Laundromats

[NJbird_dog]

Anyone involved with laundromats or know someone directly that's doing well in this business? I'm surprised this topic hasn't been discussed more often on this site.

I have a great job right now that I need to leave to take the next big step and I have some cash saved up. I've narrowed down my next financial step to getting a laundromat and continuing to work toward financial freedom.

I'll leave the "great job" for a good income running a laundromat that doesn't require any intellectual thinking. And I plan to set up a small office in there so I'll be able to get back into real estate and do other income-producing things with my free time/mind.

I can't think of anything else that'll give me more bang for the buck and require low maintenance. Also, I found one that's only 5minutes from my house and looks good so far.

I'm picturing going to work 5minutes away, having a little office in there, making good monthly cash flow, and still having a very flexible schedule to leave and do I as I please throughout the day. Anyone wanna share some thoughts?

[phlemboy]

I know someone who ran a landromat. I used to go there to do my laundry. She was in her 60's and she said it produced $500/wk for her income. It was a small place with about 20 wahers and 15 dryers. It certainly didn't look like it took a lot of work, but she said she had to be there in order to keep it rom becoming a "crack-mat". Unattended landromats can be a nightmare she said.

[Hoosier4life2005]

I could see how that could be a interesting idea for a investment....  Uhmm... question, is it common for people to actually use laundromats?  Here in the Midwest we pretty much all use our own.  I only know of a few people who dont have their own.

[rookieNYC]

A good friend of mine owns super size laundromats..100+ machines and dryers..This is a business *inundated* with overhead...I have alot of experience with cash businesses and laundromats are decent but nothing special..The cost to open up a good size place is 500k-750k and I highly suggest you own the property and dont get into a lease situation because the landlord wins otherwise..The water bills,the gas bills,the maintenance,the rent (triple net lease usually),the theft,the workers salaries,the insurance,the build out costs,the plumbing costs are HUGE..My friend does well but you have to be in a *bad* area to make real money because lets be for real who else uses laundromats..Or in NYC but then the rent will kill you..If you do decide to build a laundromat its simple...Go big or go home...And build a place using the card system vs the coin machines..Many people buy these cards and never use them and you keep that money without issuing service...It also makes it safer to collect the money ,you only have one location (the card machine to collect from) vs 100+ machines to go to and empty coins out of ...If you provide the location there are machine companies that will build out the store for you and provide everything but this will cost you your lungs...New is the only way to go with the machines because older machines breakdown..The more lucrative way to make money in this business is to build out a store then sell it and hold the note at a high % letting the other person worry about the day to day operations..Laundromats are also a heavily competitive business..the smaller laundromats are being pushed out by these super size places that offer TV's,vending machines,games for the kids,free drying,wash and fold etc...be careful of getting into this business if you are underfunded..Even if you are funded well i wouldnt get into this business..But its your money...Keep in mind the selling of a good business is rare..fwiw 100k will buy you *nothing* in the laundromat business...Even if you net $500 a week that is 25k a year minus what you should make for your time being there is a %0 ROI on your capital..And you have a dead end business that you will have to give away to get out of..Research this move thoroughly before you make the move...NO ONE SELLS A GOOD BUSINESS

http://www.businessbroker.net/listings/bfs_result.aspx?By=AdvancedSearch&r_id=33&ind_id=58&ask_price_l=0&ask_price_h=0&map_id=39&lcity=&keyword=&lst_no=&time=0&bprice=0&fresale=0&ownerfi=0

go to that link and that site and see there are only 144 laundromats for sale in NJ which really isnt alot but Im sure you can learn alot from the listings...

*dont believe the gross or the net numbers* on ANY business you look at...Spend 1 month there *EVERDAY* and watch the day to day operations..Its very realistic for desperate sellers to have people to come in and feed the machines $$$ to increase gross numbers to dump a crap business..

[davewindsor]

Laundromats are great in theory (like they say in the Rich Dad books).  But, they suck in practice.  Take it from someone who's had their laundry machines vandalized multiple times in apartment buildings with hundred dollars worth of damage with a crow bar just to get a few bucks from the coin boxes because they are too stupid and lazy to building their own lockpicks.   You'll need to be there all day that it's open or pay someone to watch it so the machines are not vandalized and that's a big waste of your time instead of you doing deals or managing apartment buildings.   

You think a camera is gonna stop vandals while you're not there?  Forget it.  They wear a baseball cap and you'll never identify them.   

They also breakdown and you've got to pay a service guy a $100 an hour plus expensive parts.  Last time a timer broke on me, it cost me $125 to buy a reconditioned one and I had to install it myself because I was tired of paying the service guy.  $250 for a reconditioned transmission.  The spinners crack when people overload the washers.  Another hundred plus bucks.  I don't know which cost me more--vandalism or repairs. 

The older machines are steel and last longer while the newer ones are mostly cheaper plastic parts and the warranties on the newer ones just cover the parts, not the labour. 

Card slides are expensive to install and now you have the money centralized in one location making it an easier job for a vandal as he only needs to hit one money box for a larger payoff instead of multiple ones on the machines with smaller payoffs taking more time.

A laundromat is not a passive business like a rental.  If your wife is willing to watch the laundromat all day and you know how to fix them when they break down, go for it.   Otherwise, forget it.

[rookieNYC]

Kyosaki has been debunked as scam artist who makes his money off suckers who buy his books with the dreams of riches with no money involved..Pure BS...

http://johntreed.com/Kiyosaki.html

[phlemboy]

John T Reed sells the same crap as all the people he "debunks". It's hard to be objective when you're in direct comepetition with these people... That being said, I agree that the "Rich Dad" seminars and coaching are a rip off. The books are cheap and give some good information on changing your mindset and how how you think about money. They don't have  specific step by step instructions on how to buy RE or open up businesses. Its all about expectations. Most people want to be spoonfed and expect results without doing any real work.

[rookieNYC]

phlemboy,
You are %100 correct and I shouldve clarified my position..I felt after reading the John Reed link he made some valid points but I feel Kyosaki is a complete *book seller* and self promoter..Not to hijack the thread but this is often my argument with many topics that get formed here and Kyosaki...If you have no *first hand* experience with the business or markets or whatever the topic is dont guess or google it for answers..Ive listened to Kyosaki on TV and my first impression is this guy doesnt know s**t..The blind leading the blind as my father would say..Im self taught and I hve read some books as well but not self promoter books..They arent my thing....

NJ Bird Dog...So whats the verdict..Do you listen to people with first hand experience about laundromats or do you google the answer?

[fdjake]

The only people I know that have SUCCESSFUL laundromats are commercial building owners.   They use them to basically add a small amount of steady cash flow....

As far as quitting your JOB to do this????

DO NOT DO IT!!!!

Rookie is 100% right.....Your LANDLORD will be the onlt one making any money.

Think about it....

Your HEALTH CARE BENEFITS are GONE after you quit your job.....Not a problem, your healthy???  PRAY to GOD you don't get hurt, crack a tooth, break an arm or worse....Because it's coming out of YOUR pocket.

You asked a very good question here.......A lot of people look into these things and if they DON'T do their homework they become a SLAVE to the place....

One other thing.....KYOSAKI has been PROVEN to be a complete fraud.  At one point someone decided to dig up his history and actualy tracked WHERE he lived at the times and SAID he was buying all this property......THEY FOUND one home.....which I believe he ended up selling at a loss.

The guy SELLS BOOKS!!

[phlemboy]

If you look at Kyosaki's credentials, it often says "best SELLING author", not best author. He never actually gives specific advice on how to this or that. I believe his value lies in the way he shows the difference in the mindset of people who are rich, middle class and poor. The books are  where the value ends.. I've read most of his boos but keep in mind that he doesn't write all of them.. Many are written by othere people like accountants, lawyers and investors that speak on their area of expertise.. He's just a businessman selling what people want to buy.. IMO

[fdjake]

Your right....

And the bottom line is this......

If his books got someone off their can and OUT THERE.....

He's done something GOOD!!

[phlemboy]

I really hate to admit it, but reading "Rich Dad Poor Dad" started the mindset change for me.

[Bluemoon06]

I got introduced to Rick Dad books when I was preparing for trip to Paris and needed a lot of reading material for the long flight.  I bought his book (at the time it was the only one he had).  I had a problem with him because he kept saying things that were not quite right like an asset is something that puts money in your pocket and so a primary residence was not an asset.  Actually an asset is an accounting term and refers to cash and the things of value that can be converted into cash.  There is an accepted list of assets and your property is on that list.  I run into people that I mentor all the time that don’t have a business background but have read Kyosaki's books and eventually run into confusion over what an asset is.  They say something that doesn’t make since and I realize they are spouting Kyosaki junk and I have to give them a little accounting 101 lesson.  But I put that knowledge aside to understand his point. 

That brings me to why I like him.  His basic point is what I have been saying since I got out of college.  I should look at myself as Bluemoon Inc.  I have an income statement (salary and expenses).  This shows if I made a profit (savings) or not.  I also have a balance sheet that shows how wealthy I am.  This is where assets and liabilities would be.  I need to track these 2 statements to determine how successful I am.  I should make act just like a corporation does.  I should have an approval process with agreed upon goals for every expenditure and track “profits’ and “losses” to determine the success of my actions in life.  Also when I have a need this gives me a guide as to what needs to change.  If I want to add more assets to my life the best way is usually to increase my income.  Your lifestyle or wealth is not a function of saving.  You can’t save your way to wealth.  You have to increase your income.  I must out earn my lifestyle, not cut your lifestyle back to your earnings.

[fdjake]

Those are great points!

[NJbird_dog]

RookieNYC, as you can expect, I've been doing plenty of google'ng on this topic 

But also speaking to people who own laundromats and that's how I came across the one I'm interested in now b/c I contacted an existing laundromat owner for advice and he told me he's selling both of his and moving out of state.

I just recently got involved in looking so I don't have all the hard facts yet, but here's some prelim info:

Asking price $250k
Transferable equipment loan: $140k, 7.5%, $2100/mo
Lease: 20yrs w/tax/snow/trash removal for $1650/mo
So he wants $110k cash, which I expect to be negotiable, especially since the place isn't even on the market right now and I approached him directly.

The owner has had his primary laundromat since 1994 in the same town about 10 minutes away, so he knows the area really well. This new laundromat had an existing one in place which shut down about a year ago due to partnership disputes/mismanagement from what I was told and he came in, re-did everything, all new machines with 5yr warranty, new flooring, equipment, etc. 3 MONTHS ago. He says the location is bringing back the previous clientele and breaking even at 3 months rather than the typical 6+ months.

His first week in November he did $400/week, and just last week he did $2k. According to him, he expected the place to NET $80k. Now of course, I can't verify this since there's no history. And that's where I need to do lots of due diligence like what RookieNYC said and spend some serious time there on a daily basis analyzing the place, while being aware that he can inflate the water bills/coins. The place is brand spanking new, his wash/fold service and dry cleaning service produce revenue but is no where near built up yet.

And I live in this town, median income is about $40-$45k and location is near a very busy road with plenty of apartments, and good parking space in front. Definitely not the ghetto, but there's still always the risk of vandalism that will come with it. No supercenter laundromats, but there are smaller ones nearby.

It's coin-operate, and based on what I've read, coin operated is preferred b/c the given demographic won't be good with using swipe cards. You'll always need someone on site to teach everyone how to use them.

I'm interested in this because:
-It's 5minutes from my house!
-It won't make me rich, but it will supply cash flow while I'm on a flexible schedule. I don't even need an extreme bargain, if I could NET $50-60k/yr part-time, I'd be fine with it.
-Equipment is new, won't require much maintenance.
-I can pay someone to stay there all day, the current owner said he pays $7/hr to his worker!
-It'll allow me to get back into real estate to make the real checks (flips, short sales, etc), spend more time learning other things like getting up to date with the money being made on the internet, and it's a brain-dead operation, anyone can do it.
-I'm reading the book "Four hour work week" (highly recommend it). And it's in line with my plans, I only want to get involved in things that allow me free time and with that free time I wanna go for the gold.
-fdjake, health insurance is what I'd be giving up and you're right, it's a gamble. Haven't figured that one out yet, cost I believe is about $500/mo for an individual.
-My current job is great, but it's SALES and gets stressful. Stressful is FINE, except I always ask myself, what if I commit the same work ethic and work for myself!?? I'm on the grind everyday, even if I hit 100% of my quota for the year, I'LL be VERY comfortable but not rich and that 100% quota won't maintain itself. In 3-5yrs from now, I feel I'd be much better off working for myself rather than sticking to this position and I NEED TO MAKE THE LEAP, sooner rather than later!

Not to mention, that I look at my manager, who is one of the most BRILLIANT people I've ever met, and he recently told me that the economic situation is causing him to delay his plans of retirement. I DON'T EVER WANNA BE IN HIS POSITION! The guy is amongst the most well-rounded people I've met, he'd do good at anything he wants, but he chose corporate rather than trying to reach financial freedom through something else. Although he does have big goals, I believe reaching $4million, putting it in some kind of a trust, and living off the returns it can provide.