Coin Laundry -- commercial self service laundry equipment placed into service in a retail shopping center. Most coin laundries for sale are owned by individual operators that lease space from property owners on long term leases (10 -25 yrs) or property owners that operate their own laundry business. The business is unique in its operation in that the majority of the work is done by the equipment.
Most other businesses require inventory, accounts receivables, and employees that can be very difficult to manage. Newer laundries may have Card Operated equipment that has very unique Marketing and Operational advantages.
The coin laundry industry is nearly 50 years old and most laundries are operated by individual owners. There are some franchise businesses across the nation but most are individually owned.
Clean laundry is considered a necessity of life and good health and just as important as food and shelter. The coin laundry industry has been able to capitalize on this necessity and has been able to thrive during periods of growth and recession. The business has been very successful in high renter occupied densely populated areas but there have been numerous examples of this business being successful in any area with an imaginative marketing approach. People always need to wash their clothes!!
Coin Laundry Value
Coin laundries normally sell for a multiple of their net earnings. The multiple may vary between three and seven times the annual net cash flow, depending on several valuation factors. The following primary factors establish market value:
- The terms and conditions of the lease. The amount of time on the lease factored with the increases in rent amount. Most operators and industry experts will look for the total rent amount to be no more than 25% of the overall gross income. Other factors to consider would be the location of the property, entrances and exits, visibility, and parking.
- The net earnings before debt service, after adjustments for depreciation, and any other non-standard items including owner salary, or payroll costs in services.
- The age and condition of the equipment. The age of the equipment is often overlooked in the valuation of a coin laundry. This should be a strong consideration in business value. If the existing equipment is at the end of its life and needs to be replaced then cost of the replacement should be factored into the valuation.
- Competition. It is vital to research the competition in the area. Are any of the existing competitors attempting to remodel or expand? Are there any new coin laundries being built in the area?
Finding the Right Coin Laundry for You!
It is extremely important that all potential investors conduct a precise evaluation of the laundry business they are looking to purchase. There are many different industry experts available that will help in correctly evaluating the business. Most existing laundry owners do not keep great financial records that are reflective of the true income of the business so a more thorough investigation of utility records and collections is necessary.
Just as important as correctly evaluating the business is a thorough self evaluation to determine the feasibility of operating a coin laundry business. Does this business work for me geographically and financially?
The following shows a list of factors to consider before purchasing a coin laundry business:
Financial -- How much of my own cash and assets am I willing to risk to purchase this business? Is the business going to provide the cash flow required to maintain operation and payback my investment in enough time to make it worthwhile? It is not recommended to try to borrow all the money necessary to purchase the business. If you can part with 50% of the cash required to purchase the business then it should be a safe investment assuming that all the correct evaluation factors of the business have been investigated. Some opportunities may be available that would warrant borrowing most of the money required to purchase the business.
Location -- How far am I willing to travel to effectively operate my business or will I be able to have a manager that will operate the business if I cannot travel that distance? If you plan on managing your own store including emergency calls and collections and only hiring employees for cleaning than it is recommended that you be within 30 minutes of your location.
Opportunity -- Is it possible to purchase this business and improve the operation and the income? You will be purchasing a business based on the value of its current operating condition. Most older laundries have great potential for improvement by remodeling and replacing equipment. Most laundries do not have an effective marketing strategy in place. These factors can be a tremendous opportunity for business improvement, income increase, and quick increase in business value. The return on investment can be tremendous with the correct business approach and marketing strategy.
Remember that clean laundry is a necessity of life. The coin laundry business has been able to capitalize on this necessity. The coin laundry business is all cash, and one of the safest and easiest businesses to operate in the nation. There are many tools and experts at your disposal to correctly evaluate this business for value and for yourself.
About The Author: To learn more about Golden State Laundry Systems and the Coin Laundry business, you can reach Mike Hurrell regarding buying or selling Southern California laundry businesses at 619-997-8364 cell or at 310-223-2240 - office phone.
|Helpful Resources To Assist In Selling And Buying California Businesses|
|Peter Siegel, MBA - SBA Loans, Non SBA Financing Assistance
For over 25 years I have provided niche business purchase financial advisory and loan placement services with SBA and Non-SBA Loans, Retirement Plan Conversions, Private Investors, etc. Financing amounts available: $20K to $7MM. Call today to get pre-qualified or receive financing: 866-270-6278.
|Mike Hurrell, Broker: Coin & Card Laundry Specialist Brokerage
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.
|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.
|Brad Steinberg, Broker - Laundromat Specialists
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.
|Larry Larsen, Broker, Laundry Specialist - Orange, LA Counties
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.
|Chuck Post: Laundry Buyer Representation, Consulting, Due Diligence
Chuck Post has 32 years experience in the laundry industry, specializing in assisting laundry buyers (and entrepreneurs) with buying or starting up, building, re-tooling, laundries throughout California. Laundry buyer representation, consulting, due-diligence, lease negotiations, laundry valuations.
|Willard Michlin, CPA, Certified Fraud Examiner, Due Diligence Services
Willard Michlin, CPA #106752, offers buyers step by step training & assistance in doing Due Diligence Services when they are thinking of making an offer, or are in process of investigating a business purchase. He helps to determine the actual net profit even when there is cash. Call 805-428-2063.
|Diane Boudreau-Tschetter: Escrow And Bulk Sale Services
California Business Escrow, Inc. is a full service independent escrow company serving all of California and has expertise in a wide range of escrows. Our team prides itself on providing an exceptional escrow experience. For more info phone Diane Boudreau-Tschetter at 888-383-3331 or 209-838-1100.
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Chuck Post hosts this live FREE online webinar on How To Buy & Value A California Laundromat. Webinars are scheduled every week! Have your questions ready for an open and honest discussion about both the pros & cons of the laundry business. Phone 619-227-5711 for more information & to RSVP today.
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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 - 866-270-6278.
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Chuck Post (reach him at 619-227-5711) a laundry consultant, specialty broker, buyer representative & due diligence advisor starts this discussion on why it's important to have an exit strategy in mind while buying a laundromat! He & others explain why this concept is so important to serious buyers.
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Chuck Post (Laundry Buyer Rep, Consultant, Due Diligence) discusses what laundry buyers and sellers should consider when reviewing and considering a laundromat lease. A must read for potential laundry buyers and owner/sellers of card and coin operated laundromats. Reach Chuck at 619-227-5711.
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Read why longer leases increase the value of a card or coin laundromat when buying or selling a laundry. Chuck Post (Laundry Broker, Consultant at 619-227-5711) expands on the topic of lease structures on the purchase or selling of a laundromat. Laundry sellers and buyers will want to read this.
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