I'm going to let you in on a few insider secrets that determine the value of a coin laundromat business. These few tips can dramatically increase your wealth and income whenever you own an existing coin laundromat or interested in owning one.
Tip # 1 – Store Multiplier
A coin laundromat business is valued based on a multiple of the net income. If you can find a way to increase the income and / or reduce expenses, the value of the store goes up. So, what are some ways you can increase the income? Some ancillary income ideas include vending machines or adding a fluff and fold service if one is not offered yet.
If you're looking at the expense side of the equation, take a close look at the rent you're paying if the space is leased. Even if you've already signed a lease agreement, there is nothing to prevent you from approaching the landlord or property owner to renegotiate the lease or request a reduction.
As you can see, these few ideas will not only add immediate income to your bottom line, they will also increase the value of your coin laundromat if you ever decide to sell your laundromat business.
Tip # 2 – Financing
The caveat here is this tip must make sense for your individual situation. In other words, you'll have to compare the financials yourself to determine if financing will give you a better return on your investment. After all, the store must generate sufficient profits to cover all expenses including the loan and have some extra to add to your bank account.
I can only speak for myself, but financing the purchase of our coin laundromats allowed me to improve my cash on cash return, pay down the note over time, and increase our equity in the business. This strategy also allowed us to eventually expand our laundromat business from one store to multiple stores.
Tip # 3 – Buy a Laundromat
It is much cheaper to buy an existing laundromat for sale than building one from scratch. Think about the capital investment required to build a store from scratch. You'll have the cost of new equipment, construction, permit fees, sewer hook up fees, and operating capital once the business opens.
To this day, I have not built one store from scratch. Instead, I look for underperforming laundromats for sale and look for ways I can increase the value. In fact, one of my favorite strategies is to install new laundromat equipment. Why?
- The income generated from the new equipment will far exceed the cost of debt on the equipment. Yes, I do not purchase new laundromat equipment in full cash either.
- I can usually pay off the loan on the new equipment in seven years. The useful life of the laundromat equipment if maintained will be 15 – 20 years.
- New equipment will help you market your laundromat business. Not only with your existing customers be happy, the new laundromat equipment will attract new customers. Keep in mind the top two things that keep customers coming back to your coin laundromat is a clean, well lit store and newer equipment.