# Buying a Laundromat



## wadesansom (23 June 2014)

Hi,

I recently found a laundromat business for sale in Sydney for $45,000. 

Apparently: 

- Low maintenance
- 25 machines (13 washing machines, 12 dryers)
- Decent income (waiting back to hear about financials)

I found the laundromat on Google Earth and it looks quite nice. In a busy area, surrounded by houses and shops, a primary school and a university. From the outside it looks to be in pretty good condition.

Has anyone had any experience or knowledge about this business venture? 

Anything to watch out for? 

Thanks in advance


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## Buckfont (23 June 2014)

Had a friend who considered buying into one, but and decided he didn't want to get cleaned out.


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## Tyler Durden (23 June 2014)

Buckfont said:


> Had a friend who considered buying into one, but and decided he didn't want to get cleaned out.


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## Miss Hale (23 June 2014)

wadesansom said:


> Hi,
> 
> I recently found a laundromat business for sale in Sydney for $45,000.
> 
> ...




Stray socks? 

I wonder how much in demand laudromats are these days as I hardly know anyone that uses them


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## skc (23 June 2014)

wadesansom said:


> Has anyone had any experience or knowledge about this business venture?
> 
> Anything to watch out for?
> 
> Thanks in advance




It may be possible to generate additional income by hiring out the laundromat to the pr0n industry?


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## sptrawler (23 June 2014)

A friend owned a laundromat, attached to a dry cleaners. The enviromental regulations, eventually led him to sell up.
So best check up on the regs.


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## sydboy007 (24 June 2014)

I think it would be hard to make it work these days.

Unless you're near a large student population I don't think too many households these days don't have a washing machine.  

Possibly if you were in an area with lots of tourists you could make a go of it.  It would also depend on the rent you pay.  I know in Newtown Sydney just about all the laundromats have shut up shop.  Think there's 1 that uses a card you add credit to still running, but a fair chunk of their business is using the extra large washer to do items you can't fit in your standard washer at home.

With the large rises in electricity prices over the last few years, and gas prices to take off now, I wonder if you can charge enough to cover those costs as well.


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## Clifton (26 June 2014)

They can turn into drop in centres for the local hoods and the anti social problems they bring with them.


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## CanOz (26 June 2014)

Look at the audited results for the last few fiscal years and see what the trend is. Chances are that if it s a bargain price then its being off loaded for a reason i.e. - the owner wants out. Sadly, if it sounds too good to be true it usually is. 

CanOz


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## wadesansom (27 June 2014)

CanOz said:


> Look at the audited results for the last few fiscal years and see what the trend is. Chances are that if it s a bargain price then its being off loaded for a reason i.e. - the owner wants out. Sadly, if it sounds too good to be true it usually is.
> 
> CanOz




yes, that is my feeling exactly. just roughly:

it has a 45k gross profit, with 31k of expenses... 

so a 14k net profit, and they're asking for 40k for the business. the lease runs 5 years + 5 years starting from the end of this year. 

the reason for the sale is apparently moving interstate soon, but that's a pretty safe "go to" reason for a cheap sale. 

i haven't seen the financial statements yet, as i am waiting for them to be emailed to me today or tomorrow, the figures are what i've been told i will see...


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## Smurf1976 (27 June 2014)

There's a market for this service still but it's not particularly large these days. 

That said, given that washing machines in houses have been normal for several _decades_ now, I'd think that the decline of laundromats would be over and done with. That is, the underlying market shouldn't go any lower than it already is so if it's viable now then unless there's some local change in the area the market shouldn't disappear.

One question that comes to mind is maintenance and eventual replacement of the machines. Regardless of how long they last, they don't last forever and their value is thus declining each year. Is this reflected in the accounts? What's the condition of the machines?


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## skc (27 June 2014)

wadesansom said:


> yes, that is my feeling exactly. just roughly:
> 
> it has a 45k gross profit, with 31k of expenses...
> 
> ...




Here are a few questions to think about...

- Are these expenses likely to rise over the years? You can bet water rates, electricity rates, insurance etc will be going up.
- Has revenue been increasing? Is that through higher prices or more usage? How easily can you pass on cost increases? 
- How's depreciation done and what's the remaining asset value on the financials vs actual asset value?
- Get a copy of the lease... 5+5 year at who's option? Is it indexed to inflation? Who pays for outgoings?
- How much of the owner's personal time does it take? E.g. Driving to the premise, collecting the coins and getting them counted at the bank. Make sure inidental expenses are included (e.g. petrol).
- Are there major one-off items in the last 5 years that isn't included in the latest year financials? E.g. a leaking machine causing damage to the floors. 
- Can you find the nearest alternate laundromats and hence define your catchment area? Is it a good catchment? Are there any known future plans to the premise or surrounding areas?


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