Help! Purchasing my first laundromat

[Marco Calabrese]

Business detials:

Asking Price $200,000.00 CAD
Sqft; 1200
9 Washers (Dexter installed 2018 supposed value $140,000 CAD)
8 Dryers (Dexter installed 2018)
ATM Machine (Purchased 2020 value $3700 CAD)
Soap Vending Machine ( Purchased 2020 value $1500 CAD)
Ozone Machine (Purchased 2020 Value $10,000 CAD)
Vending Machine (unsure how old)
Security camera and DVR
Various inventory valued at $2000 (laundry bags, carry bags, soap, food for vending machine)

Annual Income:
Machines: $66,000
Wash N’ Fold: $17,000
ATM Machine: $1500
Vending Machine: $2300
Total: $86,000 Gross income according to the vending (even though the numbers don’t add up)

Annual Operating Expenses:
Rent: $32,000 (includes base, CAM, taxes)
Insurance: $2800
Electricity & Water: $4700
Gas: $330
Cleaning, Wash n Fold supplies: $3600
Equipment Supplies: $1200
Total operating expenses: $44,700

Vendor is claiming total NET Income is $42,300 annually.

4 sizes of machines – 3 double load @ $3.75, 3 triple load @ $5.25, 2 four load @ $6.50, 1 six load @ – $9.50.

There are 3 other Laundromats that are a 5 minute drive from this location.
One of them is small and very run down. I doubt the offer much competition
The second one is slightly bigger and offer wash n fold service. This location is a bit dated but seems pretty clean.
The third is the biggest and is attended. The machines are old and the location is dated as well. They offer wash n fold as well as alterations on site
The locations I’m looking at compared to the other Laundromats is by far the newest and cleanest one.

There are a lot of apartment buildings in the surrounding area however, the neighbourhood is going through a lot of gentrification (with new condos being built in the area).

My dilemma is I don’t know how to verify if the demographics can support four Laundromats in such close proximity?

Secondly, they currently offer wash n fold and pick up and delivery but I would have expected their net income to be more with all the services offered. Having said that, according to the realtor they are running it themselves (no employees). If I purchased it I’d have to hire at least one employee and at $16.00 and 24 hrs a week that would cost me $32,000 at the end of the year eating up a lot of the net proceeds.

Now that you have the full picture do you have a recommendation on what you think a fair offer would be and do you think it is a good acquisition?

I don’t think the business is worth more than $150K.

Any help would be greatly appreciated!

[Sandy Keating]

Hi, my initial thought is that the laundromat sounds like it’s already implemented many updates and has relatively new inventory. Maybe wait until a more dated one becomes available and look at other parts of town or a close by city as well. If you don’t see ways to create more cash flow and you don’t want to offer the wash and fold service and you can’t negotiate a better deal I would hold off. Unless you provide a service that isn’t being utilized like drop off and delivery. In which case you could just do drop off and delivery and have that be your niche. Whatever you decide, best of luck to you.

[Author]

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