| I am often asked what I personally look for when | | | | destination store. It is not likely that someone will be |
| buying a coin laundromat business. There are five key | | | | driving around with their clothes in the back of their |
| factors that I pay attention to. If any of these | | | | car and pop into your store to do their wash |
| factors do not pass the initial inspection, buyer | | | | because they just happened to be passing by. That |
| beware. | | | | being said, it is ideal if the location is safe, with |
| Ancillary Income | | | | something for the customers to do while they are |
| Don't forget to count the Ancillary Income that a | | | | waiting for their clothes to finish. In most parts of |
| store generates. This could be as much as 10% of | | | | the country, the majority of the customers that will |
| the Gross Income and makes a big difference to the | | | | come to your store will live within a half mile to a mile |
| bottom line. Ancillary items are vending machines, | | | | of the Laundromat and the majority of them live in |
| soda and snack machines, video games, pay phones, | | | | apartments. So choose wisely. Population density |
| internet kiosks, tanning beds, etc. The average | | | | does matter, and you would be smart to know what |
| margin on ancillary items is around 50%, so $1,000 a | | | | the density of residence living in apartments around |
| month of ancillary income would net $500 to the | | | | your store is, before parting with your money. |
| bottom line. Not bad, eh? Make sure you take this | | | | Water Usage of the Laundromat |
| into account when adding up the Gross Revenue and | | | | It is critical that you look at the water usage for the |
| coming up with your valuation of the store. | | | | last 2 years of business when determining whether |
| Age & Condition of Equipment | | | | or not to buy a store. In many cases the seller will |
| When looking at a potential store, make sure you | | | | inflate the reported income produced by the store in |
| get the exact Make, Model, and Age (if possible) of | | | | order to increase the asking price. This increase can |
| each machine. Most machines have this information | | | | be dramatic. A store's value is based upon a multiple |
| displayed somewhere on the machine. For top load | | | | of generally 50 to 60 times monthly Net Revenue. |
| washers, it is generally on the inside of the lid, or on | | | | For example, if the Net Revenue increases just |
| the back of the machine near the top. Front load | | | | $500.00 a month, the store value increases $25K to |
| washers will often have this information on the inside | | | | $30K. The Water bills are the key to unlock the truth |
| of the door. Dryers will often have the model | | | | about the wash and dry revenue of the store. The |
| numbers inside the dryer door or on the back of the | | | | analysis is a bit complicated but can be done on a |
| dryer. This information will be needed when you do | | | | spreadsheet. With this information in hand, you can |
| your water analysis of the store. Pay attention to | | | | tell if the claimed income is reasonable or not. NOTE: |
| the condition of the equipment too. Most front load | | | | While water analysis can be very accurate (plus or |
| washers and dryers have a useful life of 15 to 20 | | | | minus 5%), there are ways that an unscrupulous |
| years and top load washers, about 7 to 10 years. | | | | owner can fudge the numbers. So beware! A water |
| However, if well maintained, it is not uncommon to | | | | leak from a leaky faucet or hose bib can add |
| see dryers and front load washers lasting 30 plus | | | | hundreds of gallons of water per day to the bill. So |
| years and top load washers lasting up to 15 years. | | | | watch out when inspecting a store for leaks. |
| Remember, this equipment is not the same stuff you | | | | Lease |
| buy at Sears for your house. It is commercial grade | | | | The lease is one of your largest monthly expenses |
| and built to last. If the equipment is old and run down | | | | and can either make or break your business |
| when you are looking at a prospective store, you | | | | opportunity. The laundry equipment, electrical, and |
| can look forward to a very expensive upgrade soon | | | | plumbing installed in your Laundromat is very hard and |
| and increased maintenance costs until it is upgraded. | | | | expensive to move. So much so, that it is not |
| Top load washers cost between $800 and $1,500 | | | | economically feasible to move in the event your |
| and front load washers start at $2,500 and go up to | | | | lease expires. With that, one could say that the value |
| $9,000 or more depending on the size. Dryers can be | | | | of a Laundromat is only as good as the lease and |
| $4,000 each. So take the condition into account | | | | that would be a fair statement. When negotiating |
| when deciding on the price. Upgrading our store in | | | | your lease, there are 2 main points to focus on. The |
| Hayward, CA cost over $170,000 just for the | | | | total rent per month and the length. As a general rule |
| equipment plus installation. You get the point. | | | | of thumb, a rent of more than 20% of Gross |
| Location | | | | Revenue should try to be avoided. Also, rents that |
| We all know the saying 'Location, Location, Location' | | | | remain flat for a period of 5 years at a time or more |
| and for a Laundromat this is more the rule than the | | | | are the most desirable. The length of the lease needs |
| exception. The location of the store should be in an | | | | to be long enough for you to have a chance to |
| area surrounded by apartments on a major street | | | | recapture your investment and make a decent profit |
| and have plenty of parking. The ideal store would be | | | | for your efforts. Leases of 15 years or more |
| in a small strip mall with a café, donut shop, or | | | | (including all options) are good. Try not to have less |
| other eatery. Remember a Laundromat is a | | | | than 8 years total. |