You have investigated the self service laundry business, it sound attractive and you are ready to take your first step in buying your own Laundromat. There are a host of things to evaluate but let's not get the cart ahead of the horse. The first question is how will you purchase this business?
The coin laundry business attracts a multitude of people from all walks of life who long to enjoy a great return on an investment, a lower stress, relatively simple work day and flexibility in that work day. Consequently there is a lot of competition to buy a store that is either doing well or has the potential to do well.
In my experience many assume they can enter the business with very little money. You may luck out and take over that lease and walk into a store that requires sweat equity and little money but a vast majority of future store owners will buy the store. Those that have money and the ability to buy now are the one's who will win the battle for the store they want.
Perhaps you have the money; ready, willing and able to invest in the exciting world of laundry. Or, maybe you don't have the money and simply assume a loan is readily available to purchase your soon to be thriving business.
If you are in the latter category you want to prepare yourself well before you make an offer or your offer will not be seriously considered.
There are a few options, some easier than others.
Consider using the line of credit you have on your home. If you opened a line in the last several years the rate on that money should be quite low; prime, currently at 3.25%, plus 0 or maybe some nominal margin. This is cheap money and likely the lowest you'll find to purchase a business.
Another source to tap into which many have but is often overlooked is that of an IRA or 401k. You are legally able to use these funds to purchase a business. There are many rules and regulations that go beyond the scope of this article but with the right counsel this option could be attractive. It is not overly costly to set up and you are not paying any interest. You are giving up the opportunity to earn interest on your investment that is currently in your IRA or 401k but you also could out perform your current yield and YOU are in control of your earning destiny!
What if you don't have cash on hand, a line of credit or a retirement fund? You need to get a loan of course. Are they easy to come by? Most know that lending is a little more difficult now a day but financing is available.
SBA loans will almost certainly be your best bet. You will need a minimum of 25% down, a credit score north of 680, reserves and the seller will have to provide tax returns.
There are other loans beyond SBA which will have their own set of requirements and guidelines. Again, something to look into now.
Prepare yourself; seek an experienced professional that can help you with the business financing process. This is an invaluable service that will turn you into a real buyer! Do this sooner than later. The last thing you want is to find the right store then have your offered refused due to your inability to perform immediately. Few, if any, sellers will accept an offer with a financing contingency.
You may also need to finance the equipment you will need to refurbish and improve the store. The distributor for said equipment can help you here at the right time but qualifying for equipment financing is less stringent than getting a loan to purchase a business and readily available through many banks and even through equipment manufacturers.
As you continue to explore the world of Laundry remember; first things first. If you don't have cash on hand decide the best way to get it. If it is a loan or tapping into a retirement fund then get the paperwork done right away so you can turn yourself into a qualified buyer and begin building your Laundry business!
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Larry Larsen: Laundry Consulting, Brokerage, Insurance
I have over forty years of experience in the sales, ownership, management, and construction of coin laundries. He is a licensed broker active in the sale of coin laundries, a licensed insurance agent specializing in coin laundry insurance. Phone me at 714-630-9274 or 714-630-Wash.
|Chuck Post: Laundry Buyer Representation, Consulting, Due Diligence
I have 32 years experience in the laundry industry, specializing in assisting laundry buyers with buying or starting up, building, re-tooling, laundries in Southern CA. Laundry buyer representation, consulting, due-diligence, lease negotiations, laundry valuations. Call 619-227-5711 (Cell).
|Steve Erlinger: Laundry Broker, Consultant - Southern California
I specialize in the laundry industry broker and consultant in Southern California. I assist buyers navigate the many facets of finding, evaluating, and operating a laundry business. I also help current laundry owners find additional stores, sell, evaluate an existing laundromat. Call 949-500-5893.
|Brad Steinberg, Business Broker: Laundromat Specialist
PWS is the leading laundromat broker in California. Since 1968 PWS has brokered over 2,500 laundromat sales. With over 90 employees dedicated to the coin laundry industry, PWS has 18 licensed agents, a 3 person in-house finance department, 10 service technicians and a 20 person parts department.
|Mike Hurrell, Broker: Laundry Specialist - Southern California
Providencia Properties Inc in association with Golden State Laundry Systems is a full service Coin Laundry Real Estate Broker. At GSLS you will receive personalized attention from our professional staff of coin laundry experts. To sell or buy a Southern CA laundromat call Mike at 310-223-2240 X209.
|Peter Siegel, MBA, BizBen Founder, ProBuy, ProSell Programs
Founder & President Of BizBen.com (since 1994). I am the Lead Facilitator for both the ProSell & ProBuy Programs. I consult daily with business buyers, business owner/sellers, brokers/agents daily about buying and selling California small to mid-sized businesses. Call 925-785-3118.
|Shalonda Chappel: Escrow & Bulk Sale Services - Southern California
Escrow services to brokers/agents, sellers, & buyers. Established 43 years. Extraordinary service. Experienced with handling difficult transactions. One stop for all your escrow needs: Bulk sales, lien searches, UCC searches, liquor license transfers, publishing & recording services. 951-808-3972.
|Helen Yoo, New Century Escrow - Escrow Services In Southern California
New Century Escrow, Inc. is a fully licensed & bonded independent escrow company. Over 20 years combined experience in handling bulk escrow transactions. Multi-lingual staff that speaks your language, including Korean, Chinese, Vietnamese. Call Helen Yoo direct at 626-890-1151.
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Laundrys are popular choices among business buyers as they often can be successfully run as an absentee run business. You need to be strategic about when you sell your Laundromat so you don't get taken to the cleaners! Peter Siegel, MBA (at BizBen) provides laundry purchase financing - 925-785-3118.
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|FREE Live Laundry Seminars For Buyers: See Our Upcoming Schedule Of Seminars
Looking to buy or start up a card or coin laundromat? PWS Laundry is presenting their schedule of upcoming Seminars for laundry buyers & entrepreneurs. These informative live Seminars will cover an overview of the laundry industry, selecting the right location, an overview of leases, Q&A, plus more.
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Is a laundry business for you? Read the Pros and Cons of buying and operating a small or medium sized card or coin laundry. If you have ever thought about buying a card or coin-op laundromat you should read this BizBen blog post by Steve Erlinger (Laundry Broker & Consultant at 949-500-5893).
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Are laundries good investments for buyers? Chuck Post, (at 619-227-5711 - California laundry consultant, due diligence services, and laundry buyer representation) discusses this topic with other advisors & brokers in this BizBen Discussion about laundry investments and if they are good investments.