![]() These are the three main methods of determining a laundromat’s income: None of them are entirely accurate, but together than can narrow in the range of probable income of a laundromat. I recommend using all three together whenever possible to get the most data possible. So how do we determine a laundromat’s income then? There are three primary ways to determine the income of a laundromat. This is the reality of this business, and it’s what makes your due diligence so critical. If you look at even a handful of deals, you will definitely find laundromats that have limited financial records, scattered financial records, incomplete financial records, conflicting financial records, and even no financial records whatsoever. Since the majority of laundromats are still cash businesses, utilizing coins either entirely, or as one option of payment, pinpointing the exact amount of income can be a challenge. This seems obvious, but it can be easier said than done. ![]() We need to know how much money is coming into the laundromat. The first Pillar of Laundromat Due Diligence is determining the laundromat’s income. But, those assets also include the infrastructure of the space (ie- plumbing, electrical, gas, floor drains, etc.) and goodwill in the community. The assets include the washers, dryers, boiler, change machines, vending machines, etc. That value will be based more on the assets than its performance. ![]() The one caveat to this form of valuation is that a laundromat that makes very little money, breaks even, or possibly even loses some money does still have some value. By determining the NOI, we can assign a value to the laundromat.ĭue diligence is the process of verifying the NOI and, if necessary, adjusting our valuation based on what we uncover. The net operating income is the gross income of the laundromat minus the gross expenses, not including taxes and loan payments. Performance is measured by the laundromat’s Net Operating Income (NOI). You must base the value of the laundromat on its performance and not its potential. When doing due diligence on a laundromat, what you’re doing is assigning a number to the performance of the laundromat. By the end you will be crystal clear on the basics of what due diligence you need to do when buying your first laundromat. We’ll go through each of the 4 Pillars of Laundromat Due Diligence in this post. So how do you do proper due diligence to ensure you are buying the right laundromat for you at the right price? You need to go through the 4 Pillars of Laundromat Due Diligence. Being off just $500 per month could mean overpaying by $20,000-$30,000. It is critical to have the right information about the business and make a proper valuation based on that information. The key to buying your first laundromat right the first time is doing proper due diligence. However, if you buy wrong the first time, you may find yourself struggling to dig yourself out of a hole. Your high cash flow and flex time can allow you to expand into more laundromats, add new services, or even invest in other businesses. If you buy your first laundromat the right way the first time, the sky is the limit. They are relatively simple, produce a high cash flow, require little overhead, and more. Laundromats might be the best small businesses in America.
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