Laundromats

[phlemboy]

I agree. If more people thought in those terms they's be much better off... But then he's have nobody to sell his books and seminars to..

[NJbird_dog]

I think Kiyosaki's books are great. Most people who are business-minded already have an understanding of his basic principles, but I've seen non-business minded people get very motivated through his books. Taking action is a different story, but the food for thought is a great first step.

Bluemoon, to add to your point, you mentioned his meaning of the word asset. I grew up in rentals and we all had this idea that owning a house is the path to wealth. There was always this clutter that if you own a house, then that house has $$worth and you automatically have $$worth. So the mindset would be to get a house even if you can JUST afford it, because it would mean that you have more money. This obviously isn't true b/c it doesn't account for the increase in everyday house expenses that you won't find in apartments. And I think Kiyosaki is a genius for recognizing this mindset amongst the population that most of his books target, so he recommends increasing your income rather than going after non-income producing assets (aka liabilities).

The only return a house can bring is through appreciation, tax deductions, or EVENTUAL expected appreciation. But it requires constant upkeep and costs that make it a liability.

I moved into a house about a year ago after being in an apartment my whole life and it's MUCH different. An apartment literally has no upkeep. Nothing besides changing light bulbs, quick cleaning, or the occasional clogged drain. But my house.....lawn maintenance, cleaning, minor fixers around the house, renovation, wear/tear, etc. and it can really add up for someone who's on a fixed/tight income.

[davewindsor]

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.

What a load of crap.  The laundromat has been there for several years, yet he can't give you certifiable yearly revenues on it because it's been mismanaged?  And, that's why he's all of a sudden selling it?  Yeah. and a sucker's born every minute....

How many machines are you getting?  280?  I paid $1000 for a pair of new GE gas dryers plus $500 for the gas connection two years ago?  How much are the utilities?  Gas has gotta be like 50 cents a dry.  I have my machines in my buildings for the conveinence of the tenants, not with the expectation to make any money.

How much of a downpayment does this guy want?  Is he financing it 100%?  If he wants a downpayment, sell your house and buy some kind of duplex configuration where you can live upstairs and have a laundromat on the main floor and buy/lease your own laundry machines.  From what you've described, I'd pass on it right away.

[NJbird_dog]

What a load of crap.  The laundromat has been there for several years, yet he can't give you certifiable yearly revenues on it because it's been mismanaged?  And, that's why he's all of a sudden selling it?  Yeah. and a sucker's born every minute....

My mistake, let me clarify that:

The laundromat I'm looking at is newly re-done, opened only 3 months ago. There was a previous laundromat in that same location that closed about a year ago due to mismanagement from what I was told. The current owner was not involved in that previous laundromat, he just came in and re-did everything and is now selling. He has another different laundromat that he's had since 1994 in the same town. He's selling both and moving out of state, but I can't afford his other location.

You brought up a good point, I need to ask him if he has any revenue docs from the previous laundromat.

I'll get more details on the machine soon and your feedback would be great. I just got involved with him over the weekend so I don't have all the info written yet.

[davewindsor]

What a load of crap.  The laundromat has been there for several years, yet he can't give you certifiable yearly revenues on it because it's been mismanaged?  And, that's why he's all of a sudden selling it?  Yeah. and a sucker's born every minute....

My mistake, let me clarify that:

The laundromat I'm looking at is newly re-done, opened only 3 months ago. There was a previous laundromat in that same location that closed about a year ago due to mismanagement from what I was told. The current owner was not involved in that previous laundromat, he just came in and re-did everything and is now selling. He has another different laundromat that he's had since 1994 in the same town. He's selling both and moving out of state, but I can't afford his other location.

You brought up a good point, I need to ask him if he has any revenue docs from the previous laundromat.

I'll get more details on the machine soon and your feedback would be great. I just got involved with him over the weekend so I don't have all the info written yet.

Who cares if the laundromat was recently redone?  People don't live there and I've never heard of luxury laundromats.  I've heard of luxury apartments with their own insuite washer/dryer setup, but never a luxury laundromat that would justify all those renovations.  You're not trying to impress your date by taking them to a luxury laundromat. 

If a laundromat opened up across the street in a scruffy, older building and charged 50 cents less per wash, do you think anyone would come to this "recently redone" one?  People who go to laundromats either can't afford their own or find it cheaper than the inconvienence of using one in their own building.  Price is the deciding factor.  It's just like gas stations.  If one looks dated and other across the street is recently renovated, but the dated one charges a quarter less per gallon, which one will you go to?

Honestly ask yourself, if a laundromat opened up across the street that's no frills (a little bit scruffy looking) but charges 50 cents less per wash, and you where taking your laundry to a laundromat, which one would you take your business to?   

Also ask yourself, if it didn't generate sustainable revenues before, why would it work now?  It doesn't make any sense.  Plus, it makes enough that you can hire employees to watch it?

Another thought.  If his other laundromat he wants more money for is making a lot more money, why not open a no frills laundromat across the street from his huge money making one and charge a quarter less per wash and take all his customers?  If he's put together this laundromat in three months, perhaps you put together a cheaper no frills one across the street from his other location in less time.

[tatertot]

My father owned coin laundries and made good money. But that was decades ago when people were more honest and there were fewer violent dopers.

You've just pointed out one down side: the local customers will move to whatever new laundry comes into the area. So the one you are looking at is new, and it will collect the customers, only to lose them if another new laundry moves in, or an old one is completely renovated.

The customers are real pigs, spilling soap and soda all over the place and not cleaning up. So someone has to be there to clean almost constantly. No one wants to wash their clothes in a dirty place. If yours is dirty, they go elsewhere.

Vandalizism is a problem. Dopers and school kids and the homeless hang out because it is free and warm.  Machines get broken into.

Clients abuse the machines, so they break down frequently. Why pay for 4 loads, when you can cram all your clothes into one machine?

Your employees will quickly figure out that they can claim to be there and you won't know that they have left. Your employees will steal from you. You don't allow them to handle money, but they steal soap, paper towels, toilet paper, cleaning supplies.

I'm not saying it's a bad idea. Just as long as you understand it is not easy money for doing nothing. It's a full time job of 16 hours or more per day.  Someone has to open and lock up. You can't leave it open all night, and someone has to be there while it is open.

[Bluemoon06]

I think Kiyosaki's books are great. Most people who are business-minded already have an understanding of his basic principles, but I've seen non-business minded people get very motivated through his books. Taking action is a different story, but the food for thought is a great first step.

Bluemoon, to add to your point, you mentioned his meaning of the word asset. I grew up in rentals and we all had this idea that owning a house is the path to wealth. There was always this clutter that if you own a house, then that house has $$worth and you automatically have $$worth. So the mindset would be to get a house even if you can JUST afford it, because it would mean that you have more money. This obviously isn't true b/c it doesn't account for the increase in everyday house expenses that you won't find in apartments. And I think Kiyosaki is a genius for recognizing this mindset amongst the population that most of his books target, so he recommends increasing your income rather than going after non-income producing assets (aka liabilities).

The only return a house can bring is through appreciation, tax deductions, or EVENTUAL expected appreciation. But it requires constant upkeep and costs that make it a liability.

I moved into a house about a year ago after being in an apartment my whole life and it's MUCH different. An apartment literally has no upkeep. Nothing besides changing light bulbs, quick cleaning, or the occasional clogged drain. But my house.....lawn maintenance, cleaning, minor fixers around the house, renovation, wear/tear, etc. and it can really add up for someone who's on a fixed/tight income.

Great points