View Full Version : Why get into the business?
From reading this board, I'm wondering why anyone would want to get into the coin laundry business. Is it as difficult to make a profit as it seems here? It's not too late for me to back out of mine. Help!
Dave_in_Minnesota
12-24-2000, 12:43 PM
DP, I'm with you! I have an outstanding Purchase Agreement, includes excape clauses, and am getting second thoughts... Is it worth it? Now with the economy thinking recession very seriously, another reason to have second thoughts. I think the laundromat portion of this business is recession proof but I wonder about the drycleaning portion??? Any words of wisdom???
People are still going to need dry cleaning services in a recession, but not to the extent they would in a booming economy.
My concern is that I'm going to have 100K in land, 240K in a building and 300K in equipment and fixtures. Getting it back one quarter at a time is difficult to fathom. Someone out there please tell me it's feasible... or not.
Gambero
12-25-2000, 06:11 PM
I,m 2 months into a 500K Plus laundromat. I hope you have deep pockets. Expect to take 2 to 4 times longer than whatever your distributor projected to get out of red ink, regardless of how good the demographics look.
petefritz
12-27-2000, 01:30 PM
I have 3 l'mats, and have been in it for 5 years. L'mats are unique in thier own, there are some really great ones, and others that never seem to be worth it. Of course I am refferring to volume, income vs. expenses.
Location is a key, but lease expense is a big factor as well. Here are how the numbers tend to add up; Older, run down L'mats might sell for 1 or 2 times cash flow. Then of course you fix it up, or just start a new one from sracth, and your return on cash is around 4- 5 times now, meaning you might get your money back in 4 to 5 years. The problem seems to be starting out is if you finance any part of it, your cash flow to you is only going to be your down payment. The notes for a L/mat are short, 3-5 years, so there goes the cash flow. Then in 3-5 years you might be able to put some of that money in your pocket. YOu have to remember you will need to "save" about 15% of your cash flow for future equipment purchses. So is there any money in it? Not a get rich quick deal by any means. But if you are lucky to get a great L'mat, the quarters will add up quickly. Other than that, plan on a 15% return of the cash you invest. If you do better, great. Remember also most of the cash flow is tax free if you are keeping equipment updated.
Pay cash if you can, other than that you are working for the bank "sweat equity" for a number of years. If you own the building, than a laundrymat is a great tenant, steady, and will likley always be there.If you need to check a number, take 25% of the gross revenue, that should be enough to pay for the mortgage, or at least a decent rent, maybe 8% return on the value of the property.. If not, the L'mat might not be feasible in that location.