What do you guys think of laundromats? I’m considering [only considering!] building a small piece of commercial property - with the anchor store being my laundromat - and then leasing out the other commercial units to help cover cashflow.
I already know the brand of equipment I’ll buy…it’s quality stuff, at a reasonable price…not overpriced like that Speed Queen junk. I know a guy who spent $250k on equipment alone - what a nut!
I’m thinking I’ll consult with a steel building construction company to get an idea of what I’ll be looking at in engineering/construction costs…and then I’ll focus on snatching up a reasonable piece of commercial real estate that’s zoned retail. You can easily overspend on commercial real estate, but there are deals out there, and I’ll find one.
I know a woman who bought two Laundry mats and was thrilled to get them. She said everyone she talked to told her they were great money makers and banks loved laundry mat owners.
I was more skeptical, especially since the previous owner declared bankruptcy, she choose not to take my advice obviously. Right now at very best she would be breaking even and instead of doing what she planned (Real Estate Investing) she is managing a laundry mat and pretty unhappy.
If your still interested make sure you crunch the numbers multiple times with different scenarios. If you’ve ever run a business you should be fine, but don’t think of it as and Investment because its not, its a seperate buisness.
Those startup costs are what are going to make it or break it in my opinion, if you spend $250k on machines like the other guy how many quarters is it going to take to recoup that? Have you considered looking for a bankrupt laundromat to buy the equipment? I’d bet you can buy their stuff for a quarter of what they paid for the machines new and with a little bit of work I’m sure they will run just fine for you.
Yeah, that $250k equipment only cost - not counting the land, building, etc is insane. I wouldn’t even consider it. I can purchase my equipment new for a fraction…literally a fraction…of that cost. The land & building costs are what I’d be concerned about.
Maybe I’ll just get into SFH’s, and when I’m ready to graduate to owning commercial property open a laundromat in one of the pieces of property I pickup. =) We’ll see.
The nice thing about a laundromat, if setup correctly, is that it can generate $10k+ a month in net profits and be fairly passive. You just need to hire someone to go there once a day and clean the place, and you can go & collect / count coins once a week. Nice & easy.
I would find someone that is running laundromats successfully and do exactly what they are doing. I would not listen to people who say they don’t work and I would not try to reinvent the wheel. Do exactly what the successful guys are doing.
There is one near me that is doing quite well I would guess. They do a lot of radio promotion to promote their free drying (with wash). They also hold free wash and dry events where all washing and drying is free, they do this with the local radio station and promote the s**t out of it. Supposedly its clean, has good machines, and has an area for kids, etc so it does well. Its called Precison Wash and Dry if you’re in the CT area and want to check it out.
The problem with mom and pop size laundromats is that the GIANT super laundromats are making these smaller places sell or go out of business…Also in 2006 insane energy prices coupled with competition from well funded supermats made the smaller locations obselete…Keep in mind that the huge cost of a laundromat is NOT the equipment,it’s the plumber,electrician,carpenter,tile guys, etc…Equipment is nothing in the grand scheme of things…Locations cost money,rent costs money,construction costs money,equipment leases come with hard money type interest rates,and competition is everywhere…I have been in cash businesses for over 20+years and I have researched laundromats in detail and have yet to buy one…Neighborhoods are extremely important,you can’t put a laundromat in a high income area then if you decide to put one in a low income area say hello to home of the supermats…These places have internet stations,play stations,areas for kids to play,food,vending machines etc…And your little 20-30 machine place seems like the desert and no one will be coming and you will have something that cannot be sold…Hence bankruptcy…BE CAREFUL…The rule of thumb in business is simple,no one sells anything that is making them money…
When I was in commercial banking a number of years ago, one of my customers owned about ten laundromats, and these suckers just PRINTED money. (We used to joke that he’d be an even better customer if he didn’t make all of his deposits in quarters…)
This book is AMAZING. I contemplated getting into laundromats, too, but I am waiting until I can own the store as opposed to leasing.
The wonderful thing about laundromats is that they are entirely demographics driven. If you know an area’s demographics, you should know with 95% certainty whether it will work or not before you even put one nickel out there.
The other great thing is that stored value cards and readers now make it possible to vary the price of the wash during the day in accordance with demand. Also, you can bump up prices a nickel here and a nickel there without anyone getting upset, but those nickels add up turn after turn. You can’t really do that with quarters.
In short, if you do your homework, a laundromat can be a real home-run.
I have always been a big fan of laundrymat but my CPA and well as 2 mortgage brokers I know well always say, STAY CLEAN. I live in South Fl, and area where we have many of them. Many will cashflow, but problem is, you need to have them attended the whole time which can eat into your cashflow. Also when your offering services like drycleaning (the big guys do) or drop off and pick up, you then have to deal with the customers claiming you ruined their clothes which is a whole new line of headaches,
If you run your store unattended, then you will deal with people breaking into your coin machine to steal the money. YES is HAPPENS. You also need to be prepared to empty your coin machines ever 2 -3days if your busy, plus you do not want to leave all your income just laying around. These machines are not built like safes and theifs know how to get them open quick.
Your the one that will want to collect your cash, as you can not trust the attendant you hire, or you need a trusted family member or business partner. YOu need to be ready to handle emergencies and alot of people who own these places know how to fix the machines themselves to keep cost down. I have looked into several and only meet a small percentage of people that hire someone to fix machines because of the cost.
And do not think about taking a 2 week vacation away from home unless you have someone to check up on the place every couple days and empty and refill the coin machine…
Coin machines: I’d go with stored value cards as opposed to coins. Why count quarters all night long when people will put a $10 or $20 bill in your machine?
Fluff-n-fold: Let someone local run their own fluff-n-fold service from your store in exchange for them being there and keeping an eye on the place. You’ll be putting someone else in business and you’ll have someone on site for free. Sure, you could hire someone to run this business for you, but regrettably they are likely to keep some of the money for themselves, anyway. If you make it clear that the fluff-n-fold business is NOT part of the laundromat, you can absolve yourself of the liability of ruined clothes.
cash cards have alot of pluses…Such as people lose them,foget how much is on them and discard them with money left,all of your money is in one location vs going from machine to machine to collect them…I’m not saying it’s a bad business but in the area needed the competition is tremendous and I personally wouldn’t want to compete with supermats nor would I want to be on the hook for that kind of capital incase it didn’t work out…Small laundromats are a thing of the past in the desired areas that utilize these places…You must be well funded and prepared for occupying a 5000 sg ft place to eliminate other competitors…Also the new craze is supersized dry cleaners,slowly hurting the mom and pop dry cleaners as well…There are so many niches these people use…I personally like the idea of pick up and drop off drycleaning and laundry…Door to door in more affluent highly congested areas…People pay top dollar and the competition is a fraction in comparison to the store business…Also look into buying an institutional laundry business vs the run of the mill coin/cash card type…You can put your facility anywhere and it’s a much more lucrative business…Laundromats are so running with the herd type of business…Can you make money,sure but there is greater chance of failure…Also keep in mind why would someone sell such a good business that is basically absentee run…Why sell something that you can go and collect your money and leave…Also I would never give up my wash and fold business in exchange for a relaible worker…I’m taking the risk,I’m putting up the capital, I want ALL the money…People with nothing deserve a salary,if they are very good you can give them a % of sales plus salary as a bonus…
Keep in mind that there are people that can be hired to evaluate a store for you…You have to check water bills,gas bills and a host of other things to determine if the seller is telling the truth or not…It’s worth the money before you put up serious capital…I’d rather lose a 1-2k to have a qualified experienced person give these business a once going over before I commit capital…They are out there or better yet you can inquire at equipment facilities and they will assist you also…