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Five Considerations When Acquiring a Laundromat (Part 1)

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:

PARTNER WITH A LAUNDRY EXPERT

Partnering with a laundry expert is imperative.

Most experts do not charge a fee, so pick someone you trust and use their services until you have found the right investment. Many experts can help you find an existing Laundromat, or assist with building a new store.

Ryan and Bernadette Hansen had entrepreneurial aspirations, but they weren’t sure what type of business they wanted to operate.

After finding a small, run-down Laundromat on Craigslist in 2009, they decided to put in an offer for $30,000. The owner rejected it.

“A couple of weeks later, I got in touch with PWS and they showed me a beautiful 3,000-square-foot store,” says Ryan Hansen.

The laundry was less than a year old and had a positive cash flow. The Hansens purchased the store and, within six months, increased revenue by 40%.

PWS also showed the couple how to analyze the competition, secure financing, and make basic repairs on equipment to keep the machines running, minimizing downtime.

MATCH THE LOCATION TO YOUR VISION

It’s important to have a clear vision of what type of store owner you want to be, and what your business plan is before you acquire a Laundromat.

The Hansens have had great success because they were able to impose their vision on the Laundromats they purchased or built. They have a clear vision of the type of stores they want to operate and do not deter from that vision.

They like larger stores that operate mostly or fully attended. They do not mind taking over run-down or poorly operated stores, as long as the location has potential when cleaned up and managed properly.

Since buying their first store, the Hansens have purchased eight additional locations.

Of their nine stores, they have built three and acquired six existing stores, rebranding all of their stores as Dirty Bird Laundry in Fresno, Calif.

“If you’re buying an existing Laundromat, you are buying the existing customers,” Ryan Hansen says. “It is nice because you know whatever improvements you make will add upside to the existing cash flow.”

Another perk of refurbishing an existing store is that older stores are typically grandfathered in by their municipality and are not contingent on additional fees and charges that new stores may be subject to.

Check back Thursday for the conclusion!

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(Image licensed by Ingram Publishing)

Have a question or comment? E-mail our editor Bruce Beggs at [email protected].