Used Equipment

[Anonymous]

It seems over the years the listings in the back of the Journal for used equipment keeps getting bigger and bigger. Are there that many laundries going belly up? I see many laundries that make no money but seem to continue to stay open and get passed from owner to new owner.

[TotoMongo]

I had the same conversation with a broker recently. He said that if it wasnt for the fact that businesses failed like that he wouldnt have a job.

Talk about unethical!

Toto

[Jim]

I think their are two reasons......

1) Because the economy is so bad (Yes George W. it's bad) alot of people decide to open their own biz....
Mats are very popular because they look like easy money, but people go into it without realizing it's not as easy as it looks, and they believe distributors (and brokers) telling them: " The more equipment you buy, the more turns per day, the more money you make". Which we all know is BS!!!

2) Mats have come full circle and business is on the decline (at least in my area)...I approach mat owners all the time and few of them are making any money. The last three I spoke with are making:
+3K yr. , -6K yr. , +11K yr. ...after seeing those numbers I consider myself very lucky....

If you are starting up a mat I think the smartest thing to do is go buy some good used equipment and save money...hell you may be the next to go under...

[Fred50]

Sorry to put a positive spin on this thread, but maybe it's owners rehabbing existing mats and offloading their older machines!

[n175h]

I agree. I've been doing this for 21 years, and am amazed at how much used stuff is for sale. Some of it less than 3 years old. That's not rehabbing that is going belly up.

One positive. In Texas, we have to render a value of our personal business property to our taxing appraisal district each spring. I downgraded the value of much of my equipment by submitting copies of the journal classifieds as proof of market values. The appraiser assigned to my account accepted them as viable values which is much less than the state allows for depreciation for property tax values in Texas.

It will save me several hundered $$$ per year in ad valorem tax each year. Bring on the for sale adds. ;>)

David

[Jim]

Mark...
Not to disagree with you but like n175h said, everything I'm seeing is 3yrs old or newer and Totomongo mentioned in a different thread he was looking at a mat with equipment that was only a year old....

I'm not trying to be negative...hell I think this business is a big positive otherwise I wouldn't be in it as long as I have been. But from what I am seeing out there it is not looking positive.

I've said it before, that a positive that is happening in the mat biz is WDF... it seems to be increasing all over the country.

[MSKLAUNDRY.]

Its the Repo man. There are tons of stuff out there. Now if they were to just offer the stuff at a decent price!!!

[Fred50]

OK, OK point well taken. I didn't realize that you folks were referring to equipment 3 years old or less.

I know of several people with $$ that are ego maniacs and think that they have the better answer to the laundry biz and it's simple and easy to do part-time. Makes me smile!! I guess their places with either be going on the cheap in the future or the equipment will end up in the back of the Journal.

We all know what an overdose of enthusiasm or better yet testosterone can do. Be careful out there!!

[Anonymous]

Wouldn't it be nice if there was a law that said distributors could not be paid for equipment in cash, rather they had to accept payment as a percentage of net income after all other expenses were paid for - bet that would limit the number of unprofitable stores they suckered people into.

[CharlieS]

There is a healthy business in older used equipment, but there is also clearly an active business in repo equipment.

What this tells me is this

Laundromats are a very mature business. What this means is that most of the good locations will have more than adequate coverage, and only the smart operators will survive. New stores are less likely to be successful than rehabbing an existing store.

Good locations are generally in lower income areas, with a high percentage of renters. With the exception of new housing projects, without W/D connections or machines, these areas will generally be older urban areas, where the rents are lower and the housing is older.

That means that the suburban ring areas of cities are less likely to be as profitable as the inner city areas. And since these better locations have been around awhile, the odds are pretty good that they have good competition already in place. This makes it harder for a new store to survive, and easier to have success by purchasing an existing mat.

Finally, if rehabbing, your existing cash flow needs to cover the loan expense of the rehab. If the rehab requires new cash flow to pay for itself, you could be creating a recipe for disaster. Consider new cash flow a bonus.

Charlie

[alyspy66]

Originally posted by MSKLAUNDRY
Its the Repo man. There are tons of stuff out there. Now if they were to just offer the stuff at a decent price!!!

Most of the used equipment for sale listed in the back of magazines are in NYC. I didn't much success trying to locate used equipment in the Illinois area. Any suggestions?

[Ken]

A good repo man is dead in IL last year :-(
Must dealer sell used machines but not cheap.
Over building is the key problem in this biz but it is not stopping,dealer is still building more stores,Spincycle just went under,which chain is next.
If you are buying any old laundromat,make sure nobody is buildind in the area,I had a deal fall through 6 months ago,just find out someone is building one a block away,I am so glad the deal went bad!

[Andy]

I know the size of the "pie" (market) in my area and it is too small for the four mats here to thrive. I also count myself as lucky to have renovated the right location and believe I am in the best position with respect to my competitors; however, if another new mat is built in my town we may all go under.