Laundromat Resource Forums Laundromats Acquisition – Need Advice!

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    • #3973

        I am currently in the process of purchasing an existing location in a rent-heavy neighborhood. This location has a large parking lot, a 2-bedroom apartment, and another 500 sq ft store front. The main storefront is 1,500 sq ft, which the laundromat occupies. The current owner and his wife (both 73 and want to retire) attend the laundromat full time and operate a wash/fold service which makes about $1,000 a month. There’s about 20 machines and 30 pockets. It seems like a lot of equipment for the store size. The equipment is about 12-13 years old and he has a couple dryers out of order. According to his revenue sheet- he makes about $3,500-$4,000 a month. The building itself needs quite a bit of work. New floors, new paint, new exterior paint (or replace the old wood siding with vinyl), new fold tables, and NEW EQUIPMENT. My quote on new equipment from a Continental distributor was $280,000 for 16 washers and 26 pockets. Mostly bigger machines.

        My plan is to buy the building with hard money, run it “as is” while rehabbing it, refinance it, and take the equity out for a down payment on machines. I have experience in multi families and flipping so I have a team of contractors for this scope of work. I am fearful that new equipment will cost too much with a monthly payment close to $4,000 a month. I have been told by a mentor/consultant of mine that I should seriously consider investing in the business first, opposed to the real estate because it will pay off faster. However, I am looking to keep my monthly costs low and get the real estate fixed up before the machines. I also believe financing is easier for machines as opposed to having $280,000 worth of equipment on my credit then going for a refinance. Banks may not like that.

        The asking price is $215,000. I am going to offer $150,00 as the building needs a lot of work and obviously new equipment. My hard money loan will be for $200,000 which gives me $50,000 for repairs. I have cash as well if more than $50,000 is needed.

        If anyone has any sort of experience on this, please feel free to share your strategy, advice, or any sort of input.

      • #4025
        Jason Dodge

          The strategy sounds solid. I like this BRRRR method approach. You can have the laundromat do a formal lease for its space and crank up the rent so it increases the value of the building as well. The rehab of the building shouldn’t take too long so doing the laundromat 2nd shouldn’t be an issue. When you say he is making $3000 to $4000 a month is that NET income or gross sales. People tend to get those confused, just wanted to verify that income stated was correct. Assuming demographics are good and competition is in check, I’d say go for it.


        • #4187
          Dan Arnett

            Total newbie, but the biggest “unknown” to me is what level of confidence do you have that the rehabs will put the building at where it appraises for what you need it to in order to clear the hard money? And I do not mean that crappy, I just think that sometimes commercial buildings and appraisals are not as cut and dried as residential ones can be. Additionally, and I default to the veterans, is it an option to consider retooling the new equipment in phases so that you can see if its worth it without such a payment at first?

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        Laundromat Resource Forums Laundromats Acquisition – Need Advice!