, just wanted to make sure my bases are covered. Real Estate is my passion and expertise but looking to diversify and make a bit more with a little less upfront investment.
Thanks again, Cheers!
-Jason
- Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes12y
@Jason Nevaril use the "follow" link under a member's avatar and send a colleague request. After they accept, you can send each other PM's.
- Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes12y
Just wondering if anyone has heard of pipes freezing or other weather related problems at quarter car washes with this brutal winter we have had? One of my houses had pipes freeze several times and I had to wrap them with heat tape.
I would be hesitant to buy a quarter car wash for that reason alone. We also have tunnel car washes that only charge $2 all over town. I think it would be very difficult to compete with those.
- Mechanicsburg, PA · Member since 2013 · 3k+ posts · 2k+ votes12y
Is right on, both of these retail businesses are labor intensive and not passive. People are rough on the equipment and there are going to be breakdowns that need repaired. The OP didn't say where he was considering investing in car washes, but the extreme winter this year has a big negative effect on the car wash industry.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes12y
Many of the older ones in rural areas are closed and winterized. Newer car washes, DIYs, are in heated buildings but that doesn't keep some from freezing up. I believe now the soap has an a anti-freeze of some kind, mentioned by an operator. Water is recycled as well, so they have fewer issues as the old ones.
I got married on the coldest day here of the 20th century, before I got there I washed my car, ice formed immediately and I showed up with a rolling ice cube. I think my mind was on other things that day, LOL.
- Investor · Ogden, UT · Member since 2014 · 98 posts · 10 votes12y
I was / am interested in vending machines. I came across an excellent forum of vending owners. Well, coin-op laundry is vending (as are car washes, though talked about much less) and there are many experts on this site that may have more intimate knowledge in this field.
Here is the site: http://vendiscuss.net/
Here is the specific forum: http://vendiscuss.net/index.php?/forum/16-other-vending/
Give these guys a go. They know their stuff.
Cheers,
PS Didn't realize this was such an old post. You can ignore.
- Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes12y
good website for vending info.
- Specialist · Anniston, AL · Member since 2013 · 59 posts · 32 votes12y
I own a chain of laundromats and I am still expanding. With the right investigation, understanding and plan they are one of the best passive income businesses I have found.
What other business has customers pay you so they can do the work.Contact me If you are looking for a Laundromat, Equipment, Consulting or any other information.
Online.WashinCoinlaundry.com
- Princeton, KS · Member since 2014 · 357 posts · 169 votes12y
Keep in mind - some folks (like me!) have never used a car wash or don't even own a car, but everybody has to wash their clothes - hopefully on a repeat basis!
- Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes12y
What does your marketing campaign look like for new and existing customers? I'm suppose to close escrow on a laundry in a week or so and have been penciling ideas. It is an existing business that is fairly clean and operating. I was thinking deploying alot of yard signs and door hangers... change of ownership... etc.
- Specialist · Anniston, AL · Member since 2013 · 59 posts · 32 votes12yMy first focus would be to freshen things up a little. Send me some pics and I'll give you some suggestions. It may just be some paint and signs but a slight change will show the existing customers you want to make improvements. A bit more info would help: Attended or unattended ? Drop Off Service? Card or coin? [email protected]
- Real Estate Agent · Bloomfield Hills, MI · Member since 2014 · 117 posts · 30 votes11y
I am submitting an offer on a coin wash this week. My offer is an owner finance at asking price for 7 years, the monthly payment will be around $1500 with no money down but I will need to do at least a new roof for $20,000 within the next 2 years. The building is a little neglected but those are the best opportunities :) If you are considering a car wash purchase try to do it with owner finance and as little down as possible....the 3 month+ option is a great idea here and I will put that in my offer.
For valuation use a multiplier of 2.5 to 3.0 of the profits to get a good faith value and consider any repairs and equipment age. Figure replacing pumps at 6 years ($600-1200 ea) and brushes yearly. Chemicals are cheap (100,000k gross location can run on $3500 in supplies) Auto Laundry News carwashmag.com is a tremendous resource for industry news and owner surveys. Having a touchless automatic bay helps big time with sales in the winter and will most likely be the majority producer. Other less expensive improvements would be adding credit card readers and in-bay drying systems. Do everything you can do to keep people in the bays longer, time is money! Also consider your time. You need to have someone clean the place daily, preferably twice a day. As an owner you should plan to be on site at least twice a week to watch your investment. Its a good idea to have extra equipment to such as an extra vacuum, coin acceptor, etc so when one goes down you can replace it immediately while getting the broken repaired.
Keep us posted and Good Luck!
Bill
- Investor · Southeast, MI · Member since 2012 · 2k+ posts · 1k+ votes11y
Originally posted by @Bill Bodziak:
I am submitting an offer on a coin wash this week. My offer is an owner finance at asking price for 7 years, the monthly payment will be around $1500 with no money down but I will need to do at least a new roof for $20,000 within the next 2 years. The building is a little neglected but those are the best opportunities :) If you are considering a car wash purchase try to do it with owner finance and as little down as possible....the 3 month+ option is a great idea here and I will put that in my offer.
For valuation use a multiplier of 2.5 to 3.0 of the profits to get a good faith value and consider any repairs and equipment age. Figure replacing pumps at 6 years ($600-1200 ea) and brushes yearly. Chemicals are cheap (100,000k gross location can run on $3500 in supplies) Auto Laundry News carwashmag.com is a tremendous resource for industry news and owner surveys. Having a touchless automatic bay helps big time with sales in the winter and will most likely be the majority producer. Other less expensive improvements would be adding credit card readers and in-bay drying systems. Do everything you can do to keep people in the bays longer, time is money! Also consider your time. You need to have someone clean the place daily, preferably twice a day. As an owner you should plan to be on site at least twice a week to watch your investment. Its a good idea to have extra equipment to such as an extra vacuum, coin acceptor, etc so when one goes down you can replace it immediately while getting the broken repaired.
Keep us posted and Good Luck!
Bill
With all of the $2 tunnel car washes in our area, is it hard for a coin operated wash to compete? When I was a teen, I used to wash my car at a coin wash and it cost about $2.50 to do it myself - 20+ years ago. Now, I can get my SUV washed for $3 and not even get out of the car.
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