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How much you can buy a functioning laundromat for really varies by market. I bought mine for $190k. Good luck on your laundromat journey!

Thanks for commenting! I agree that owning a larger business is going to take up more of my time than owning a laundromat. And I agree that laundromats are more hands off than many other types of businesses. But laundromats still require regular attention, especially when you have a wash & fold service. It may not actually require that many hours in a week, but those hours can happen unexpectedly and at unideal times (an employee calls out last minute, or a customer calls in the evening to let you know a machine is leaking). Larger businesses are still work for the owner, but the work often looks different than in smaller businesses. One of the big challenges I had with my laundromat is that there was really no way for both my husband and I to travel internationally at the same time. And that was one of the reasons we sold it-we want more flexibility to travel before we settle down and start a family. With only one laundromat, we didn’t have the cash flow to afford a manager, and there could have been a lot of problems if there wasn’t someone close by and on call to fix problems. With a larger business, there are usually more layers of employees between the owner and the actual labor. I love to work, and I plan to work plenty when I buy my next business. But I plan to buy a business with a management team in place so that I’m not required on the ground so much, such as being the one who has to go cover a shift if an employee calls out. I’ll also wait to buy my next business during a period of my life when I’m ready to be more settled down and am willing to spend at least the first few months being deeply involved in the day to day to make sure I intimately understand operations.

Correct! You add back the interest payment but not the principal of the loan because the principal cannot be written off as an expense, therefore there would be nothing to add back.

So glad to hear it! Thanks for watching 😊

Thanks for the question! Typically at least 1.2 for the last 3 years.

Thanks for commenting! I focus more on financing for business acquisitions than I do start ups, although you can use an SBA loan for a startup. Feel free to stop by my office hours (link in show notes) or ask me a question here.

Thank you! $190k

Thank you!! I'm very excited about it :). That's a great question and the answer varies. A seller could be saying no to SBA financing because they want to move quickly and SBA can be a more lengthy process than other financing options. A cash offer is generally preferable because the buyer doesn't have to go through the approval/underwriting process, so it's most likely going to be a faster close and it's probably going to be less work on the seller's part overall. There are times when a borrower gets into the SBA underwriting process and then the deal falls apart for one reason or another. That means lost time for the seller in finding the right borrower. Generally, when a seller agrees to an offer they agree to a "no shop" period, meaning they won't entertain offers from other buyers. So if a borrower's financing falls through after a few weeks, the seller is now back at the beginning of a finding a new buyer. Obviously, I think SBA loans are great products. If you're working with the right lender who's pre-flighted the deal properly, then there should be a very low chance things go wrong in underwriting. But SBA financing still poses more of a risk to the seller than a straight cash offer. Many laundromats are sold for less than $500k, and at that price point there are a number of cash buyers out there, and sellers know this. Another reason a seller may not be accepting SBA financing is if they know their business won't qualify for it. Maybe they haven't been keeping up their books and know they wouldn't have the documentation needed to send to a lender. Maybe they've been under-reporting their cash income on their tax returns. Maybe they know the multiple they want to get to isn't going to work with SBA. You can always ask the broker/seller why they aren't accepting SBA financing, although if they've already stated they're only taking cash offers then they probably won't entertain a conversation with you if you're asking about SBA.

@@Keira_Hamilton Many thanks for the detailed response!

Thanks for adding this!

This is a great question, and ultimately business valuation has a degree of subjectivity. Most small businesses are valued based on a multiple of Seller's Discretionary Earnings (SDE). That multiple can range, but it's typically in the 3x-5x range. Factors that can affect where a laundromat valuation falls within that range include machine age and condition, lease length/terms, and the overall operations. If the machines are 15+ years old, I recommend getting a quote to replace them and then determining what your monthly loan payment would be and factoring that into your cash flow projections. There is no perfect way to value a business. Ultimately, you'll need to determine what the cash flow would have to look like in order for the investment to be worth it to you and then negotiate with the seller from there. Something to keep in mind is that there are a lot of laundromats for sale for under $500k. While you can certainly get SBA financing for a smaller deal, you are going to run into a lot more cash buyers at this size. A cash buyer's valuation may be different because they are not factoring in a monthly loan payment. It makes the process more competitive, especially if you're trying to finance your acquisition.

This is going to vary by state and city. I would guess most places you just need a business license. In San Francisco you also need a Permit to Operate and you only need an additional license if you're doing something specialized like medical laundry. Licensing tends to be stricter in California, so I would think if you're in another state it will probably be even easier.

Great question! I was actually surprised at how few times this happened. In over a year I think I've had 2 wash & fold customers reach out asking if we had seen a particular item. We're really careful about tagging customer's laundry and checking machines before we put clothes in and after we take them out to avoid mix ups and lost items. The couple times a customer reached out asking if I had an item I let them know I would certainly be on the lookout for it and would reach out if it turned up. I would explain our organizational procedures and that I thought it was unlikely it was lost during processing, but that I was sorry if that was the case. Even though I didn't think it was our fault and that the item was probably around their house, I wanted the customer to leave with a positive experience, so I would offer a $20 credit on their next order. If this situation had occurred more frequently, I probably would have needed to think of a different response, but as I said it was rare.

@Keira_Hamilton makes sense..,I am under contract on a property that I own and will soon have cash, I'm a big fan of the age old cash is trash, and looking at different things to invest in. As of now I am in gold/silver and I have a sniff spot on my property that nets $1,200 on avg a month. By no means weathy, but looking at options. I cannot do a 1031 for gains due to the property is rural minning land, so considering if I should invest into m own small biz and get something else going or real estate etc. Stocks seem like a very volatile place to be as of now with limited upside.

@@Mountaintoptractor I offer weekly office hours if you ever want to come by to ask questions about business acquisition and financing. calendly.com/keirahamilton/business-acquisition-office-hours?back=1

Thanks for commenting! For me personally, I like service businesses in what some might call "boring" industries--laundry, cleaning, routine maintenance. I plan to make another acquisition in a few years and will likely be exploring industries such as janitorial or non-emergency medical transportation.

I have seen that done before! It's not something I've personally tried. I think it could be a good fit for owners who are looking for some extra revenue but don't want to deal with running a wash & fold service themselves. But I think there could be some challenges as well. If this person is not your employee, what does that relationship look like? They will essentially be representing your business if they are running their service out of your store, since customers aren't necessarily aware of the business arrangement. Since my store already had a wash & fold service when I bought it, I didn't consider switching to a model like this because it would likely decrease my revenue.

For purchasing a laundromat or starting one? The amounts can really range. I recommend checking out my Business Buying Basics course for more info on financing a business acquisition.

Thank you so much!! Check out my calendar: calendly.com/keirahamilton :)

Interest rates could be even higher than that. In some cases, using available cash is preferable. It depends on a person's overall financial picture and their short and long term goals. Sometimes, even if someone has the cash available for the total purchase price, they may still want to leverage debt.

I can't speak to those courses specifically. I'm sure there are useful courses out there. What I really want to caution my viewers about are the folks selling courses using misleading claims, such as the ones I've described in this video. Thanks for commenting!

I absolutely would! Not only has it been profitable, but it's been an invaluable learning experience. The lessons I've learned from owning a laundromat will be necessary to move on to larger acquisitions in the future.

I’ll actually be creating some content around my future plans soon! But the short answer for now is something else.