New Laundromat Location Dilemma

[Rony]

Hi Everyone, I am planning to build a new self-serviced laundromat and shortlisted a location in Melbourne, Australia (under lease negotiations). Demographics – No laundromat in 1.5 square miles (3.5 sq kilometres), 50% rented dwellings, 33% population in units/flats, 55% population is single/not married, high population density – 8,500 per square mile. The suburb is blue collar suburb (people on tools/trades).

Potential Location –
Advantages: Corner site with 2 street facing, adjacent to multi-storey council car park (hundreds of parking spots at nominal rates), free parking after 6pm to 6am next day. Near a national pizza shop chain and 24 hour Gym. High visibility because one of the road facing laundromat is the ONLY entry to council car park – approximately 2 million cars go through this road to council parking annually.

Disadvantages: No street parking – people have to walk from council car park across the street (less than 100 metre) The commercial complex of the location is run down – not high foot traffic. High rent for a long term lease.

DILEMMA
I am talking to 3 distributors. One (out of Melbourne) distributor has said that location is not favourable because there is no street parking and moms with children will not carry laundry from parking. Other 2 distributors from Melbourne liked the location and would have chosen the site over other sites.

Parking is a big problem in Melbourne. If I find a good location with parking then potential issues are
– it will be expensive or
– demographics will not work for you or
– parking will be mostly crowded and you have to wait.

I prepared Cash flow based on 3 turns per day for 1 year and I am in loss for 1st year. However, I see potential in this location that 3 turns per day is a reserve estimate. I know other laundromats with similar demographics are doing 6 – 7 turns per day. With 4.5 turns per day, I can make 20% to 30% profit.

What do you guys suggest to go for this location or not as the distributors can be sometimes biased?

[Archie Lord]

Hi Rony,

How did you go with this one above?

I am in Sunshine Coast Qld and l am in the early stages of researching for potential laundromat sites.

Would appreciate anything you have learned so far and willing to share.

thanks,

Archie

[Rony]

Hi Archie, happy to share. I could not proceed due to finance.

The Sydney market is slightly different to the rest of Australia because there is minimal parking space and long travel distance. Plus there are only few laundromats – the concept is catching on. Melbourne, Adelaide and Perth are more advanced with decent presence. Not sure about sunshine coast/Brisbane/Qld.

I sought help for getting demographics reports done based on my criteria. This helped me find a suitable location. Cost me a decent amount but helped me pin point 3 suburbs where I needed to find location.

For location – I looked on commercial real estate websites to identify the potential site but in the end, good old fashioned walking around the neighbourhood helped me finding the location.

Showed this location to a 3 distributors – 2 were positive and 1 had a different opinion. The distributors are willing to share their inputs. Overall, I had a good experience with distributors. Always suggest talking with them about potential site and showing them the site before entering in discussion. Some distributors make laundries and then sell them or some distributors know dry-cleaners/laundromats wanting to get out of business and they can introduce.

Another suggestion is to get your finance ready before you start discussing with the landlord. The Australian banks and 2nd tier lenders are very risk averse and will only lend on the basis of providing decent guarantee (e.g. property as a mortgage).

If you have a partner then keep them involved and seek their blessings – otherwise it can become a painful experience.

I hope these points help you. All the best!!!

[Archie Lord]

Thanks mate, appreciate input.

I am talking to a couple of distributors at moment more just getting their opinion on what makes a good laundromat etc.

Going to sit down with one next week who do a presentation of what to look for in finding a suitable spot for a laundromat.

Where were you able to get the demographic reports from?

At this stage I’m only looking for a lease on property, how have you gone with finding finance on machines if you are going down that path?

[Rony]

Hi Archie,

You are most welcome.

I defined the scope of kind of demographics I wanted to start a laundromat and posted this on “Upworks” (freelancing platform). Awarded works to a person who is based in Australia and had exposure to similar reports.

I was in the same path as you to look for lease before finance. And I ran in trouble.
Suggest sorting the finance before the lease.

Australian Banks are highly conservative and unless you are able to mortgage something, they will lend you nothing.
Distributors are horrendously expensive (unlike in USA).
The remaining option is private financers or your own cash.

Hope this helps.

[Author]

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