Making $97,000 Profit Using a Laundromat! (PASSIVE INCOME)

If you've ever thought about buying a business, whether it be a laundromat, a lawn care business or whatever it is, the numbers have to make sense. In our Mike minutes Mastermind, which is our daily mastermind we have with our franchisees at Augusta Lawn Care, I actually broke down the numbers a few minutes on a laundromat deal that they were looking to buy and just wanted to analyze whether or not it's a good deal. And so I think it's a great thought process that you can use when you're looking to analyze whether or not you should buy another business and get into another industry. Whatever you do, make sure you avoid this shiny object syndrome. Make sure you're getting into business and starting a new business because it's going to make you money, not because you're just distracted or you're entrepreneurial. Let's go ahead and roll the tape.

I see a laundromat near me is for sale. I've been interested in this because the low level of employees need to operate it. The asking price is 210,000. It is a coin operated location that has a drop wash and fold service. I would drop the wash and fold service because I want to simplify the business. The sales are listed at 140,000 and the net is listed at 60. I looked up the business and was able to see that it was owned by an older couple that has been operating it by themselves. The Google reviews are sitting at four out of five stars. People are saying that it used to be better kept and that it could be more comfortable. This all seems like an opportunity to capitalize on the need of a boomer aged owner that is looking for liquidity. How should I go about analyzing this opportunity? How should I value the business? I heard Cody Sanchez from Conventional Acquisition say that these valuations are really mostly made up. Meaning that it really comes down to what people think. I would like to do this with either a SBA loan or 90% finance or owner financing or a combination of two. What do you think? Okay, so several things I have my that go through my head. I don't know where you're at financially. So that's the biggest thing. Like it depends. Like if you have multiple locations, it's very different what I'd be saying. But let me try to give advice without knowing that because that is the determining factor. But first and foremost ask yourself, what's the difference? What advantage do you have over the market in this industry? This is where Cody. I think Cody's amazing by the way. But you have to remember the only reason you do a good, you can make a great deal in boring businesses that don't require employees. And it's just they run by themselves. The only way to make a good deal work is you get a good buying. You get a good buy. It is not on the. Because if there's nothing you can do to make the business more profitable by growing it and there's nothing, no employees required, there's no operational efficiencies, then you know, vending machines, things like that, there's no real improvements you can make on the business. It becomes commoditized in terms of valuation. So the only way to really crush it in a business like that is the sale price needs to be incredibly good. If you could get this business for 50,000 now it becomes interesting, right, because now you're able to make your money back within a year. So my first thing is, do you have any sort of edge on any other buyer when it comes to laundromats? This is why I've stayed very narrow to lawn care and only recently started going to real estate. Right? Like all of my businesses are around lawn care, like the gym. Okay, that's, I did that beforehand to figure out the franchise model. But even that is within franchising, right? So it's like lawn care, franchising, real estate, like that's very narrow. And every single time I've ventured outside of that, I either stop question myself or I've started it and then just had to abandon it like keto ketosis cups. I was not a food expert. What was I doing? Why do I think I'm going to beat. People have spent years and decades of their life dedicated to that industry. So first and foremost I'd be looking at do you actually have a, an operational advantage over anyone else buying secondarily? If you don't, the asking price is the only thing that matters, what you can buy it for. Because then you're simply looking at numbers. Third thing I would look for is 141,000 revenue. I would imagine that 30 to 40% of that is from the folding service and the Washington service, if not more. I could be wrong. You're not giving me the numbers here, but I would imagine 30 to 40% of that is the wash and fool. So let's go ahead and say 100,000 of it is from the coin operated side of things. So now we're looking at.

About 50 to 60,000 in annual annual profit if you take those numbers. Because that they're, they're they're, their expenses are fixed rent and utilities. Those are the two big ones when it comes to Laundromat because you have rent of the facilities, you have all the water, electricity to operate the machines, and then you have maintenance. Right now, if they were doing all the maintenance themselves, they're doing all the labor themselves. Now you got to look at that 50 to 60,000 and ask yourself, okay, how much is it actually coming to me? Let's just say it's 30 to 40 grand. After you take, you hire someone else to do the maintenance, cleaning, because they were doing all of that, you're going to 30, $40,000. Let's just say $50,000 to be generous. Okay. That you're actually profiting on this business. If you cut out the fold, wash and fold service, so you reduce labor, but then you need someone else to the maintenance, fix the equipment, repairing equipment, changing it out. But I promise you one thing. They're not fixing asset capitalization in terms of replacement costs for those machines. So max you're making this is 50,000 a year. Now you just ask yourself, okay, 50,000 a year on 210,000 in in asking price. That is going to take you four years to recoup your costs. Okay, secondly, more from a cash flow perspective, we're now cash flowing about on 50,000amonth or 50,000 a year in profit. We're cash flowing $4,000 a year in profits. On $210,000 of a loan, you are going to be looking at about 2 to $3000 a month in your loan. If you're doing a 10% down on 90% finance SBA. So you're literally looking at about $1500 a month in profit. That's the reality of this situation. Now, if you can get the asking price down to 50 to 60,000, because they're just done with it and they do not. They can't sell the machines by themselves, which is very possible. Now we're talking about something more interesting. We're doing three to four thousand dollars a month in profit. Then the question is, is this going to take so much of your time where if you just put this time, money and energy and that same SBA loan into your lawn care business, would you to $4,000 a month in profit? That is the question. Okay, if you spent the amount of time, energy and money that you're spending on this Laundromat, if you spent $210,000 on your business, would you make $80,000 a month in revenue? Would that make 10 to $15,000 a month in profit. That is the question. So again, this really depends on where you're at in business, where you're at in terms of financially. If you had $200,000 sitting in a bank account, that's a different conversation. And if you have $10,000 in your bank account, you just got your business started for lawn care. I truly believe $210,000 on your lawn care business is going to net more than three to $4,000 a month. And after the cost of financing, $1,500 a month. I truly believe that.

Those daily masterminds, by the way, are just one of my favorite things about Augusta Lawn Care. And if it's something that you'd like to be a part of, check out augustalawncareservices.com franchise. Even if you have an existing lawn care landscaping business or you're just getting started, Augusta Lawn Care is a great place to to connect with other like minded individuals and literally one out of three or four people that even apply go through the vetting process. Do we allow in the process simply because we are trying to create a group of individuals that are dedicated to growing their wealth, growing their business and becoming better. And that's what those masterminds are all about. Every single morning I'm on there, we're trying to improve each other's businesses. Answer questions and you can see even that it's not even about lawn care. All the time we talk about real estate, investing, other businesses, the economy. And it's just the best part about being a franchise is you have like minded individuals using the same business model and the same systems so you can bounce things off of and just a great group of people that I think you might want to be part of. So if you'd like to be, check out augustalongservices.com franchise. Our next training event is in November and there are still a few more available spots, so check it out.