Has anyone here ever negotiated and bought a failing laundromat? I’m looking for a low barrier to entry (i.e. very cheap) laundromat, so I sent out a letter to a few candidates and got a response from one of them. After a nice conversation with them, I have some P&Ls here that show what we talked about in our conversation: the owners have been winding down the business in recent years (disinvesting) in anticipation of closing it this year when the lease is up. I know that any offer to purchase would have to be contingent on negotiating a good new lease, but I honestly have no idea what to offer if the NOI is in the red? I started to try to compile a valuation based on what the machines might be worth, but I don’t have enough information on the machines to do that, and just thinking of doing it that way made me nervous, because it’s unconventional.
I do understand that this is a risky acquisition. I’m still interested in doing this because I see a lot of potential upside to this laundromat: high traffic location on a street that is not too high of a speed limit, nearby shopping, decent sized and growing population of low to medium income families, a lot of recent immigrants, a decent percentage of multi-family units, plenty of onsite parking, and lots of opportunities to add value by fixing machines, adding vending, and upgrading the cosmetics of the interior. If the current management had chosen to keep machines in good repair instead of consistently choosing to just let them sit broken, then I think this store could be making a decent profit.
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