Mat biz.....

[Kitty]

I know we had this thread a couple of years ago, but the names have changed to protect the innocent since then.......It is interesting to hear the stories behind the names of our members. Im not interested with location as we have also asked this before and this doesn't matter, but I'd like to hear the how to's of your mat business(es) and how you became an owner. Who's full time and who works outside their investment. Who got what they paid for and who wishes things were different? Who out there is contemplating the business and why is it you consider the thought.......talk to me! :)

[Winston]

I'd like to be able to share and also learn information about other laundromats that would normally be considered confidential. Info like amount paid for the mat, its current value, gross revenue, expenses and net revenue. How can we share this info without revealing who we are, or where we are? You never know who's surfing this forum. I would not want to reveal financial information that a local competitor could use to his or her advantage and to my disadvantage.

[Kitty]

No one should post any numbers, and I certainly didn't ask. I was asking how each of you entered the wide world of the mat business? Each of you have a story, I just wanted you all to share it. No numbers, no locations. Who's happy whos not? Who cares?

[mike]

I just got annoyed when my local mat went from 50¢ a wash to 75¢

My wife said, "so YOU open a laundromat"

I did.

26 years ago

Still working on my first million,

$5,000. down,
$995,000. to go !

[JBTcajun]

he he u funny! I am working on that second million dont know where the first one went.
JBTcajun

[PeterH]

It took me 5 years to make the leap. I studied and studied and studied. Seemed like everything I learned went in one ear and seeped out the other. Finally, my New Years resolution for 1999 was "Sh*t or get off the pot". The problem I could not get past mentally was initial funding. No matter where I turned, I just couldn't find the money. 30% down on any store was just too overwhelming for me. Finally, my brother-in-law said "borrow against your 401k." I was really, really against it, but the 'mat I found to buy had absolutely no incorme records. With what I could borrow from the 401k, I could low-ball my offer and hope for the best. Because that owner had no clue, she took my offer, I hit the 401k, paid cash for my store and was in business. Within 1 year and after tons of sweat, I had the 401k paid off. I still have a hard time understanding ROI and feasability, but I know that I have a good store in a good location and that the income is there to pay the bills and service the debt with a nice chuck of change left over.

Now if I can just take the next leap and become an employer...

[Anonymous]

I got tired of the consulting business and living on airplanes. So around Thanksgiving time one year I just called it quits. Then I had to decide what to do next. I though a laundromat would be a good business - cash, no inventory, no travel, etc.... Looked around for a month and made an offer on one. Had a deal, or so I thought and then just before new years the seller backed out. Found another and made an offer the end of January. It dragged and dragged and dragged, but we finally closed the deal on April 19th. Have never looked back.

[ajay]

After servicing(strictly fixing when things broke) my dad's store for 10 years during college years and first few jobs, I decided to get a store of my own. I bought a low entry store, simply to off set my income and peace of mind in a volatile IT market. After 8 years of running the store, we decided to sell to move onto bigger and better things. But luck would have it, it wasn't meant to be. We lost the lease and the store to another business man. Under some desperate situations, We ended up moving the equipment and rebuilt another store. Now, I'm looking to buy more or build new to make it a primary source of income...only to have the ability to move on to bigger and better things ;-).

[David]

After 10 years of marriage, my wife and I had the first kid. She quit teaching to stay home. I was looking for something else to offset her income loss a little. I tried every type of MLM and home business there was. None of them were for me or fulfilling in any way.

We hired a new guy at my day job. He owns one mat and has his finger in three others. He is getting burned out and decides to sell one. After listening to him for over a year, I realize, "I can do this!"

That was about 18 months ago. Now I own three mats. And for some reason, I enjoy the business.

[Winston]

After 25 years of delivering babies at all hours of the day and night, skyrocketing malpractice premiums, 50+ OBs on staff at the local hospital, I decided to look for another life. I looked at a resort grocery store, but the owner showed me the sofa where she spent many nights during the season... so much for that! An automotive repair shop just didn't seem right. Then I found a large (7000 sq ft) run down laundromat. The mat was opened in 1989 and at one time was very busy. For the previous 2 years it was owned by 2 engineers who had lost interest in the business. I really only looked at one laundromat, briefly looked over financials and utility bills, then made the plunge. At the time 25 machines (out of 108) were out of order. Since that time two and a half years ago, I have learned to repair all the machines, and business has increased steadily.

It really is true: If you find a job you like, you'll never have to work a day in your life.

[Kitty]

I should remember you Winston! Gyno-laundromat owner.....its so simple.....

You thing my just recently retired gyno might want to join the ranks of mat owners? :)

[Andy]

I Have a friend whos parents owned 12 stores and were very successful at running them. They bought some existing locations to remodel and also built new stores from the ground up, it was an impressive operation. My buddy always talked about how great the coin business was so in my free time while still in college I began to go with him on his "rounds" to get a feel for the business. I would sit with his dad at their office and listen to his thoughts on all aspects of the laundry world. He was very encourging to me. Looking back I can't believe I spent the time on all this research because I really didn't have any money, at all.

My idea was to talk two or three of my friends into teaming-up to buy or build a small mat. As I said my funds were limited as I was living off of student loans. At the time I had also just started an automotive manufacturing services related company, but believe me at 1996 total revenues of just over $7000 it wasn't going to do much for me at the time. STAY WITH ME I DO HAVE A POINT. With all my free time another friend of mine and I bought an abondoned house for $4200 (with credit card checks) and sold it for $32000 after eight months of labor and some expense. The day we sold the house I also won a radio contest for $10,000 (I won't go into this). In one day I had almost as much money as I had earned my entire life.

Soon thereafter I discovered one of the mats near where I actually lived was operating in a building with no lease. I wrote the owner (who lives 2000 miles from here) a letter explaining my interest in the property. One week later the mat was listed for sale in the classified ad page of the local newspaper. Two weeks later I bought the mat.

Today, six years later I have about 20 employees (it varies daily) at my two businesses.

[mike]

Andy, I'm unclear, did you buy both the real estate AND the business from separate owners ?

If so, cool !

[Andy]

By writing the letter to the landlord I unwittingly lit a fire under the business owner. Essentially the landlord immediately went to the business owner and said sign a lease or get out because I have people interested in the property. The business owner said give me a chance to sell the business and I'll be out of your hair. As it turns out the mat had been sold a year earlier and financed by the previous owner, he then got it back for non-payment-so he was ready to sell anyway and was happy that I came along.

I only bought the business and I am now in negiotations with the property owner.

[anonymous]

My older brother (18 years older) had 2 laundries and 2 drycleaners at one point in time. I worked for him on and off for about 21 years, starting when I was about 19. He was an "explainer". Whatever he was working on at the moment, he would explain it to me as he went along. Everything from bearing jobs on Milnors to profit margins.

Guess he didn't think I was listening. Or maybe it was because I'm a "goil", but when he started to retire and sell off the businesses, he knew I wanted the larger of the two laundries, but he sold it instead to a guy that worked for him. I figured the guy would take this really great laundry and run it into the ground in about 4 years or so. Since I had a good long wait in front of me, I went back to college and got my degree in business. Time well spent.

It actually took 6 years for the laundry to go bust. Brother repossessed it, but it was in such deplorable shape that he couldn't find a buyer. He offered it to me in desperation (guess he thought he'd be holding my hand for the next 20 years). Even though I knew the biz and had been waiting for this mat for 6 years, I hesitated. The mat was operating in the red, and it needed Everything replaced. I knew from experience that I would need to give up almost all free time for 2+ years to make ends meet and the retrofit would take up to 10 years...... how hard did I want to work?

Well -- I held my nose and jumped off the cliff.

I had learned alot from my brother-- enough to know there were things that I would do differently. My brother is a great mechanic. My strength leans more towards marketing and management. Yes, I know how to diagnose and fix most things.... and at the beginning I was fixing things even in my sleep. But now I CHOOSE to fix only the smaller, easy things. The heavy, greasy, gross jobs I farm out to my distributors. And when Mr. Fix-it is there, I am right at his elbow making sure I know what he's up to.

There is no biz like the laundry biz.... it is not for the faint of heart. My strength in my local market is that I have not only my own years in the business, but all the 40 years of insights and knowledge that my brother gave me. I can outwork any other laundry owner in my area. I don't believe that just because something has always been done a certain way, that it's the right way in today's market. I'm not afraid to experiment, just to prove an idea right or wrong. And I keep my pencil so sharp, it should be declared a lethal weapon.

Oh, yeah..... I make more than my brother did... adjusted for inflation, naturally.

[pete f]

I just wanted a business for some extra cash to use to buy a bigger boat. You know the theory, if you are going to create a liablity, create an asset to cover it. So a mat sounded like an idea, I had employees, inventory, Recievable$ in a prior biz.
Well I got the bigger boat, and still want bigger, so I keep adding mats. It has taken years to get them where I consider them least amount of trouble. Now am working on another.
I had a very mechanical background, and also a sales background. I know if you make a customer happy and take care of problems they will continue to do business with you. I learned this many years ago. I was a little worried with my first mat, everything was pretty old and I had no idea how to fix anything. I mentioned it one day to my mother, she said something like don't worry, dryers are built by dummies.. have not thought about fixing stuff since, just do it.
I had, and still have other income, though I would say now the mats are the only thing I physicaly work at and are starting to account for more of my real income. The first 4 or 5 years I reinvested to update and remodel and expand.

[Kitty]

When I was in college and moonlighting at the restaurant adjacent to the Laundromat I eventually worked at, I would never step foot in it. I always thought there was low lifes and derelicts and greasy nasty owners inside? After my son was born Dave offered me an office postion and I declined, never wanting to work in a LAUNDROMAT...

In 1995 while employed at Nationsbank, Dave calls me again. Needs an office manager. I accept this time, as banking was begininng to suck, and he sold me on "flexibility"

I started as office manager of 3 stores and became an apprentice to dave. I learned every aspect of the business from upfit, profit, expenses employees and maintenance. I wanted to know everything and I learned everything. I worked for him for 9 years and recently resigned because his wife wanted to work, or at least that was what I was led to believe.

I envy you people as you have been able to take the leap to self employement, and I wish to do that one day. This business is not for the weak heart, nor is it for those who do not learn and contintue to learn about the reselling of utilities to their communities!

What is tough to do on my job search is to find that flexibility and a position that allows me so much control.....

[JBTcajun]

the leap to self employment is not so hard when you think of several things. How do you want to work, for your self or for someone else. As you have learned working for someone else has no guarantees! As a matter of fact it is a less stable position because you suffer for others mistakes and whims.
Start gathering printed material. Make a resume. Find a situation. Do your homework. Go to a bank that dos direct SBA loans. Present your package. You have what SBA looks for, a track record. NOW is a great time for you to do this because you probably are on unemployment and are getting some income during this very long process. Do It Girl. If You Fail YOU failed then you will be right where you are now. Just a couple years older. IN my mind there is no shame in failing but there is in not trying if this is in your mind. Without trying you will never know and never again be satisfied with what your are doing. Seize the day!

[Kitty]

THe problem is I do not have a track record, from the banking perspective. Even though I know what I know, banks are conservative to some degree. I will never give up and I will plug away and continue to seek my goals. Im just a little green eyed as I would like to be working for myself and creating my own work now. I am a woman and I want everything yesterday......however, I will be patient and make a good sound business decision when the time comes! :)

[Anonymous]

You've got "X" number of years managing 3 mats, what do you mean you don't have a track record? You have a hell of a lot more experience in the business than most people they lend money to. You just need some attitude adjustment - starting being more positive and convince them why you will succeed where others would fail.

[Anonymous]

If you own a home just take out a home equity loan. They give those to anyone.

[JBTcajun]

Kitty you ran multiple mats. All you lack is the confidence. You have a better chance than most for getting an SBA loan with very little down. They will make you dot the i and cross the t and underline the u but you will get the loan and it is very good idea to be familiar with your project. You should dedicate yourself into finding a situation. While you are looking familiarize yourself with the SBA. Start putting the package together, do it on your dream situation. When you find what will work change package to fit. www.sba.gov Do something everyday and this goal will come to foliation. Kitty I know some very wealthy folk (own 2 successful supermarkets) that wanted to help her sister get into the mat biz. (mat,car wash,mini storage) After speaking with 3 bankers they are selling the property they bought and abandoning the Idea. They are building sis a supermarket. The bankers scared them off because lack of experience. Money was not the issue experience.
The government has set up the SBA for folk like you. Experience no funds. Being female there are programs that you can get into the biz with 5% and less. Leveraging really hurts any biz but if you do most the work and take less salary it can work. Every day charee.

[Kitty]

Kirby,

I can't believe you said " I need an attitude adjustment"??? Need more confidence?? Are you kidding? Are you talking to me?
I can envy you guys, while trying like hell to catch up with you! Make no mistake, I will not lie down and wish in one hand and be dealt with #%# in another. I am not afraid.

As petef has so eloquently stated before " if it was that easy, everyone would do it" (which by the way annoys me to no end...only because it so freaking true!) It is difficult to acheive the goals to self employment, it takes determination, drive, homework and the ability to take no for an answer more than once. My only pitiful to self employment is cash and banks want to see me take a risk as well as them. They do not want my equity in my house, they want cash. I have a tremendous amount of experience, however the banking institutions are telling me I have no proven track record as a business owner. Employees don't rate too highly in the track record scenario of a business. My business plan is damn good, thanks to Duane for giving me a starting point, however, I have been declined for a biz loan for several reasons. It has not wasted my ambition. I can, however, act like the woman I am and be annoyed at my impatience to become my own boss, as well as be aggrevated at the lack of intelligence the bankers have regarding my request for funds! Have no mistakes gentleman, I will be where you all sit someday, it may take me longer than I'd like. I will run at some point. :)

[Anonymous]

Why not refinance your house and cash out if you have equity.

[Kitty]

Because the loan to value is not met. They will loan up to 80% of the appraised value. I own 25% of the appraised value. Not enough to borrow against, but certainly will use what I have! Anyone who has financial wizardry in their resume, please spill your guts and tell me secrets!

[Anonymous]

Get Dave to get a divorce and then marry into the business.

[Kitty]

Oh Gee, thats a plan.

[Anonymous]

Probaly easier then finding a good mat for sale.

[Gary C]

How bad do you want it? Sell your house, then you have the cash.

Gary

[pete f]

There are many mortgage programs loaning 95% LTV. It costs more a month because you pay a mortgage ins prem, but it is not THAT much, maybe $25 on a $500 payment. I bt my first house on a loan like that. Also, you can re fi for 30 years even if you only have 20 to go, it will keep your payment about the same, and let you have the cash. Also if you go with a 5/25 arm your rate will probably be much lower than what you pay now. The problem with financing mats is the short loan term vs the income, if you have 30 yrs on your down payment and 5 on the balance it could work cash flow wise. Not going to be real easy, but possible. Of course much depends on the scale of your mat project,. if you have found an existing store where you would get the owner to take back a note, which is very common, or if you are trying to build a mat from scratch, land, building and all.

[PeterH]

Sorry, guys, I would not put my home up for a business unless it was a 100% obsolute certainty that it would work. If the business goes bust, they come ater your house. I wouldn't want that to happen. There are more than enough homeless stray cats on the street! Besides, the longer you wait, the more you learn, the more you save, the more you find out aobut financing opportunities, and the better the possibility is that you do find the 100% certainty opportunity.

[Anonymous]

Many of the home equity loans I see advertised on TV claim that they will loan you up to 120% of the property value. Maybe that is worth a try.

[detlaundry]

Look closely at loan docs, especially SBA's. Many loans require an "unconditional personal guarantee". Some banks may not back a loan without one.
So if the bank had to forclose, any and everthing one owns may be up for grabs if the bank cannot settle the loan with the prceeds from selling off your business.

((The home equity lines of credit are good for cash . I once opened a home equity line of credit and bought a small business. After, i refi'd the equipment and paid back the home equity line of credit. Works good for realestate.)))

Just take your time and be confident/realistic about your decision.

[pete f]

I agree, but there are risks in everything. If your business fails it does not mean they come take your home. They take your home if you do not meet the mortgage payments. A longer term re-fi at lower rates will lower the monthly payment, making it easier to make. One should not plan on the business income to make any payments for a couple years, as in someone else better have a decent paying job in the house. In time, it can work, but the scheme is not for everyone.

[JBTcajun]

Kitty what you need to do is go mortgage brokers. One will have an appraiser that will be willing to appraise your home for allot more than the banks will. When you go in tell them what you would like to appraise it for (something reasonable) they will tell you if they can do it. These loans can be tricky be very careful read all truth in lending papers and every word on every page. There are allot of crooks in that biz. You should be able to get an appraisal for at least 30 % more than bank offer. Put on 30 years. You will have your seed capitol. Where there is a will there is a way.

[mike]

Yes,

Appraisers can be co-operative.

While having my house appraised, (for a re-finance loan)

I offered the information (during the inspection) that I had a buyer that had made an offer of "x" (about 40% over market)
This of course, was not true, but the appraiser seized the opportunity to look like he was "right on the money" for his boss with an evaluation about 35% over market.

Everyone left the table happy !!

[Anonymous]

I Kinda agree with Mike although an appraiser needs proof in the form of comps, he can't use data in an appraisal that he heard about. He has to cite current sales or other appraisals based on sales.

I need to get about 3 or 4 appraisals a year either for refi or new acquisitions or to reduce the rate of a loan.
(I have some commercial loans that lower the rate or remove my personal guarantee if I have a higher value to loan ratio)

What I do Is get the comps for the appraiser. Appraisers are for the most part lazy and if I do some homework and find the highest comps in the area they will use them in their reports and I get a higher value.

the same will work with mats, homes etc.

[JBTcajun]

you city clickers have it tough. Here rural there are no close comps, things have to be adjusted. That is where there is an opening. In a row of track houses I think it would be a little harder but a good appraiser will find a way.