All Forum Posts by: Ken Barrett

Don't confuse Laundromats with Real Estate. Although they can be "automated" there are many other variables that are not found in Property Ownership or Management. 

Repairs, advertising, equipment purchase or replacement and many others. Service Techs are specialized and may be an hour or 2 away. 

Personally I like the business and the flexibility but I'm also an Electrician by trade and in many cases know as much or more then some contractors about the stuff behind the walls and under the floors and in the ceilings and under the parking lot, etc

Do the research, and understand the business not just the numbers.

If I can help, let me know.

Older machines can last up to 20 years but like cars it depends on the amount of use they have had.

I usually try and find out why they are selling before I get too committed. "Looking at new opportunities" doesn't cut it for me. Some people will sell a profitable laundromat because they want to invest in something else.

Other, more common reasons are illness, divorce , age, moving, equipment needs replacing, too much maintenance required, constant employee issues.

Keep in mind these are not as passive as rental real estate. Even unattended they require daily cleaning, regular maintenance and someone to move the money around on a regular basis.

But you always have to be ready to deal with this as well.

LaundromatHowTo

It depends on the distance. I wouldn't go over 30 minutes for my first one. And factor in traffic and other travel time issues.

I have 3 that I have been running for 6 years.  There are a lot of advantages to other businesses and you have hit on many of the top issues already.

Initial investments can be high.

Never trust an employee to handle the cash. That's your job or a very trusted friend or relative.

Repairs can eat you up if you can't do a lot of the small stuff yourself.

You don't have to have employees. Two of mine are unattended and I have cleaners go in once a day.

But it is a business and if you are serious it will take time to understand th business and  th market before you invest. It's not something that can move and most initial leases are for 10 years.

I have been posting info on my site LaundromatHowTo for a few years. There is also a YouTube channel and PodCast with the same name.

I have done well with Real Estate in SFH but I'm down to one now.

Ah yes. The Laundromat that is run by part-time help and makes hundreds of thousands of dollars a year.

Do the Part-Time help handle all of the cash and make deposits as well? Unless it's credit/ debit card only there is going to be cash. A "Card Store" usually has a kiosk for the customer to transfer cash to a store card. 

What about repairs? Is there a maintenance man handy they can call or does the owner make the decision? Personally I do all my own maintenance. 

Most owners I know are doing well because they have bought from the absentee owner and became the active owner.

I would plan for at least 15 hours a week and those hours could be at anytime. Like 7am when the attendant doesn't show up or 11:30pm when someone calls about a machine that didn't work.

Don't get me wrong, they are a good investment when properly vetted and managed, I've been doing it for 7 years, but be careful with the word "absentee". That great manager that the current owner has might decide it's time to move on or retire when you take over. Now you are setting the shifts and hiring attendants.

I consider each washer and dryer to be a "door" that people rent for about 30 minutes at a time. The best part is if one is closed they just use the one beside it.

I've trying to figure out how I can get some of the millions that developers put towards an App for Laundry that fails when they could have paid cash for a few stores, hired a great manager and had a decent income for 15 hours a week.

Nice numbers on the Laundromat. Rent targets for Laundromats are normally max out about 25% so if the numbers work you could increase the rent on your unit and add more to the available cash flow of the property.

It also puts you in a good position if you want to sell the Laundromat in the future. That's my Real Estate advice. From the Laundromat owner side I would tell you to keep the rent low so it would be more attractive to a potential buyer in the future. But you could always "reduce" the rent to make a future sale more attractive. 

The companies that provide the equipment and split the income are called Route Operators. This is a very lucrative business with some operators owning thousands of machines. The personnel  they use to collect the money and do repairs do it everyday and have the parts available for a quick fix. You will be signing a multi year contract to make it worth their while but you have no headaches. 

If you own your washers and dryers you will probably make some decent money but get ready when something breaks and the tenants want it fixed right away.

If you are priced lower than the local laundromat (which most are for some reason) your tenants not only have to carry all their stuff to the Laundromat but will have to spend more money and may want you to cover it.

Also a Service Tech will probably charge $100 to show up plus parts. 

Weigh your headache level against your income goals. 

One other question. If you don't need to provide laundry to get tenants how much could you rent the room for as a storage unit?

Many tenants prefer all electric as they don't want to put to many deposits on utilities. 

Leave the pantry and let them use a Laundromat. They are probably used to it anyway.  When a washer breaks down and you have to spend $200 to get it fixed and they are calling everyday and wanting you to pay for the Laundromat bill it will seem like a good idea.

I have 3 of them.  
Keep in mind they are a business and not as passive as Real Estate. Although I can be flexible with my time they require attention and the ability to deal with issues that come up. Breakdowns, leaks, customer concerns, etc.

Can you provide more details about "my issue will be that the owner have a cleaners that assist him in paying for the laundromat."

Be careful when buying a rundown laundromat as all you are really buying is the customers , the lease and the infrastructure.

If the equipment is old and worn out as soon as you "buy" it you will be throwing it away and buying new machines.

-What is the local competition? Has a new store opened or upgraded and is taking the business away?
- Have the demographics changed? Has the customer base moved? 
- Is the Laundromat and building owned by the same person?
- Would the building and business be part of the deal?

Laundromats have the ability to make great almost-passive income but buying Real Estate and buying a business are different animals.