Codie Sanchez Laundry

July 7, 2022

Codie Sanchez’s Laundromat Acquisition Journey

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Codie Sanchez’s Laundromat Acquisition Journey

Unconventional Acquisitions

July 7, 2022

Let’s face it: no little child grows up wishing that they’ll one day be a laundromat owner.
It might not be the sexiest business to invest in, but it’s one of the more profitable. Buying boring businesses — those companies that reside in the “invisible layer” of the economy that quietly supplies communities with what they need — can be some of the most profitable purchases a person can make.
That’s exactly what Codie Sanchez did.

In this article, we’ll show you what Codie Sanchez did when she invested in a laundromat. You’ll learn about the pros and cons and the process it took to gain a passive income from her shiny new laundromat.

Who is Codie Sanchez?

Codie Sanchez is a former journalist turned institutional investor. She is now a partner at a private equity firm with $200mm in assets. She learned about active investing from Goldman Sachs and was at the forefront of the ETF business with Vanguard. Codie writes the investing newsletter, Contrarian Thinking, and she is responsible for the Contrarian Cashflow Community. You will find her all over social media.

As a small business owner of over 17 companies across different asset classes, she’s always looking for unique business deals to invest in as new revenue streams. She’s had experienced buying and selling businesses, sitting on boards, and losing and making money.

Today, we’ll go into what made her invest in a laundromat and how it quickly became a profitable passive income for her within the first year. Let’s take a look at Codie Sanez Laundry Journey. If you think real estate is exciting, you should see the returns on investment we find in laundromats

Why Buy a Laundromat?

There are six reasons why Codie loves the laundromat business. Here they are.

‣ The Customers Do the Work

One of the main draws of the laundromat business is that the whole process is really simple. The customers do most of the work. They bring their own clothes, bring their own supplies, wash the clothes, dry the clothes, fold the clothes, and take their finished product out themselves.

‣ Little Labor Costs

If the customer’s doing most of the work, that means there’s little need for extra labor, training, or onboarding costs in the laundromat business. You don’t need full-time staff — or really much staff at all.

‣ Upfront Cash

One of the benefits of buying a Laundromat business is, that the customers in the laundromat business pay you right away, which makes tracking your finances much easier. You don’t have to stress over complicated financial statements — you get all your coins in one spot.

‣ Recession-Proof

No matter what happens, people always need clean clothes. This business won’t be affected by downturns in the economy.

‣ Great ROI

The laundry industry has a 20-35% average ROI and nearly a 95% success rate. This makes it a very advantageous investment compared to other riskier businesses.

‣ Little Physical Inventory

Compared to something like a restaurant or retail store, laundromats have very little inventory that needs to be stored. This means fewer expenses for physical products and storage facilities.

‣ No Seasonality

This means your revenue is constantly going up and down depending on the season. People are (hopefully) always cleaning their clothes. The laundry business also is not weather dependent.
These are several of the attributes Codie looks for in her passive income investments. Buying a small business of any type requires due diligence of the numbers, but small business acquisition becomes much easier when you know what to look for.

What Are The Cons of Buying a Laundromat?

No business acquisition is without its cons, and laundromats are no different. Here are some downsides to getting into the laundry business.

‣ You Actually Need to Run a Laundromat

This one may be obvious but needs to be said. Once you invest in a laundromat, you’ll be spending a lot of time there. It might not be the most fun or glamorous “hang-out spot” in the world, and you’ll need to put the elbow grease needed to renovate and run the business.

‣ Hefty Price Tag

Dropping $100,000 to $300,000 isn’t an easy ask for most people. Although some people might make it seem like an “easy investment,” the reality is that it costs a lot and might be out of some people’s price ranges.

However, Codie used seller financing to make the upfront costs more manageable.

‣ Low Barrier to Entry

There are tons of laundromats out there. Besides the cost to buy and repair the business, there aren’t really any other obstacles that block people from getting into the game. This means lots of competition.

‣ You Need to Get Your Hands Dirty

Maintaining a laundromat requires many jobs. You’ll quickly learn that you need the skills of a plumber, an electrician, an engineer, a repairman, a janitor, and a marketer (and probably more). This means late nights, stressful problems, and lots of hard work.

Of course, you can always hire an operator to run the company, but remember that someone will need to get their hands dirty, and you will need to pay them.

‣ Set Costs

Your fixed costs will always be there. This includes rent and utilities!

‣ “Undesirable” Customers

Not all customers are bad. In fact, most of them are great. But laundromats do have a very unique and specific clientele. Sooner or later, you’ll run into “undesirable” customers that will require security.

‣ The Financial Nitty-Gritty

Now to get into the finances that went into purchasing the laundromat.

Beforehand, Codie requested to see five years of the financials expanded so that she could see the day-to-day and week-to-week. The great thing she found was that there wasn’t much variability, meaning that they made around the same amount of money yearly.

Initially, the owner wanted $200k and would finance $125k through seller financing, but Codie wasn’t willing to give that much up for the laundromat.

Why? Because there are 2.5 million businesses out there for sale right now, if you can’t find the deal you want, you can always find it elsewhere.

Here was the information provided for the business that came from BizBuySell:

Location: Phoenix, AZ
Included in the asking price
Furniture, Fixtures, & Equipment (FF&E):
Included in the asking price
Growth & Expansion:
Tons of room for growth with more online marketing
Seller will carry with 125k down and 75k for 2 years at 7%
Support & Training:
1 month after the sale
Reason for Sale:

She negotiated the price and structured the deal to have a small down payment while paying the rest over the next three years through seller financing.

So How Much Does the Laundromat Make?

Now the fun part. 

The laundromat makes $5,583 a month as a buyer. Here’s a full business breakdown:

  • Revenues: $113,000
  • Profit: $67,000
  • Purchase Multiple: 1.86x
  • Valuation: $125,000
  • Business Assets: $135,100
  • Business Funds Raised: $0
  • Closing Payment: $25,000
  • Surplus Cash: $0
  • Future Payments (over 3 years): $100,000
  • Personal Investment: $25,000

Monthly Payout to Buyer: $5,583

Cash On Cash Return: If $25k down, 268%

Yes, you read that right. After one year, she made 268% profit. (The zero funds raised is because she got a loan)

Now there are several different ways you can do this deal. You can get an equipment loan or you can do it through seller financing. 

Then, you can go find the next business. You use the proceeds to put a down payment on the next investment. 

Why Buying Boring Businesses is a Win-Win-Win

The reason why private equity heads become billionaires isn’t by buying financial firms — they do it by buying normal, Main Street companies, A.K.A. boring businesses.

They turn them around, optimize them, and start getting cash flow out of them. By doing this, everybody wins. Why?

  • The business owner gets to retire
  • You get the cash flow
  • Employees get jobs

This is the main difference between trading stocks and building businesses. In trading stocks, someone has to lose for someone else to win. When building businesses, everyone can win.

But why does Codie really do it? 

Take a look at real businesses that lie on “Main Street.” There’s no politics there. No whiny tech workers. 

These businesses are comprised of normal, everyday humans that wake up early in the morning and work their butts off to feed their families. The lifeblood of the country is comprised of small businesses run by people like this.

By investing in and supporting them, it’s one less big corporate chain that takes the place of hardworking, honest families. 

Key Takeaways

While buying boring businesses might not be the sexiest investment in the world, it can be hugely profitable not only for you but for everyone involved.

If you do your homework carefully on businesses that can be a win-win (-win), buying a boring business won’t produce boring results. You can find real value and start getting passive income that can change your life.

Codie Sanchez’s Course

If you’re ready to become a business owner and get the financial freedom you’ve only ever dreamed of getting, register now for Codie Sanchez’s Laundry Acquisition Course and Mastermind Community.

In Codie Sanchez’s Course, you’ll learn proven methods to find, analyze, and purchase profitable laundry businesses.

This will give you the financial independence you crave and help you become the business leader you were meant to be.

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