photo of woman standing inside the laundromat

July 14, 2022

How to Buy an Existing Laundromat that Makes $60k+ Per Year

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How to Buy an Existing Laundromat that Makes $60k+ Per Year

Unconventional Acquisitions

July 14, 2022

There are 3 main steps of buying an existing laundromat- Finding a ‘good’ existing laundromat, evaluating the existing laundromat, and financing the purchase of the laundromat business.

How to Find an Existing Laundromat to Buy

So, maybe your traditional 9 to 5 job is working out for you. Maybe it’s not. Either way, it’s time to think about how you can make money work while you aren’t. You might be able to clean up by buying an existing laundromat. There are 5 benefits of buying an existing laundromat:

  1. Passive Income Potential
  2. Laundry’s Gonna Laundry
  3. Minimal Maintenance
  4. It’s Not Risky Business
  5. The cash comes first

Now, if you are asking the question “How to Buy an Existing Laundromat?”, you first need to find a good Laundry business.

There are several places you can look for an existing laundromat to purchase including business listing sites, search platforms, business brokers, local pop-bys, social media, and equipment distributors to name a few. Some may seem more obvious than others. Here’s how to start cleaning up in the laundry business.

1. Business Listing Sites – This is the low-hanging fruit in the search process. “Laundromat for sale” listings on sites like bizbuysell.com are easy to find. However, that means there may be more competition and higher prices since it is posted publicly for sale. The more access to the information, typically the less likely to be a deal, but don’t let that stop you. You may just find your home run deal.

2. Google – Laundromats near me. Start reaching out to business owners. It may be helpful to have someone pull the info on the LLC or holding company to find owner information in the case that they don’t work in the store, so you could mail them or call them directly.

3. Pop-By – Drop into the nearby laundromats and check them out. Do a load of laundry. Chat with people. Ask questions. Find out if the owner works there and when they typically come in.

4. Social Media – Let people know what you want to buy. If everyone knows you want to buy a laundromat then there is a good chance someone will know somebody that owns one. All those extra points of contact can help you land in the right conversation with a laundromat owner at the right time when they are considering selling.

5. Laundry Equipment Distributors – Your local equipment distribution reps will have the lay of the land for the local existing laundromats including what types of machines they use, how many, and often how much revenue they are doing. These reps can likely connect you to owners that they may know are thinking of selling.

Check out Dexter Laundry or SpeedQueen for examples.

I can think of at least three deals in the last couple of months that have come from third-party connections. Our mastermind members frequently reach out to these connections to find acquisition deals. This works really well in coin laundry deals.

How to Value an Existing Laundromat before Buying

The valuation of any small business will typically be based on a multiple of earnings. In the case of really small businesses like your typical laundromat with less than $2 Million in revenue, we typically use SDE. SDE, or Seller’s Discretionary Earnings, is basically just a way to say anything of value that went to the previous owner from the laundromat.

SDE might include the owner’s salary, profits from the business, owner’s auto, gas or insurance, health insurance benefits for the owner, etc.

We are typically looking at valuations anywhere from 3X to 6X SDE for most laundromats. The multiple depends on a handful of factors. Laundromats are similar to many service businesses we are looking for a multiple of annual owner benefits to create cash flow.

  1. Laundry Equipment Age and Condition (Part of Due Diligence)
  2. Leverage – Technology (Laundry Systems) or People (Employees)
  3. Solid Paperwork showing a track record of income (Financial Due Diligence)
  4. Location – Quality of location and similar sales in the area.
  5. Lease – Having a quality long-term lease with options is important with all that equipment and infrastructure

A laundromat in a great area with newer equipment, card readers, automatic lights and door locks, a team of cleaners and mechanical help, and clean taxes and P&Ls with a great lease should command a higher multiple than one that needs an overhaul. You can find great deals on either end of the spectrum if you value them appropriately.

How to Finance the Purchase of an Existing Laundromat

There are a few different ways to finance the purchase of an existing Laundromat including bank loans, personal loans, home equity, seller financing, and equipment loans. You can also raise money from partners and private investors:

1. SBA Loan – An SBA loan is a loan backed by the Small Business Administration, which is a government organization. This type of loan has low-interest rates and can be used to purchase an existing business or start a new one. If you have questions about the use of an SBA loan be sure to check out our free one-hour training on SBA Acquisition Loans with one of the top SBA Brokers in the US. If real estate is included you may be able to get a 25-year term as well.

2. Personal Loan – A personal loan can be obtained from a bank or credit union and is unsecured, meaning that there is no collateral needed. This type of loan typically has higher interest rates than other types of loans, but it can be helpful in purchasing an existing business.

3. Home Equity Loan – A home equity loan allows you to borrow money against the equity in your home. This type of loan typically has lower interest rates than other types of loans and can be used for any purpose, including purchasing an existing business.

4. Seller Financing – You may be able to negotiate with the seller to carry some of the debt on the purchase of the laundromat. Sometimes a seller will finance the deal if they are a cash business and have trouble proving the revenue of the business. In other scenarios, the tax benefits of the deferred income may entice the seller.

5. Equipment Loans – When buying new equipment for an existing laundromat, you will likely find that several of the vendors will lend you 100% of the cost of the equipment. In some cases, they will also lend up to 90% of the purchase price for the acquisition itself.

Lloyd, one of our Mastermind members, was able to acquire his first laundromat with only 5% of the total cost of the acquisition and equipment by using this method.

Learn How to Buy an Existing Laundromat with Industry Experts

We’re Teaching You Everything You Need To Buy And Manage A Successful Laundromat, Making Between $60-$120k A Year— All With Minimal Set Up And A Simple Management System. How Do We Know? We’ve Done This Again And Again. Now We’re Teaching You, How to Buy an Existing Laundromat that makes $60k-$100k per year!

You’ll Gain The Knowledge And Tools Necessary To Generate A Significant Monthly Income Without A Backbreaking Amount Of Work. Laundromats Offer A Steady And Recession-Proof Business Model, Remaining Open And Bringing In Revenue For Owners Even Through The Business Closures.

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