People want to own laundromats because they have dependable cash flow and economic stability, are flexible part-time commitments, have no accounts receivable (laundry is paid 100% upfront), require very few employees, and require no sophisticated business skills.
Important factors to consider when purchasing a laundromat include:
Quality and reliability of the records and documents provided during due diligence.
Length and terms of the real estate lease.
Verifying revenue collections and observing operations during due diligence.
Age and condition of the equipment.
Awareness of the local market demographics and level of competition.
Coin laundries are highly specialized, but these are the main points that industry newcomers tend to overlook. Engaging an experienced laundromat professional to assist in the vetting process can make a huge difference.
The purchase price of a coin laundry can range from $50,000 to well over $1,000,000. A laundromat’s price is largely determined by a multiple of its annual net earnings; the more the business earns, the higher the purchase price. A good rule of thumb is for every $10,000 of purchase price paid, you can expect net earnings between $2,000 - $2,500 per year. Therefore, a 20% to 25% ROI is typical for a laundromat investment.
The biggest mistakes occur when Buyers do not:
Verify the income and expenses: There are several checks and crosschecks used to determine a reasonably accurate picture of the store’s true income and expenses. If you are not already well-versed in these methods, get assistance from a trusted industry professional early.
Understand the terms of the real estate lease: Restrictions in use, option period terms, future assignability, total rent expense, and scheduled rent increases are some of the terms that can affect the current and future value of the business.
Properly capitalize: Lack of free cash is one of the top reasons businesses fail. Buyers should have sufficient capital for a 30% down payment, with enough cash leftover to cover 3 to 6 months of expenses.
The buying process is your opportunity to “look under the hood” of the business before you part with your money and assume the responsibilities of ownership. Use this opportunity wisely!
Successful laundromat owners focus on the basics and do them well:
Select a friendly and helpful cleaning crew.
Ensure the entire laundromat is kept clean and well-lit.
Keep the equipment in good working condition.
Keep the bill changers full.
Keep the interior updated and well lit (paint, flooring, furnishings, etc.).
Really successful owners also:
Advertise regularly: it introduces your business to new local residents.
Monitor their competition’s current pricing and equipment upgrades.
Remember: Although your time spent at the business is flexible, you won’t maximize your laundromat investment by being a 100% absentee owner. Successful owners visit their stores regularly to ensure they are running in top condition.
Yes! Most coin laundry acquisitions are financed by industry specific lenders who typically require down payments of 30% to 40% of the purchase price. Of course, all loan approvals and terms are subject to the lender qualifying both the Buyer and the laundromat.
The primary fixed operating expenses are:
Utilities -- gas, water, and electricity
Equipment maintenance and repair -- parts and labor
Staff -- cleaning crew, attendants
Vending supplies such as sodas, snacks, soap, etc.
Debt service (i.e. loan payments), if you financed the laundromat purchase
Some expenses are flexible with the owner’s time and effort such as equipment repairs, employee hours, and marketing.
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