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  • Profile photo of MatthewKellyMatthewKelly
    Join Date: 2002
    Post Count: 17


    I would like to receive feedback relating to Laundromats. I would like to know if anyone has any experience with these and what are the benefits / pitfalls etc. Also, does anyone have any ‘checklists’ that can serve as a guide when reveiwing these businesses.

    I have found 2 and am compiling a list of questions for the R/E agents to complete so that I can then ascertain if these businesses make factual financial sense from a positive gearing point of view. (One is very cheap <$35K and the other is more moderate at <$80K). I have a list of proposed questions below. Please feel free to email me or post on the board your comments, thoughts, and further questions. Based on this, I will keep you all posted as I perform due diligence.


    What is the cashflow of the businesses? (Income vs Expenses)
    How old are the machines?
    What is the date of the last service?
    How many machines?
    What is the shop size?
    What is the rent on the premises? or is the building included in the purchase price?
    Why is the business for sale?
    How long has the business been for sale?
    How motivated is the vendor?

    I can see a number of opportunities here based on the above questions.

    Clearly the first is that if the vendor is motivated, then there maybe the opportunity to negotiate the purchase price (so long as the cashflow remains positive). Secondly if the service history is poor, this may also influence the purchase price. Thirdly, if the shop is under-utilized, then there maybe the opportunity to add further machines. Various add on services may also be available.

    Comments / thoughts / questions etc will be appreciated. I may not be able to answer all but I will certainly try after I speak with the R/E agent.


    Profile photo of MatthewKellyMatthewKelly
    Join Date: 2002
    Post Count: 17


    Just thought I would update you….

    I called the R/E Agent and enquired re: laundromats. He said he would fax through details etc. A few moments later he called back after I emailed the questions and asked me “Are you for real?” (Bad attitude…) Meaning am I serious about the questions pertaining to the building being included in the purchase price!!! Man, he must have had a bad day because he was ?argumentative!!!!
    As we speak he called back and gave me the guys name and phone for one of the Laundromats and said he would find out some more details on the other laundromat.

    (Maybe I should send him a copy of the book “How to win friends and influence people”?)

    I know this is not a whinning board. Just thought I’d keep ya all posted. This could get very interesting.


    Profile photo of ADAD
    Join Date: 2002
    Post Count: 636

    I’m no expert on commercial stuff but a few thoughts came to mind.

    1. What are the conditions of the current lease (Get hold of it and take it to a solicitor).

    2. Request a financial statement of the businesses activity over the last two/three years. (Maybe see an acountant).

    3. Check with local council/Main Roads as to any changes modifications around the area that may lead to a reduction in customers. (or that have recently happened – the business may not show the losses yet ?)

    Small businesses can be highly profitable but also a potential headache. Hope the investigation brings you a great cash cow.

    Maybe he has been reading “How to Lose Friends and Infuriate People” by Jonar Nader

    AD [:0)]

    Profile photo of ChristineConquestChristineConquest
    Join Date: 2002
    Post Count: 2

    Could you clarify whether you are buying the property as well as the business.
    If you are buying the property, perhaps you could rent out the place and not get too involved with the hands-on of running the laundry business.
    Or perhaps sub contract to someone to the run the laundry business while you count the cash.
    After all, why spent your valuable time working for a living when you can spend more time looking for positive cash flow properties with a view to retiring early?
    Good luck

    Profile photo of Steve McKnightSteve McKnight
    Join Date: 2001
    Post Count: 1,763


    The introduction of GST had an adverse effect on the laundromat industry as, generally speaking, 10% of the profit went up in suds.

    This was because a $2 machine is geared to accept either one or two dollar coins. That is, you can’t put in $2.20.

    It’s a massive jump to go from $1 to $2 or from $2 to $3 because of the GST.

    As such, profits generally fell.

    As for general feedback, I’d just like to remind you to weigh up the risk vs. return and be mindful that getting finance may be tricky if you are looking for more than 70% LVR.

    Finally, be sure to draw a distinction between a leasehold business (where you are presumably buying the machines and taking over an existing lease for the building) and a freehold business where you buy the machines and also the building they are housed in.

    Sourcing finance for a leasehold business adds a layer of complexity in the deal.

    I’d imagine the real value in the business is the location it is in and the amount of repeat business. For example, a laundromat near a Caravan Park or multi-family property would be better placed than something in a more established family area.

    Why not place the details of the financials for the business for analysis on the forum? I’d be willing to cast my eye over it for you.


    Steve McKnight

    Steve McKnight | Pty Ltd | CEO

    Success comes from doing things differently

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