COMMERCE, Calif. — The purchase of a coin- or card-operated laundry can truly be a great investment.
Compared to other more traditional investments, laundries can offer a significantly higher return, with the added bonus of tremendous tax benefits.
When assessed alongside other entrepreneurial investments, laundries can offer comparable meaningful returns, but with a more passive involvement.
As co-owner of PWS – The Laundry Company, my team and I have helped store owners open more than 2,500 new Laundromats, brokered a similar amount of existing Laundromats, and sold more than $400 million in commercial laundry equipment.
Whether you are looking to purchase your first store, or your 20th, here are key considerations to keep in mind when acquiring a Laundromat:
UNDERSTAND THE TERMS OF YOUR LEASE
A long-term viable lease is imperative to the success of a Laundromat. You not only want a lease that works today, but one that will be viable for years down the line.
This business is about cash flow, and a long-term reasonable lease protects your cash flow and enables you to sell the laundry when you are ready to exit the store.
When entering a lease, always look for a fair rental rate, and make sure that any increases are reasonable.
Try to get a term for as long as possible—10 years is great, but 20 years or more is even better.
Additionally, the lease should include a base term plus options. Make sure the lease and the options are assignable to a new buyer.
Negotiating your lease with your landlord is key to running a successful store.
Ryan and Bernadette Hansen own nine Laundromats in Fresno, Calif., branding all of their stores under the name Dirty Bird Laundry. All of the Hansens’ nine stores are leased.
“When building a new store, or heavily remodeling a store, I always negotiate 90 days of free rent from the store opening day to build cash reserves,” says Ryan Hansen. “You’re not paying interest on that money.”
PICK A VIABLE LOCATION
Good distributors have access to demographic information to help you select the best location possible.
Evaluate the demographics, particularly population density and percentage of renters, and evaluate the competition, as well as if the property has good exposure and adequate parking.
Typically, a viable location consists of a renter population of 35% or more, with an average household size of at least two people, with an annual income of $35,000 or less.
Being surrounded by a grocery or convenience store, auto parts retailer or check-cashing outlet can complement your business by attracting even more customers.
PAY ATTENTION TO EXISTING EQUIPMENT
The equipment you choose is crucial to the ultimate success of your Laundromat, so pay close attention to the existing equipment when purchasing a new store.
Having newer, energy-efficient equipment—manufactured after 2009—will save you money on utilities in the long run.
If the location is prime, old equipment shouldn’t scare you away—it can always be replaced.
On one of the Hansens’ first acquisitions, the store had 15 washers that worked but 25 washers that were irreparable.
After Ryan Hansen cosmetically remodeled the laundry, he received compliments that the store looked great, but his equipment didn’t operate properly. As a result, he had lackluster customer retention.
“That’s when I called my distributor for help and his team came through. Today, my equipment works well and looks great, and the replacement parts are durable, affordable and easy to get.”
By putting these tips into practice, the Hansens have found great success in the laundry industry.
When looking to buy or build a Laundromat, be prudent, patient, and follow these steps to put yourself on the road map to success in the vended laundry industry.
Missed Part 1 of this story? You can read it now HERE.
Have a question or comment? E-mail our editor Bruce Beggs at [email protected].