Don't Fall for This SCAM When Buying a Laundromat
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- čas přidán 11. 08. 2022
- It can be hard to tell a good deal from a bad deal and if you buy a bad deal, it can literally cost you tens, if not hundreds of thousands of dollars! This video was prompted by two consulting clients who brought me the same BAD DEAL.
I walked each of them through my thought process on what I was looking for when a broker or seller gave me information on the business and why things weren't adding up on this deal. I thought it would be valuable to share my thought process with you, too.
If you want help analyzing a deal you can reach out on the Laundromat Resource forums (laundromatresource.com/forums), ask around on a laundromat Facebook group, or book a consulting call with a laundromat expert (laundromatresource.com/coaching). Whatever you do, don't go it alone on your first try. It could end up costing you big time!
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I’ve actually walked this store and your assumptions are correct, the $1800 is for a small ‘store’ inside that sells phone cases, the owners both work full time, the machines are dated with a few that are in pieces. Finally, the store was ran from home, so there are no clear books and expenses are mixed in with personal expenses.
Thanks for that input!
Great video Jordan! Super informative. Learned a lot here…
Thank you Jordan for this video! Super informative without much jargon! Greatly appreciated!
Glad it was helpful!
Excellent information…Thank you!
I’m interested in buying a laundromat and this video has been eye opening. Thank you for sharing this video & information with us.
90 % of the sellers always lie about their gross income and payroll. Be careful
Thanks Jordan for presenting the financial Summary..
if you add following expenses: CapEx + Taxes + loan amortization: the business is basically 'dead capital'.
Absolutely! I didn't even mention that and it was already a bad deal
Only if your offer is too high…
Great info!
Thanks! Hope that’s helpful
Thanks for your insight
Based on their size and utility and maintenance costs, I imagine that they have roughly 30 washers. New washers and dryers (high end) might cost $300,000. They are offering to sell the business including the equipment at $300,000. So the equipment is valued at zero and probably for good cause. It might be a good candidate for a turnaround if the facility is run down, but that should be reflected in the pricing.
At this time there are many laundromats for sale and there's no need to buy a dismal property unless you're buying it at the right price with a turnaround plan.
Thank you for helping us avoid the sharks
Wry informative. Great info
Great video, so informative, i am still in the beginning of my adventure, wish me luck!
Best of luck! Let me know if I can do sending you help!
did you opened was is your experiance? I want to open one and trying to learn everything that I can.
Great info. Would’ve been nice if you would contact the seller and let us know the answers to your questions. Thanks!
thanks for the video
What is your opinion on approaching, trying to purchase a laundromat business on the method of seller financing
What about small ones that only have someone check in once a week?
Great video
Am I able to send you a copy of a laundromat I am looking into?
That's interesting. Never thought about the owner/operator not including their own payroll despite working a significant amount of time
I see that happen A LOT. Had 3 consulting calls this week where the owners didn't include their labor in the expenses. It's pretty common
Hello sir, Thank you very much for all your information. I am a member on your forum. Also, if anyone is interested in a laundromat in North New Jersey let communicate.
Are you selling one in North New Jersey? I probably know people interested in buying in that area
@@LaundromatResource No sir. I am looking to buy a laundromat in my area. I already had 2 bad broker experiences, so I definitely need better/more efficient means to find out about laundromats for sale. I have 100-200k to put down. I am also open to partnerships if the ideas and goals cross each other. I tried to post on your forum when it was new for my area, but did not get luck. I just posted again seeing is how you have many more members then when I first signed up. Thank you very much Jordan for your time!
15:30 So ironic that I just saw my local Panda Express advertising for $18/hr.
Hi! In what do tou base yourself to know if the rent is ok or not? Thanks
If the rent is 25% of the gross income or less it's a good rent amount. anything over about 35%ish is getting too high to stay profitable in most cases
For someones first deal, would you advise them to look local in their area and stay away from out of town deals that are say 2+ hours away?
Closer to home is definitely ideal. It’s a business after all and someone needs to look after it. It’s possible to partner with someone more local or to use technology to an extent, but you probably don’t want to entrust your business to minimum wage employees
It took 18 sentences for you establish your experience only to contradict every sentence afterwards. You started by saying old equipment will lead to expenses and that new equipment also will lead to expense but can make you a millionaire … which one is it lol ….
Ye the percentage that you have to pay on the rent is way high ...that would be a no go for me
Yeah, good eye there
Thank you I love listening to you . You are food for my Maga passions to own and operate with studio office/ apartment on site. On site 24/7 with all purpose room for community space for local neighborhood's meetings space with kitchen area for myself and employees use / hospitality for my community. Coffee variety of fruit made available to customers. I feel it c an manifest into reality if I keep my faith
Very cool vision!!
What happens to these stores you advise your clients to pass on? Does some unsuspecting buyer purchase and struggle? I’m always looking for small businesses to buy. I find most of the time, I can’t gain any confidence on the books. Co-mingling of funds, handwritten ledgers, I’ve seen it all! I wonder what happens to these deals that can’t hold up to due diligence?
Yeah, unfortunately that’s common. Getting a clear financial picture of a laundromat can be easier said than done for sure. As to your question, sometimes unsuspecting buyers pick them up, sometimes they sit on the market until sellers adjust their expectations, sometimes they just close, and sometimes an experienced owner can pick them up and turn them into something profitable. But there’s usually no getting around a bad lease…
@@LaundromatResource Is attempting to renegotiate the lease an option you consider? As a commercial landlord myself, I feel I’d be open to it. Lock in a long term tenant again, yes please!
How many years is the life of this equipment i.e. washers and dryers??
15 years is about when the best operators in the industry replace their equipment
Yes; the landlord is probably a related party or common owner; plus expenses are all over the place; you can “normalize” “pro forma” the correct expense amounts; all this tells me is that they don’t have good books; you say red flags, to me that’s an opportunity; the main thing is to verify gross receipts and pro forma the correct expenses and you’ll have your correct NOI. Every concept you spoke about is called “normalization adjustments” of the cash flow in the valuation world.
Moral of the story: know your numbers;
Hi I just inquired about a laundry business and I wanted to know if you would be willing to look over the deal with me?
Congrats! The best way to get on my calendar is to book a call at laundromatresource.com/coaching
Looking forward to checking it out with you!
The benefit of owning a laundromat is that it doesn't require much labor unless you're washing/folding for customers. Why aren't you considering this in your analysis?
You don't mention the loan cost. How do you pay back $302,000 with $6000 per month profit. That's 72,000 x 5 years = $450,000 and then the lease is over how do you sell the business then? Plus only $800 per month salary? Hmmmmm. Not.
That's part of why this deal is NOT a good deal. If your lease is up in 5 years you won't even be able to get a loan... It MUST be a longer lease
your coaching link is not working
It should be good now. Thanks for the heads up
What if the lease has a 3 years left but 5 year option? Would you consider that 8 years total and safe?
Make sure the 5 year option is transferable or assumable by the buyer. But 8 years is still too short. I’d want at least one more 5 year option and preferably two more
@@LaundromatResource the SBA will require the lease runs at least as long as the term of the loan. Not everyone needs an SBA loan of course but think about that.
This is basic business analysis what’s the scam?
Tank top??
How much do you charge for a initial review of a deal?
HTTPS://LaundromatResource.com/coaching
How can I contact you for consulting ? Thanks
Hi Gary. The best way to get on my calendar is to schedule a call through the website at laundromatresource.com/coaching
Bro PLEASE STOP TAKING 15 MINUTES TO SAY 6 MINUTES OF INFORMATION. CONSTANT REPETITION WILL LOSE SUBSCRIBERS.
Is it possible to email you for a query?
Yes! You can find my email here: www.laundromatresource.com/contact/
Interested in why you think payroll should be so high for a laundromat. Thinking these are basically unmanned 99% of the time.
Great question. Higher volume stores are rarely unattended. I don’t know the actual stats (but it would be interesting to find out), but I would say maybe 60-ish% are unattended. The rest have someone present part or full time. Especially if they offer a drop-off service
@@LaundromatResource Ok. That's interesting. Thanks.
@@LaundromatResource ive visited a laundromat in Maine, Florida and in New Hampshire and they all didnt have any attendants. i was surprised. sign says in all places if you need hepl, text them. one place has drop off but if nobody was there, i guess you text them? to be fair, the ones in maine and in Florida were both in tourist areas
This lease is just ridiculous I would never agree to pay $10,000 a month for rent for my business then I gotta pay $2500 for my apartment too hell no. I wouldn't pay no more than 5K a month for my future laundromat business with me knowing cash flow is definitely coming in 🤖
Sun's out, guns out! 💪
Ha! 💪🏼💪🏼
@@LaundromatResourceare there any laundromat inspectors who can come and check on the equipment etc before buying just like we have home inspectors doing inspections before buying RE??
Thanks
If there’s this many people thinking of buying a laundry mat it can’t be a good idea
I fail to see the connection there...
Many people "think" about doing a lot of things. Its the few that actually have the means, resources, and follow through that are actually successful. How many say they're going to the gym every new year and they fall off within the first three months? Same principal here. These business are simple but they're not easy. It takes grit and perseverance to ensure it succeeds. Many have the mentality of "Get rich quick, passive income, etc" and that doesn't happen until much later in your business ventures.
@@Roxus50 you’re doing what most people do who are sleazy sales people and you’re trying to make money selling or shilling information. So yes starting the laundromat may be a good idea but I don’t trust what you’re doing I think you’re a sleazy snake oil salesman
@@miketrav I haven't tried to sell anything to anyone, sir. I'm simply saying that there will always be more talk than action in the world whether that be about business, politics, or any venture.
Laundromats objectively make money, to what scale it profits depends on many factors but it is definitely not a shill.
This many poeple as in.... a few thousand out of 340 Million?
please stop repeating the same point over and over and over countless times, make it short and to the point and concise, audience lose interest and patience to listen further. thank you
Thanks for the feedback, I'll keep working on it!
I agree great info but please stop repeating same thing over and over .. makes it hard to follow
I have to agree. Been watching for some time on your older videoa and I'm like omfg. Please dude the information you present is great but cut the fat. Thank you
I have said the same thing on his other videos. I start LOSING interest because of his CONSTANT repetition over and over and over and over and over and over again. Get my point ?
@@LaundromatResource I have to agree with this commenter. Go over each point one time, maybe do a quick 15 or 20 second summary at the very end. Will make it a lot easier to get and use the valuable information presented.
I shopped that deal tool. That rent is awful Lol
Haha small world
YOU Forgot Tax!!!
EBITDA (NOI) is before taxes. Is that what you’re referring to?
@@LaundromatResource 28.000 Once you pay the tax It would be Less ain't that another red flag!!! That 28.00 would be less!
It depends on how you do your taxes… but yes, you’d definitely want to think through the taxes too! Good eye!
@@LaundromatResource Thank you, for your response!
That's why you dont buy a laundromat
Gonna miss out on a lot of opportunities think like that…
@@LaundromatResource what I meant by that was not to buy it and get if for free.
This video should have taken half the time. You linger too long on each topic.
working on it!
@@LaundromatResource I subsequently watched several other videos. Good work.
Here's a tip: in the lower right corner of the screen there is a "cog". That's the Settings. In there you can find "Playback Speed" where you can slow down or speed up a video. I find that you can play some videos at 1.5x speed and still be able to understand what they're saying.
Good information but you're very slow to get to the point and you keep repeating yourself over nonsense things like whatever is highlighted in Black he kept circling around it and talking about it if you don't do that your videos would be great but if you keep repeating yourself and talk about nothing terrible
how to contact you
send me an email at laundromatresource@gmail.com