When they say LOCATION, LOCATION & LOCATION, they are definitely including vended laundries at the top of the list.
Many other businesses such as Car Washes, Gas Stations and many others where the investment into the property itself is near or even over half of the value of the business, require longer leases.
They are critical.
The Vended Laundry Is An Investment Business
Most investors in the laundry business know that at some point they may wish to sell their business. There are windows when this can be optimal. In this regards, let us understand why this long lease period is so important. When a developer first develops a laundry the initial lease term is most commonly a 25 or 30-year span, broken into original lease with options. This is good. The initial owner can operate the business using the full life expectancy of the original equipment and still have time to retool the laundry for a second generation. This owner has every incentive to keep improving and maintaining the laundry; expecting growth and a healthy return on the investment that he makes both in increased income and profits upon the sale of the business. The landlord and the property manager are happy. So are the other tenants, for the extra customers you are bringing to their businesses with time on their hands.
On the other hand, a laundry owner with only 15 years or less of lease time (It is assumed that a longer lease extension was attempted and rejected) would be advised to manage any reinvestment very closely. In order to make a reinvestment into a laundry without a longer term requires analysis. Remember, reinvestment in a laundry I often in the 6 figure range. It is common to have 15 years or more for a resale of a laundry. If you are the Seller you will be able to get a reasonable selling multiplier for your laundry with only 15 years, depending on the other elements; equipment condition, operating model and potential for continuing business with some measurable growth.
Now, if you are the Buyer, you will need to concern yourself with how much of what reinvestment you will need to make during the course of the remaining lease. You will want to maximize income but you also need to look at the length of time you will have to return the investment. As this lease gets eaten up the laundry value will also be limited to the ROI, in the remaining time allowed. At a point it is essential that the lease be extended. If not those final years of the lease, once the equipment is in bad shape, can be bad for all. It is clearly in the interest of the Landlord that the lease be sufficient in length in order to minimize the effects of this.
Making An Argument For The Landlord
Many landlords are reluctant to issue long lease periods. The reasons are many. Among them are, who knows what things will be in 20 or 30 years? We don’t see a reason for such a long lease. We get a higher rate with other businesses. We don’t know you. We are not sure we will want a laundry in the center that far down the road. These concerns must be addressed and demonstrated. The fact is, is that if you cannot have adequate time to re-invest into your business and get a reasonable return on the investment, you probably won’t. You will need to make measured improvements and unless a new lease can be negotiated the laundry will begin a process of deterioration causing problems in many ways; affecting the other Tenants, the landlord and Property Manager. It can also make it very difficult for anyone to sell the laundry.
Chuck Post specializes in selling coin laundries and consulting with laundry buyers and sellers. Let my associates and I help guide you on the path to success: Laundry Specialists * Expert Witness Services * Coin Laundry Valuations * Monthly Workshops On Buying & Selling Laundries. With 25 years of experience buying, selling, valuing, retooling, analyzing and giving expert court testimony about coin laundries, Chuck Post is one of the nation's leading experts in the field. Those interested in buying, selling, or starting a laundry business should contact Chuck at 619-227-5711.
|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.
|Larry Larsen, Broker, Laundry Specialist - Orange, LA Counties
Larry Larsen, Realtor has over thirty 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 Larry at 714-630-9274.
|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.
|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.
|Steve Erlinger: Laundry Broker, Consultant - Orange/Riverside Counties
I specialize in the laundry industry (Broker/Consultant at 949-500-5893) - Riverside, Orange Counties. 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.
|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.
|Helen Yoo: Escrow & Bulk Sale Services - 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.
|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.
|Related Articles, Events, Blog Posts, Discussions, Videos, Interviews|
|Laundromat Business Valuations: Could Buyers Of Laundries Be Overpaying?
Chuck Post (laundry buyer rep, consultant, due-diligence expert) discusses the factors of appraising laundries. Why such high purchase prices is baffling - many times the value is so misunderstood that it results in laundry buyers over-paying for a laundromat. Reach Chuck direct at 619-227-5711.
|When Buying A Laundry Why Buyers Should Have An Exit Strategy When Buying
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.
|Buyer Asks: Is Buying A Service Based Business A Good Choice These Days?
I've been selling businesses a long time & I get many calls from buyers who are open to buying something but aren't sure what would be a good investment. I'll get asked what I would buy if I was them and my answer is always the same, "a service business". Business broker Chris Lazurik explains.
|FREE Online Webinar: For Buyers - Buying A Card, Coin Laundry - 11/13
Chuck Post hosts this live FREE webinar on Buying A CA Laundry. Upcoming webinar date(s) include: 11/13, 11/21, 11/27. Have your questions ready for an open and honest discussion about both the pros & cons of the laundry business. Phone 619-227-5711 for info & to RSVP today.
|Determining The Value Of A Laundry Business: What Factors Are Important
Steve Erlinger (laundry Broker & Consultant at 949-500-5893) discusses how to value a laundry. Issues that affect a value include: demographics, the lease, past financial performance of the laundromat, age and condition of the equipment, utility costs, competition and other factors all play a role.
|Laundry Broker Reports On The Latest Trends From The Laundromat Industry
Steve Erlinger, (laundry broker specialist/consultant 949-500-5893) reports the latest laundry industry trade show & what's new in the coin and card laundry industry. He discusses what various manufacturers are doing and why laundry distributors can be important ally when buying a laundry business.
|Is The Laundry Business For You? Pros & Cons From A Laundry Broker / Advisor
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).
|Laundry Expert Reviews: The Laundry Lease And Its Effect On The Valuation
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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