All Forum Posts by: Paul M. DeAngelis

Good friend of mine is looking into buying first home with about 10% down and renting a couple rooms out then paying the remainder of the mortgage/taxes etc.

They are asking if I have any interest putting in 40% of the down payment to help and as an investment. In this situation what should I ask for in return? I would think at a minimum 40% of the profits on a sale maybe 3-5 years down the road, but should I also receive some cash flow every month? If so, what would that look like.

Does anyone have experience doing this and what was your strategy?

Thank you.

Definitely too early to tell. And yes with forbearances and the influx of unemployment benefit increases it might be hard to see similar price movement as in 2008-2009.

Is anyone seeing any softness in SFH prices at the moment? (In Tri-State or elsewhere) Does anyone expect to begin seeing more as the current environment continues?

BP,

Just closed on a condo and inherited a tenant who is there on a month to month lease. She has been a tenant for a couple years and is very clean and always pays on time.

It is in our strategy to raise the rent a couple hundred dollars at the start of the new year.

What would be the best way to go about doing this as to not upset the tenant too much?

Thanks!

@Seth Ferguson

Awesome. Thanks for the insight here Seth

BP,

I am closing a deal with a partner and am looking for a sample partnership agreement. We would prefer not to form an LLC until we have a few more units. What are some key points/takeaways when drafting up these agreements?

Thanks!

@Steven Taylor

Hi Steven, the cost will definitely depend on the sq ft and location of the building. There is a large upfront investment that goes into rigging up a building for laundry (troughs, bulkheads, piping, water lines, etc). Just a quick example, I worked on a 5000sq ft store recently and the cost of construction and build out will be around $250,000. Along with cost of equipment, you could be looking at a high up front investment but some companies will finance the construction and ti as well as the equipment.  I can look into the specific building location if you'd like - thanks!

@Andrew K. Andrew thanks for the post!

I have underwritten a lot of deals in the San Antonio area, I would say a majority of them are coin stores mostly due to the demographics. Both have their pros and cons, and card systems are expensive (40-60k), if the market doesn't call for the card system I would probably try to start without one.

In terms of purchasing an existing store, the numbers have to make sense. If you can look at some P&L's, look for inefficiencies, for laundry, the biggest one is utilities. New equipment can really drive down these costs and create a fresh allure for customers, bringing in new business from competition. A new location will require high investment costs, construction, TI, and new equipment, but ROI may be higher after the first year.

For leases, I always recommend 10 yr with at least 1 5yr option, this is because equipment debt will typically be a 10 year note for a full retool. (Feel free to message for any further info on detailed financing structures, rates, and costs)

If you have any potential locations in mind let me know, I can definitely offer more detailed insight!

@Omar Abdelbadie In my experience, the investors I work with that have automated or unattended stores have more than one location, seems to be an economies of scale type thing.If you do go with fully self-serve you'll need to invest into security and put time into teaching the attendants. I have seen owners with full time jobs operate the business through a security system that allows him/her to view the store at any time and also to answer questions through some form of hot line - might be something to explore as well.

@Jeff Bousquet Jeff, I work in the industry, and default rates do tend to rise for remote investments. Unless you are very knowledgable in the industry, its difficult to own/operate remotely. Laundromat is definitely more of a business than a passive investment. They CAN become a passive investment, but only if you really get the processes/procedures down.