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|
|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.
|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.
|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
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.
|Mark Chatow, Esq.: Legal Services For Buying, Selling Businesses
Mark has a broad range of small business purchase & sale experience from analyzing potential acquisition targets to successfully guiding buyers and sellers through the purchase & sale of small businesses. Mark can assist with contracts, negotiations, legal matters, etc. Reach Mark at 949-478-8393.
|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.
|Related Articles, Events, Blog Posts, Discussions, Videos, Interviews|
|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.
|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).
|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 Explains Laundry Leases: 4 Big Issues For Buyers And Sellers
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.
|FREE Live San Diego Workshop - How To Buy A Coin Or Card Laundry - 4/27
Chuck Post, a coin laundry consultant and specialty broker offers this upcoming San Diego FREE seminar - How To Buy A Laundry Business on Saturday April 27th at 11AM (PST). Contact Chuck Post at 619-227-5711 or Chris Mason at 949-878-2755 for more information and to RSVP for this upcoming workshop.
|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.
|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.
|Interview: With Chuck Post On How To Buy A Laundry Business Successfully
Chuck Post (and his Associate Chris Mason) a California laundry consultant, due diligence specialist, buyer representative for laundry buyers shares his thoughts with Peter Siegel, MBA on his weekly BizBen Vlog & Podcast show. Chuck and Chris cover all related topics on buying a California laundry.
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