Commercial Property W/Laundromat Inside & Addtl. Tenants

[Mitch Brunette]

Hi Everyone,

I’m new to the laundromat world, I’ve done research on a few laundromats over the years. Since then I have bought two single family rental properties and am back on the laundromat train for higher return on cash and business ownership. I found a property for sale, its a unique deal. The seller owns the laundromat and the building as one business rather than separating the two. Either way, seller owns both the laundromat and building. The building has 3 tenants aside from the laundromat. They have a 3 bedroom apartment, 1 bedroom apartment, and a pilates studio. Because they lumped the laundromat business revenue in with the overall building P&L it makes for a messy analysis and I’m looking to see if anyone has any experience trying to separate the two. Here are some additional thoughts:

1. The laundry doesn’t pay rent to the building. If the laundry did pay rent, it would increase the cash flow and NOI of the building of course, but the laundry would hardly stand on its own.

2. The building does have separatey metered utilites.

3. The laundry and building have very low maintenance expenses, as in, I’m worried they are covering something up, low. The owners owned 2 other launderies and am worried they sheltered maintenance costs in another location potentially.

4. Aside from what i said in item 3, the broker seems legit and very open to my questions. I’m concerned however that the list price of $675k at a 10 CAP is too high because if you have the laundry pay rent, the building isn’t worth that price. If you have the laundry pay rent, and then sell the laundry for what it is actually worth after paying rent, then the laundry itself is fairly close to worthless.

As I write this I know the deal might be a bad deal, but I’m curious if anyone else out there has any ideas of how else to look at this?

Thanks!

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