April 9, 2021 at 7:58 pm #5139scottParticipant
I’ve found to locations that are closed that use to be laundromats. The owners want to just sell the property what are best practices in this situation? Do I buy the real estate or try to get them to lease it to me?
April 9, 2021 at 10:04 pm #5141CKHParticipant
Well, I don’t have a ton of advice for you, but a question that might help you think it through yourself. Do you have the capital to buy the entire building? If so, what would make you feel as though leasing was the better option? If not, then it’s not really worth spending the mental energy on. I assume that you believe you can get the capital together to buy the building, in which case you might have better luck in the commercial real estate part of the forums.
April 10, 2021 at 7:51 pm #5240Shawn NorcrossParticipant
First, let me say that I haven’t done this myself yet.
That being said…I have heard on podcasts that If you are able to buy the property you can then leverage that to get new machines and other upgrades that may be necessary to get the mat going again.
If you are able to do that and decide at a later time to get out of the laundry business you can sell the business but keep the property. Then the new owner of the laundry business would pay you rent.
April 12, 2021 at 9:22 pm #5264Shawn NorcrossParticipant
Sure. When Ray Krok (owner of McDonald’s restaurants) was still alive he once said that he was in the real estate business because McDonald’s corporate owned the real estate every restaurant was on.
Why not with laundromat’s? I think of it this way: I can pay rent and CAMs in a strip mall or I can pay a business mortgage and taxes for property.
Both are quite viable options and there are plenty of people owning mats using both methods. It comes down to how you are most comfortable running your business.
I have even heard of the possibility of having two separate businesses where business A owns the property and rents the laundromat to business B. Both businesses are owned by the same person but has set up separate business entities. I would assume this works best if the property has multiple units.
IMHO there must be myriad ways to handle these types of businesses, I strongly suggest that you first decide what type of mat you want and go from there.
April 12, 2021 at 8:49 pm #5250scottParticipant
so this sounds like this actually be leveraged into a real estate play?
April 13, 2021 at 8:25 pm #5265EmersonParticipant
This is going to sound basic but I would make sure to evaluate the locations as laundry locations first. Make that determination first then you can decide which path if any to take. I am all for turn around stories and they happen, but more than anything I have learned it is pretty hard to screw up “A locations” (in most businesses ) with a bad operation to the degree many people want to promote.
I mention this because at least for me sometimes I can get caught up in the hunt or chase of the structure of a deal and not step back and look at what is most important which is determining if it is a good location. ( I have been getting decent demographic reports from a place for $50 a report that have been very helpful. )
If you decide to pursue a lease or a purchase on these closed mats you may want to make sure to get a good inspection on the electrical, plumbing, especially a video inspection of the main drain line. That may sound a bit like hand wringing worry but could also save you a big surprise.
Jason Dodge or others may weigh in on a potential lease with an option to purchase strategy as well.
But again I would first determine if the locations would make good locations for a mat then decide what to do next.
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