buying a laundromat
anyone here ever look into buying a laundromat? there is one listed for sale on bizbuysell in my area for pretty cheap and going to reach out to the owner who listed it cause why not. seems like a decent business. spent the past two days reading laundromat forums and stuff. could you execute a roll up strategy buying laundromats? there don't seem to be many synergies other than pricing power, if you could buy all of the laundromats in an area then you could raise the price at each laundromat and not lose customers, or not lose that many customers if you owned most of the laundromats in the area. would a collection of laundromats in different locations throughout the country be more valuable than one single laundromat, so sniping random laundromats from bizbuysell and assembling a platform could lead to multiple expansion? there are a lot of random laundromats on bizbuysell, my intuition says that a rollup of laundromats conventional thinking would be that it would have to be regional but who knows maybe you could come up with a good setup to manage lots of small unattended laundromats in different areas throughout the country. could it be a good strategy to go out and snipe some small unattended laundromats, try and assemble a platform of them? how many laundromats would you have to snipe for the platform to be attractive to some some sort of small buyer? based on my research over the past two days I'm liking the idea of buying these small unattended laundromats and keeping the operation extremely simple, set auto unlock on the door for morning and auto lock for door at night, auto lights on in morning and auto lights off at night, no pick up and drop off service. that way you only need to hire a cleaning crew to come in at night and someone to collect the coins and make sure the coin changer is stocked which I could do myself at this one near my house but might be tougher to find some trustworthy person to do it if I bought a remote laundromat. based on my research these smaller laundromats might sell at somewhere near 3x earnings depending on the age and condition of the existing washers and dryers. seems like a capital intensive biz, as you can't just do some biz development grinding and increase sales which is something that might make the laundromat game less appealing from a business perspective. I could see biz dev grinding being pretty impactful for something like a fast food place or something. thoughts on the laundromat business? should I buy this laundromat that is listed for sale? I think that laundromats and gas stations are the two most often listed businesses on sites like bizbuysell.com, laundromats seem less operationally challenging and like more simple businesses than gas stations, maybe there are groups out there sniping laundromats regardless of location but if not maybe laundromat sniping is the move. what are your thoughts?
also forgot about needing someone to coordinate the manage maintenance of the machines if a machine breaks. look I understand that no business is fully passive or easy just seems like the laundromat business for a small unattended store can be made extremely simple operationally. and maybe most of these small unattended stores are owned by mom & pop type ownership. since big money would be going after larger sized laundromats. unless there is already some kind of platform company doing what I'm saying and just buying up these tiny laundromats?
operationally you take over these small mats, implement auto door locking auto lights sophisticated camera system that can be remotely monitored. then fire employees if you have them. pay person twice per week to stock coin changer and empty machines for coins and take them to the bank, pay cleaning service daily to come in and clean the place. boom. money. only problem is how do you make sure your coin changer/machine emptier guy isn't skimming money off the top?
this laundromat owner is not using a business broker to sell the laundromat. maybe I could structure a good deal. I'm going to try and see if they will go for owner financing a portion of the purchase price so that way I don't have to worry about obtaining a loan, although there are some laundromat lenders that I have found like eastern funding so I may explore that avenue as well. I've read online that laundromats are typically priced so that the buyer can achieve 20-25% returns. this business isn't broker listed so I would assume that there would be more upside or also more downside to get screwed if I don't know what I'm doing.
- The biggest expense for a laundromat is the hardware. Age, efficiency, any credit line against them, etc is really, really relevant. Are the machines old? How was the service previously? Are they coin-only or with digital acquiring? How often were machines broken into and was it repaired correctly? A decent, large machine from Dexter, Huebsch, SpeedQueen, etc is between 7K-20K, that is excluding really large machines. Renovating 30-40% of a laundromat in this area will cost you 150-200K.
- Most laundromats don't own the space they are in, so make sure you have a long enough lease to make your money back. Also, rent will probably increase every year. The RE part is the tricky one for me personally.
- The initial capital expenditure for a laundromat is higher than for other businesses since you are either leasing or owning the machines, the heating system, and all other equipment. There are ways around this, but at the end of the day this type of business is not like a corner store that sells beer and chocolate bars or something.
- Location is relevant, most laundromat customers live not that far from the service. Make sure there are many apartment buildings, high-rises, no plans to build new apartments, college towns are good, but also tourist destinations with high footfall, etc
- A laundromat business is NOT passive income. It takes enough time and effort to renovate, fix things, call service teams, deal with difficult customers, deal with police after a break in, managing staff, create adjacent business revenue, upsell, marketing, legal stuff etc etc... realistically, I don't believe a one-man business can manage more than 3-5 laundromats efficiently.
- Research has shown that in many areas, people prefer to be in an attended laundromat. This will add cost, but maybe it will make sense and customers may feel safer or have someone to help with stuff.
You will see that there are a lot of laundromats available that don't look too expensive. There is a reason for that. Either the machines are too old, or there are other issues nobody knows about. I have seen one laundromat where regular drug sales were happening in the bathroom, just as an example. Another one was used as a nightly sleeping quarter by a bunch of homeless dudes. You never know what to expect unless you have witnessed the area for a longer time.
According to my research around laundromats, the lower margin ones are around 15%-25% ROI, the well managed ones with lots of upsell you can expect 30%-35%.
this is awesome. thanks for this. yeah one of my concerns going into it is that the equipment is all too old since it seems like he started the biz 9 years ago and laundromat equipment from what I've read might last 10-15 years, so I'd be paying hella for old equipment that is probs about to be done for. everything makes sense though at the right price right. will just have to see what happens when I get some info from the seller and go from there. do you own any laundromats currently, or have you simply done a lot of research into buying a laundromat? still I think if I knew what I was doing I could structure a good deal as the seller has directly listed the biz for sale. I'm probs going to do some consulting with some laundry dudes I found online if I pursue the idea. let's see what the seller has to say first, I am kind of getting ahead of myself here however I became excited about the idea after I did some reading about how the laundromat biz is so fragmented and operationally efficient and so many laundromats are being listed for sale. this laundromat that I am looking at is being listed for 100k.
I own small businesses and I am looking at going into laundromats. The problem is you have to carry out your own due diligence. Information from the seller isn't reliable. He can tell you anything and you wouldn't know what to do with the information. The negative stuff will be held back anyway.
DD for a small business can be expensive, since you have to hire people for this.
10 year old machines will have issues.
And honestly, how many sellers say "they are retiring from the business". this is BS. they can't turn a profit or it isn't worth the trouble.
For the price of a laundromat you can buy a LOT of other business types.
few more data points:
- Did you notice that during/post Covid there are suddenly MORE laundromats available? Why is that? People wash their clothes less frequently due to WFH, no commute, no visits, no vacations, etc. Children play at home, etc. This is a risk.
- Energy, utilities/gas are more expensive now than before, and they will be more in the future. This is another issue for laundromat operators.
- Almost 50% of Canadian laundromats went out of business in the last 10+ years. Weird, because Canada had an increase in population (from mostly Asia/India, but also EU) and many immigrants don't always have access to laundry rooms and most immigrants are often low-income.
I met lots of laundromat operators who are flippers. Meaning they buy bankrupt/defunct coin ops, then renovate, do marketing, etc.. turn a profit and then sell them within a year or two. They are in the business of flipping, not operating a laundromat - beware of those.
InvestmentJoy is a YouTuber that buys laundromats and posts frequent updates videos about how they're doing, good look into the lifestyle.
He is good youtuber, and a sociable guy. I like his content. But Ohio (or rest of working class Midwest) isn't comparable to most of the other locations in the US for laundromats. 0$ purchase plans for small business are not always the best way forward for every person. It is one avenue though.
come here to post this as well.
you'll need to count your own coins/paper, cos a low paid employee will 100% skim that.
have a client who runs a few of these, labor is his biggest complaint but the financials are good, >50% margins (goes to him since it's s corp)
I used to have a client who owned a couple of these as well. Shouldn't need more than a couple part time employees to keep the place staffed. Water and chemicals cost along with Cx are also going to be the some of the larger expenses in terms of on-going maintenance long-term
Make sure the site is environmentally OK. Some facilities used to have Dry Cleaners that were in operation before a lot of the current regs went into place and the sites became problematic as a result. Meaning if you were to try the buy the building down the line, you may be in for a surprise. This was our experience with a couple locations in CA, had trouble clearing the Phase I's when we went to provide financing. CA is pretty crazy about Environmental Regs though so maybe that isn't an issue
I for one, believe in paragraphs.
I’d prefer starting a food truck and hiring someone to run it or doing AirBnBs over a laundromat.
bad news, unfortunately the seller is already under contract with another buyer who is currently seeking bank financing. I am now exploring laundromats in other locations.
how much capital and leverage are you going to take
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