young buyer looking for help

[Teskid]

Hey everyone, well im new to the forums, im 17 and im really into the whole business aspect of life. Ive taken a few business classes in highschool and i find it really interesting.

So recently i decided that i wanted to buy a coin laundry mat. So i started really really looking into this and other businesses like gas stations ect. And i just had a few questions that anyone could really answer.

Like i said im 17 and by the time im 19 im wanting to purchase a business. I will be making around $1400 a month after taxes and before commision with a job i will be getting when i turn 18 and graduate. I will still also be living with my mom for a year or two after school and only pay a small amount for rent. So onto my questions.

Would buying a business be something you all suggest to someone as young as 18-19? Would getting a small business loan for $200,000-300,000 be the smartest way to go as well? I would try and strech that over a 20 year tiem period if possible. If anyone owns a coin laundry mat are they very profitable?

I thank you all for your imput and your help and for reading this all.

And i have done plenty of research so far on it all, i have been looking for about 4 months strait so far, and im still very interested in this idea. Everyone i seem to talk with seems to thinik its like a bum idea, but i think its a great idea. Just in case i didnt mention it i also would not be trying to make a living off of this business. I would just have it as an investment, i would have an actual job and be going to college along with owning this ( and yes i know thats a lot to control all at once). Just looking for opinions from all of you thanks guys.

[Teskid]

well i tried looking for an edit key, but seems there is not one. Anyways, so i posted my ?'s and then i decided to check out all the treads that sounded interesting to me. (i have been on forums in general for about 3 years now so i get the jist of it all lol). So i was reading through a lot of posts and threads and i was amazed at how much there really was to it all. Granted i know this is everyones business here so obviously there is a lot they know about it. What im talking about is the formula's and everything that you guys use its amazing, so thought i would share all that with you guys.

Also was just wondering how long it took you guys to get the jist of everything and get it down. I dont want to open up a brand new laundromat for the fear it might fail and at such a young age i would hate to have to rebuild my self (mom has a lot of money issues and just dont want to be in her situation my self). So im going to buy and existing one that has been open for sometime now. I have been looking into like seminars and books on how to operate and run laundromats ect. are these good ideas to look into? Another thing i thought of doing before i decided to fully purchase a mat, was to learn to fix the machines myself to me i think that would save a lot of time and money would you guys agree and do you guys know how to do it or do you all just hire people faster easier ect.? Just a lot going through my head right now and i love the idea of this business i really do.

thanks again.

[Winston]

Before getting into the business I would offer the following:
1. Get a (part-time) job working in a laundromat. As Yogi Berra said, "you can observe a lot just by looking". Try to find an older laundromat that has everything working. The owner of this mat will be good to learn from.
2. Save your money. If you have to finance more than 50% of a laundromat, you will have a tough time having positive cash flow.
3. You will have difficulty getting a loan for a large amount of money if you don't have significant net worth and experience in the business.
4. A laundromat is not a good investment, but it can be a great job. It is definitely not something you can leave alone and just collect the money.
5. The best time to take risk is when you are young and don't have a family to support. There's lots of time to recover from adversity.

[pete f]

www.iespell.com
Let's move on past your bad spelling ( and mine)
I bought my first business at 18. I borrowed 15k from family. Hope you have some family! If not, save every dime, keep your credit spotless. When the time comes, present your intended purchase to the bank as a money making venture, which it should be. You will probably have trouble with a business loan for 20 years if there is no real estate involved. Keep involved and focused, something may break for you.
You may have to start small and build your future from there.

[Teskid]

thank you for all the responces ( and yes my spelling is horrible, i cant stand english lol). I will have a full time job, my credit will be great, and why would a laundromat be a bad investment??? I dont expect to sit back and watch it fail. I think you underestemate me and my goals. I would work there every night i got, do the cleaning my self to save costs, i mean i have thought a lot about this, seems like you put out a negative image winston. Maybe thats just me.... any more opinions.


and thank you again for the output.

[ajay]

My dad always says "...No knowledge without college, No life without wife...". I followed his advice to the T. After two associate degrees, a bachelors and a MBA with 15year of work experience, I own a laundromat going on 10years, I teach and am a business/IT consultant. And I haven't looked back to see how I'm doing. I am very happy that I have achieved financial independence at 30+years of age.......if you're looking for advice in starting laundromat business, ask yourself "why I want to be in this business" . If you're getting into to make money, you're not going into for the right reasons.....the advice you'll get from us will be based on our experience. You need to experience life a little before getting caught up in daily grind of paying bills, sweeping floor, etc.

Here's another advice my dad to you " go to college, enjoy life, have fun". Even if you end up being a street sweeper, just be good at it......but make sure you get your degree first". There's plenty of time to make money and figuring out how you're going to make your first million.

"if you face the light, your shadow will follow". Figure out what you light is and go after it!!!!.....if laundromat is your light then so be it, but "make sure your have your degree first" ;-)

ajay

[Anonymous]

I am 27 and own 2 mats. Some people buy businesses so they and their families have employment, while others buy businesses to invest and grow money. It's tough being young and in biz, you need to be very smart and cautious in your decision making.

[Teskid]

webmaster i totally agree with the decision part of it and i know it can be stressful, but im definatly up for that challenge.

ajay thanks for the advice and i fully intent to get my mba in business administration/management.

And the reason i want to go into this business is as a back up source of money. I inteneded it to pay its self off, so whatever it makes put towards the loan i took out to buy it till its paid off. Then from there is all profit besides the lease and such. Its weird i definatly have it all figured out in my head lol, but thena gain me and my mom just found a new condominium to move into in august, which is close to $700 more than our appartment now with more bills like gas, electric water ect. So when i get my full time job ill be paying those bills, but just seems like a great idea to me lol, i cant get over it really.

Thank you for all your advice ajay, webmaster, pete f, and winston ill definately take it all in.

[goingtoarizona]

I would personally suggest saving and investing every penny I could while I went to college and got a degree. I have earned my masters degree in the college of hard knocks. I opened my first business at the age of 23. I was under capitolized ( didn't have enough cash ), and too inexperienced. Now that I am forty, I am closing on my first laundromat this Thursday. I have done plenty of research, checked the untility bills for the last two years, driven by and checked outhow busy it was at all times of the day/week. It is in a low income, migrantworker location with some moderate income for fluff and fold.

If you had the experiance that us older folks have, you might understand why we recommend you wait. 1)Save your money, pay cash, or get owner financing with a big fat down 2) You might decide to live somewhere else, then you'll have to sell your Mat (girlfreinds etc cause this "problem") 3)Life's experiance will help you decide if the Mat owner or Landlord is a CROOK

If the laundromat I'm buying fails, which I doubt, it would be upsetting, but I could handle it financially. See, I failed, learned, and rebuilt myself financially, and it took 13 years, a driving ambition, and a little luck.

Don't let this get you down, instead, learn from our combined experience, save and invest, research, and before you know it you'll have plenty of cash and life experience to buy two or three laundromats, and live the life of your dreams.

MOST IMPORTANTLY!! Figure out your goals, make them important ones ,(where and how you will live,drive etc),and you will end up exceeding those goals like I did...good luck and may the quarters be with us all!!!

[Anonymous]

I think by 'bad investment', the poster just meant that it is NOT a passive place to put your money. In other words, if you can't fix the machines, forget it, too little cash flow to hire everything out.

If I were your age, I'd focus my efforts to brainstorming internet-based businesses that have real growth potential. Look at the guy that made milliondollarhomepage.com - thought up a creative idea and now is $1mil better off.

A laundromat is ok if you happen to have a (big) hunk of cash laying around, you like to fix stuff, and you want to 'buy' a little extra cash flow.

But as a route to go w/o significant savings to put down, well I just don't think the time would be worth it. Going there and fixing stuff is gonna get real old if, after paying your loan payment, you are only putting $100 per month in your pocket, or worse, it is sucking $100 OUT of your pocket each month.

That's just my 2 cents,

John

[amartlock]

I tend to disagree with many of the posters here that say put 50% down so you have positive cash flow at the end of the month to put in your pocket. If you have a "day job" that pays your living expenses, then to me it doesn't make sense to put that much down. I've purchased my mat with 100% financing (from various sources of course) and it generates income to service the debt, and that's it! However, at the end of 7 short years I will have it fully paid off and own an asset worth hundreds of thousands of dollars that kicks off 20% return each year.

Just a different school of thought, but ultimately my goal is to purchase several mats over the next few years using this method and then when they are paid off, retire from my "day job". I guess it's all about each individual's motivating factors. Mine is the pursuit of financial independence and to be able to stop working for the man.

[TLR]

I wish I had started asking questions like this at 17 year of age. I suggest you read Rich Dad/Poor Dad by Robert Kiosaki and all his other books to help further educate yourself on business and making money work for you!

Find the best laundromat in your area, get a job with the owner, and learn everything he has to offer - and who knows - maybe someday he will need a partner - or want to owner finance sell it to you.

TLR

[Teskid]

read rich dad poor dad, great book ;). Amartlock EXACTLY what i was thinking. Just make it pay its self off, thank you so much lol, and tha tmakes so much sense to me. Would you recomend starting that at a young age??? Ill actually pm you about that, but question guys.

What is 100% finance and whats the difference between 50 and 100.

More realisticaly what is financing?

[DuboisLaundry]

what is financing?

you have a lot more posts to read!

If you are serious about this, ( how serious can a 17 year old be? I certainly wasn't) read ALL the posts on this and the CLA board too.
Maybe go to a CLA seminar too

simply put, financing is how you pay for something when you dont have enough money. Most Banks and even the Small Business Administration would probably not loan you the money for a laundromat with your lack of work experience. do not despair, you have plenty of time.
A significant portion of existing laundromat sales are "seller financing"
For instance I paid 50% of the price of my laundromat and owe the lady I bought it from the rest of the money. She holds the Mortgage, a legal document where if I don't pay her, she can take the laundromat back from me. I pay her about 13 hundered a month for the next 5 and a half years. then I will own it all myself. As someone else said, even if you could get 100% financing ( and a higher monthly payment) the cash flow would not work out very well. at least 50% down payment is more sensible. Unless you can get the money from a wealthy relative I doubt at 17 you would have that much saved up yet.

also please see my PM to you.

[Teskid]

bro, im 17 i have done a lot of research on this and i know i still have a lot to learn before buying one obviously.... thats why ive found this site, and thats why im here now asking questions.... seems sinsible to me. Read the PM, thanks. Im just kinda of questioning why a bank would not give out a loan.... if they will loan people $500,000 for a house, why not $300,000 Maximum to me? You have to remember im not buying right this second, im waiting a few years, saving money in a bank for a back up source i guess the word would be collateral. But come the time im 20 or so, i would have credit ( i would hope so lol), a well paying job to keep me living and hopefully a laundromat on the way. I would definatly 100% finance it though, %50 dosnt make much sense to me. Now some old lady is in control of your business, and can take it away from you at any time you make a mistake that seems risky to me. And all of you guys except the one, are talking about money that goes into your pocket........ maybe i can put it this way.

If you put ALLLLL the money your laundromat made back into itsself ummm, you would own it soon, faster, whatever the word you want it would be YOURS sooner, but instead you guys pay the minimum and try to put the rest in your pocket. To me it just makes much more sense to pay off something faster. Could just be me and amartlock though.

[DuboisLaundry]

my cashflow usually makes utilities, expenses (both mine and the laundromats), and a bit for modest upgrades. If I had 100% financing my mortgage payments would be a lot higher, and I would need a fulltime job besides this to afford food and gas and satellite tv.

and no, the mortgage holder does not have any control over my business. She doesn't "own" 50% of it. If I failed or refused to make my mortgage payments she could forclose and take it back, just like any lender, SBA, Bank, whatever. she has no say in operations or anything else.

Seems like you have the right idea, working for someone else several years, saving up for a down payment, etc. Wish I had been more forward thinking earlier in my life.

[Teskid]

well wait, would 100% financing be paying it in full, then making the like loan payments? or would 100% finacing be not paying any of it like no down payment? Guess im just trying to understand why it would be higher. IM guessing because there is more money involved like this ex.

100% financing = $300,000 (so im paying a loan for $300,000)
and
50% financing = $150,000 (so its cheaping because its half)

^ is that what you guys are talking about?

[DuboisLaundry]

100% financing = $300,000 (so im paying a loan for $300,000)
and
50% financing = $150,000 (so its cheaping because its half)

^ is that what you guys are talking about?


thats it exactly!

[Teskid]

ok so now i understand both sides. Both sides sound good to me, and i can see how 100% financing would tougher.

wait wait wait lol, im so lost...... why could i not finace 50% which would be a smaller loan from the bank ( or do you guys save up the 50%?) Actually yeah that makes sense. It would be hard for me to save up 1/2 the sale price of the business thats a lot of money to save lol. I would save some $$ obviously and put that towards the loan anyways, but why dont the people who finance 50% pay it of faster then... i dunno i seem lost all over again lol.

the people who finance 50% do they save that or get that in a loan i guess is the next big question.

[Anonymous]

Teskid,
I don't care what age you are. As you can see the are many different opinions and ways to go about this. I think a mistake you are about to make, and others have done the same, is to focus only on a laundromat. If you are looking to invest $300,000 then surely there are other options out there for you. Many may (or may not) be more profitable. Start looking at those and consider the return on investment and potential for growth against a laundromat and then you will start looking at the numbers differently. Maybe you have already done that.....kind of hard for us to know when all we have to go on is this forumn.

Someone before said "If you're getting into it to make money, you're not going into for the right reasons." Wow, what other reasons are there? Botton line here is to make money. If you don't have that you won't be doing this for very long. Unless you just need an expensive exercise program and think folding laundry is the way to get in shape.

I think it is great that you have goals and desires to do something. That is positive, but try to consider that this may not be profitable. If you over pay, over estimate the market, etc.......I don't care how hard you work......this just might not fly. Keep in mind that there are probably many others out there who no longer read this forumn and thought this was a great idea.

Rich Dad/Poor Dad....interesting reading but didn't you get sick of it after a while? I mean seriously, I learned a couple of interesting points but by the end it just seemed silly. I mean, what a frickin miracle that everytime this guy bought a place there was someone who wanted to buy it for a higher price a short time later. OR, they were desperate to sell and he got it at a low price and all of the sudden there were renters filling up the place to generate apositive cash flow! Hmmm.....the real message of the book is to write a book and learn how to sell. It would have been nice if the author would have dropped in at least one situation where he lost his butt....lol.....lol.....lol.

Good luck to you and please stop the obnoxious over use of lol.

......One more point, banks won't loan to you until you have that collaterol......something they can take away if/when you fold. Best bet might be to do a contract with the seller.......good luck getting favorable terms.

[Anonymous]

Since you will be 18 and in college, I would suggest getting into a mat close to campus so you can reap the female benefits!

[Teskid]

sorry for the excessive "lol's".... yes of course i would be in it for mulla, but then again i have compared it to other businesses. The job i hold now is at a fish market/restaurant(take out). The "manager" of it is pretty much the guy who kept it running and knows all the business aspects of it, so i do learn alot from him and his experiences. Then again he is there day in and day out all the time. The way i saw it was that i could run a laundromat with out being there 24/7. Still have a full time job, go to college, run this place and i would still be able to have a decent life. That is my goal and it seems reasonably possible. So with that goal in mind iw ould be buying a laundromat that is fairly close to me so that i can take a quick drive there, do what i need to do and be done with it.

About rich dad poor dad i read it when i was like 12 so i did learn a lot from it, but i understand the point you meant seems like all worked his way. Some people actually have the luck though, and then again the book was to incourage people and teach, but why would they want to teach things that could go wrong?? not good business to do that.

So a laundromat compared to a food restaurant seems like a better investment for someone who has a pretty full schedule already. Maybe higher a part time worker (family memeber) to just clean it up once a day and i take care of at night and thigns like that after work.

For everyone to know, im not denying anyones points/posts. Im taking it all in and reading them very carefully and taking them into consideration all of them. I honestly want to do this, and im wanting to figure out the best time, the best way, and exactly what to do. Once i have the credit card im going to start buying evaluation books to get the right price on these things, books on how to run and operate them, how to maintain them, going all out really. Also wanting to learn how to fix them (the machines) feel like i need to learn that.

Thank you for all the help so far guys.

[laschmove]

My dad always says "...No knowledge without college, No life without wife...". I followed his advice to the T.

I'm sorry, but I could not disagree with this attitude/statement more. In regards to the wife aspect... I think it is fantatstic that at 17 you already have such a fierce entrepreneurial spirit. I firmly believe that the time to take financial risks is prior to having a wife or children. If you try the 'mat thing, and it tanks at age 20ish, and you're single, then all you have to worry about is yourself. It would be an entirely different matter if you had a family to feed and diapers to buy. The way to get ahead in a capitalist system is to be completely selfish. Itr is hard to do that when you let family get in the way. So get your finances and risks in line before you become a husband, or worse, father. Besides, when you're single, a 12-14 hr workday or an 80 hour week is no big deal if it is necessary. That's not the case when you have a spouse or children who haven't seen daddy all day/week/month. If you venture into to business at such a young age, you'll have plenty of time to marry when you're older and more financially secure.

As per college... I am 25. I dropped out of college 37 hours shy of graduating w/ a degree in finance. I just got to the point where I felt that college degree was not going to be all that helpful to me. All that staying to get it was going to do was cost me about $12k. Some people need college to make decent money, others do not. I now own two laundromats, a college laundry pick-up/delivery service, and zero degrees. Honestly, the only thing I use in business that I learned in my four years of college is from the two accounting classes I took. You have to remember that most college professors are professors for a reason; they either couldn't hack it in the real world or never even tried. They're tenured in a non competitive enviorment, insulated from reality, and put in part time hours that would make a CEO of a large corporation sick to his stomach.

I did have A HELL OF ALOT OF FUN in college though. I grew up there and learned how to make new friends and meet new people. The social value of college for everyone is undeniable. One thing is for certain though, when you hit the age of 21 you will be amazed at how far you have come and how different you are from who you were at your high school graduation.

Bottom line is you know you better than anyone else. Get a job at a good mat like the other guys say. See if you feel that "I want this" fire in your loins, take some accounting classes at local college, hook up with a few random hotties, maybe get a Bachelor's (definitely STAY a bachelor), drink some cheap beer, eat alot of Ramen, stay out of credit card debt and decide for yourself what is best for you.

My reading recommendation for you: "The Millionaire Next Door"

[Anonymous]

I'm sorry, but I could not disagree with this attitude/statement more. In regards to the wife aspect... I think it is fantatstic that at 17 you already have such a fierce entrepreneurial spirit. ......

As a married guy with 2 kids and a laundromat, I have to..... pretty much AGREE with you!

If you want to go balls-out for a successful business, by all means do it when single it will be 100 times easier and less stress. And in that case, go for growth, not a measly cash-flow constant business like a laundromat, unless you're gonna build an empire of them.

As to college, if it is for 'buying entry' into a field like engineering with a very good starting salary, it may be worth it. It certainly has allowed me to sock away a lot of money in my 401(k) since I could easily live below my means.

But some run-of-the-mill degree that doesn't get you a decent salary right off the bat, why bother - save your cash and spend 4 years brainstorming business ideas.

I'd also recommend millionaire next door over kiyosaki any day. I like the one where he wanted a vintage porsche, so he found a self-storage facility for sale with nothing down, that spun off enough cash to make his porsche payments.

Yeah right - people are selling businesses like those *all* the time, because it just sucks to have a business that requires zero capital and just throws off money, doesn't it?

And yes, 50% financing means you've saved up 50% of the purchase price. Borrowing 50% from lender 1 and the other 50% from lender 2 doesn't count!

- John

[Teskid]

runchman and laschmove thanks a lot for info. I will definatly pick up that book, or add it to my to pick up list. About the whole single thing it sounds like a much better idea and for a lot of reasons of course. Ive had a girlfriend for 2 and a half years now and its just to much work......... thank you for all the advice im definatly learning. Still going to college just to say that i went and hoping i do learn a lot. (deifnatly the hotties are a plus though.)

[SuperMat]

Your enthusiam is refreshing. Your drive at a young age, even more so. I was in college when I decided I wanted to own a laundromat, or a car wash. I went for the mat, only 15 years later. There are many ways to get where you want to be, the most important thing is that you get there. Your theory's are not unique, but oversimplified. I would normally say this is an age thing, but the reality is it is lack of life, and business experiences. Some people are much older with no experiences. Ask questions, pay attention to everything, learn from all you can, keep an open mind, and don't be blind to the facts of each situation you come across. The fact right now is your seventeen, you have a dream/goal, you have no money, and no credit. You're starting to make and inact a plan to make the dream a reality. The plan has some holes in it. The most glaring is what if it fails? What if it doesn't cover the note(regardless of how much)? What if Jane and John Doe open a Laundromat twice the size, with twice as much new equipment, fully attended, across the street, and you lose half your business. What if you aren't covering the note, and the new one does that. Now your a twenty something year old with horrible credit, no money, a worthless mat being repoed, a crushed dream, etc. I wouldn't wish this on anyone, and my point is to look at both sides. You are on your way in the right direction, just be very careful/cautious, and understand you may not know as much as you think you do. If I can help you I will, and I think everyone on the board would also do so. Listen to what others have already said, they have given you good advice. Go for it! I wish I had at your age.

[TLR]

Not sure if you guys who downplay Rich Dad/Poor Dad have read his entire series of books or not - and yes he gets repetitive and unbelievable at times - but the underlying message of recommending these books to this young entrepreneur is for him to understand where he fits in life with his thinking at an early age - as in Robert's 4 Quadrant book and Roberts' looking "Outside the 9 dots" approach to life and money. He can pick up a point or 2 from each reading - and it may spark some light bulb to go off in his head about aquiring his first business.

TLR

[Teskid]

well with all said, if you guys have the time check these out. This is what i have meant by i have been looking around and trying to do research. I know its not the best yet, but i think its a huge start.

http://www.diomo.com/index.asp?cat=164120

http://bizcomps.com/

http://www.coinlaundrybusinessplan.com/

http://www.coinlaundromat.com/

so this is the kinda of stuff i have been just browsing and thinking about purchasing. i cant say they are all great or will all work, but im honestly willing to try anything to get ahead.

[Anonymous]

Not sure if you guys who downplay Rich Dad/Poor Dad have read his entire series of books or not -

I agree with some of his points, I just don't think the advice to be a business owner is necessarily 'right' for all people - there are plenty of folks that simply don't have the skills for what it takes, and are better off with a traditional job. That's my 2 cents anyway.

When I read him on yahoo telling about how saving and investing is entirely the wrong thing to do, and 401(k)'s are dangerous, I think that is poor advice for the masses.

There are nuggets of wisdom in his books, but the cult following he has attained is just plain weird.

[pete f]

After reading more here I got to thinking... I worked for a guy who owned the business I bought for about 3 years before I bought it. That gave me the experiance, and in time a family situation happened to get me some money, and a partner had some and we bought his business. I never read a book on business in my life. I would suggest after rethinking what I did, go get a job in a laundry mat! Find out what is is really like, do well, maybe the owner will sell it to you in time, or at least you will know what to look for when you do go shopping.

[Teskid]

yeah i acutally have started putting a lot of thought into that lately. Thought of just working part time for one, on the days that i have school, since i would already have a full time job so just be like working o n the weekends or 2-3 times a week, but thanks for the advice.

[Teskid]

hey guys, well i went to the book store with my brother since he likes reading, and i decided to take a look over at the management or just business section. I decided to pick up a few books and this is what i got...


rich dad/poor dad
rich kid smart kid
and....
Millionaire next door (someone here recomended it)

I know everyone had their opinions on the rich dad/poor dad book, but i learned a lot even at the age of 12 when i was reading it so thought i would try it again and see what i learn this time. The smart kid/rich kid book is the one i just started reading last night (which is when i got th ebooks) and its actually a decent book, a lot of my problems lie in that book so it should be a good read for me. I was just wondering if there were any other books anyone would recomend, articles i should read or just anything else of info like that i could look up, besides this forum lol, already still looking around on here.

Thank you for the help everyone.

[laschmove]

Doesn't have anything to do with laundryor business per se, but "Atlas Shrugged" by Ayn Rand should be your manual for living life.

[Bob]

Everyone should read "The Richest Man in Babylon" The book presents a very simple plan that anyone can make work.

Bob

[Teskid]

ive got a questions for you guys.

So im looking up how much these all cost to buy and such, and i see a lot going for $850,000-1.5 mil (is that anywhere near right????).

What is the cash flow in these situations, is it like how much money it makes before bills?

[Kitty]

These guys are giving you great advice. As the woman in the group I have to agree with them, take their advice and learn what you can now save every penny invest it wisely to earn the best return possible so when you are ready for your venture in this business you will be ready. But take their advice, you will want to sow your oats and enjoy your college years. Learn what you can about business and the laundromat industry Take the time to look over laundromats in your area and any that you may see while you travel with visual inspections and note the changes in the industry, vend pricing, equipment etc. during the next few years while you are saving your fortune and getting your self ready for your own business. But these guys are right, any risk you take , you want to take without the benefit of a wife and kids in tow...a wife is a real drag and kids tend to want to eat...

;)

[Clothes_Tyme]

Teskid,
I appreciate your ambition.

It is true that you will need to establish yourself first. Getting any type of financing will be difficult without having cash reserves and good credit. I own a home and stock and it was difficult to get financing (especially start-up businesses).

It is also true, that owning a laundromat will not make you rich. It is just a possible stream of income and in some cases no income at all.

I am using the laundromat to diversify my corporate holdings. I think owning a laundromat makes good economic sense.

My advise in life is:
Whatever you take-on in life try to prepare for the worst.

There are many examples in life/history that you will see that a successful person took huge risks. If you try and you failed you are not a failure because you tried. But, the moment you put "can't' or "doubt" into your vocabulary you have already failed.

Take the time to grow and learn because life is filled with experiences.

If you like to invest in stock of sound companies (Pepsi, Microsoft, etc) to help grow your money, you can choose a money/dollar based investment broker. I have and have seen a steady increase over the past 3-4 yrs of investing.

Good Luck

[Teskid]

thanks clothestyme and kitty, but can anyone answer my question lol, and trust me i do know its a lot of great advice and i appreciate it all.

ive got a questions for you guys.

So im looking up how much these all cost to buy and such, and i see a lot going for $850,000-1.5 mil (is that anywhere near right????).

What is the cash flow in these situations, is it like how much money it makes before bills?

[laundryman]

I think you have allot to learn, but you are at the right age to take risks and make some money.

So here are a few tips:

Opening a laundry is a risk, since I am in both sides of the industry
(Distribution/ Mat Owner) I see allot more than most would. Many business owners make a really good living with Laundromats, others more than a few crash and burn after a few months. The two greatest factors that make a good Laundromat are location, and management. I have seen laundries with a great location, brand new equipment but bad management and they dont last. If all you do is open and close the door, expect your door to be closed permanently.

Location is also a huge factor and is becoming even more important every day. One there are allot of Laundromats, so you have to watch your competition every store takes a slice of the pie. Two good locations are going to cost you, avg asking rent in NY for a Laundromat is close to $25-30 sf. You might be able to get less but it’s still a big nut to crack at the end of the month.

In the end you age IS going to effect you ability to get financing even if you have good credit, you won’t have any assets or collateral to secure your purchase. Most good land lords are going to be hesitant to give you a lease because of your lack of experience.

It seems to me that maybe a Mat isn’t the best route for you right now. If I were you I would consider learning a trade or maybe starting a small landscaping business you'll be able to pay cash for it and its a better way to gain the experience you need, not to mention you will probably take home more money anyway, and if your in it for the $$$ thats the way to go.

[laschmove]

I agree w/ alot of what laundryman said above w/ one notable exception. If you have your heart set on the laundry business, go for it. It will take some time, so while your waiting for capital to build and banks to pay attention to you, work at a mat, learn all you can, read, research etc. YOu'll always perform better at a job that you love.

As per your question, cash flow can be defined many different ways such as pre-tax, post-tax, operating cash flow, free cash flow. Here's how I would do it....

Start w/ all revenues, take out all expenses that are normal and recuring: rent, payroll, light bill, insurance, utilities, supplies, etc... Then you get operating income. Then subtract the interest you would pay annually on a loan to purchase that business. That's the number. That's also pre-IRS raping. Leave out one-time numbers that don't repeat regularly. For instance, routine maintenance on machines would be included, but if the owner forked over 8-10k for a new high eff. water heater one year, that could be left out since that's a once every 15-20 year expense. A fair bit of subjectivity there, but you'll get pretty close. Just be honest w/ yourself. This is your financial life on the line; no rose colored glasses allowed.

Now that you have a cash flow number, you pay that number times a certain multiple. You'll hear 20 different multiples on here. 4x, 7x, 10x That part is up to you, but remember, you're essentially buying cash flow so the lower the multiple, the better the deal is. Also remeber, each mat is different, just like a share of stock. One mat may warrant a multiple of 4x, while you may feel another could be worth 7x.

One other thing... I'd steer clear of any mat which is a) not cash flow positive or b)not cash flow positive to at least pay for the loan you used to buy it. Two other things, ask the landlord if the owner has ever paid late or missed months all together, and do a lien search. The only acceptable lien is one that the bank has securing it's loan for the mat itself. Tax liens, etc. are bad news. Both of these things signal trouble or at the least poor management.

Sure you could turn it around a make it more profitable, but it takes a long time to turn a cruise ship around, and a mat isn't much different. A mat in a good loation that is losing money is like that for a reason. Maybe it's dirty or the change machine is always empty. Yes, you can come in and fix all those problems, but it will take a long time to bring back all the customers that the previous owner lost. Marketing could speed that process up, but then you're just plowing more money into a business that isn't making any itself.

[laschmove]

I don't know what it is but I just cannot stay away from this topic. I think it's that I love financial analysis and being 25, with a 22 year old partner, I appreciate the young entrepreneur.

I'm gonna tell you what we did to get our mats, and I'm gonna give you all the numbers. This is gonna be long but hopefully it'll help.

First off we are in Texas, not Cali or NYC so rents etc are a little lower.

Here goes:

We are in College Station, TX home of Texas A&M and Blinn College. Approx. 50,000 students. I was a golf pro at a course here in town. I quit school (UF) in '02 and took the pro job out here in TX. I worked full-time all through college and had been saving quite a bit of money. So first thing I did when I got the new job was buy a little townhouse. Fast forward three years, got alot more saved up. I guy I worked with who was a junior at A&M and I dream up the idea of a college laundry pick-up/deliery service. That's in May. Research it, see things like it are doing pretty well at other schools so we figure, what the hell. No wives, no kids, no one to worry about but ourselves, if we don't do it now we'll never do it. We quit our jobs, and he quit school in late July.

Dip into our savings, pay for some print, radio ads, flyers etc. School starts like AUG 14th I think so we launched with the website, flyers, radio ads, etc. First week we sign-up like 3 people, so we're kinda excited. 3 is nothing so we're just doing them at my house. Well, well, well, a week and a half later we're doing.... 3 F 'in people! So now we're a little worried. Funny thing about radio ads is that they take a while to sink in. And yes, the sales people told us that, but we were still worried. From week 3ish to about week 5 we went from 3 people to 50.

Now we're freaked out because we've had to abandon the the house and go to a local laundromat. This sucks because we're pumping quarters into machines and flushin what were beautiful margins on paper directly down the shitter.

We start looking around for some cheap warehouse space in the GHETTO to rent. I mean, since no one is actually gonna go there except us, we don't care where it is. Chalk body outlines, yellow crime scene tape, and prostitution are pluses since that drives down rent.

Now the kicker... And this will be your biggest obstacle. I am 25 and my partner is 22. You are 18, so it'll be even a bigger problem for you.
Pardon my French, but ABSOLUTELY NO F U C K ING RESPECT. If I walked into 10 commercial realty offices and told them to locate me some space, I'd have 1 or 2 call me back. One actually looked us in the eye and said... and I quote... "Are you sure this is a good idea, I mean, do you expect to actually make any money doing this?" Holy Crap man! Wow, now that you mention it, no, we haven't put any thought into this at all. Thank you, thank you for saving us from our naive 20 something selves... I thought John was gonna go over the table at him.

[laschmove]

Longest story ever... Part Deux...

So we're looking for cheap commercial space, maybe about 1k sq ft that we can outfit with washers and dryers. Thing is, because of our age no one will give us the time of day, and the one's who do don't look very hard. While all this is going on, I put in a call to the Maytag distributor in Houston to see what some equipment will run us. He calls back in like 10 min, and the dude is awesome. I tell him the situation, he gets all fired up, says he loves the idea but says we're going about it all wrong. Tells us we need to be looking at laundromats that are open to the public, not space that only we use. He says he has something in mind but needs to make a call. The next day he calls back w/ a phone number for me. It's a guy in our town who has two mats for sale. He outfitted both of them w/ Maytag equipment several years ago and has stayed in touch with the owner. This is late September.

We call the owner and meet with him the next day. We meet him at one of the mats and talk to him for about two hours. He is asking 105k total for both mats. He is FIRM. WILL NOT owner finance, WILL NOT come down on price one penny. We actually kinda liked that, he had two mats, had a good idea what they were worth and was sticking to his guns. Other than that he struck us both as a) the funniest dude we'd ever met in our lives and b)completely trustworty. Sometimes you just get a bad feeleing about someone right off the bat, and other times you just feel completely at ease. All positive with this guy. He'd owned the mats for 4-5 years, but also owned a tanning salon and had a kid on the way. He said he just had to make more time for his family somewhere, and selling the mats was the way he was gonna do it. (see what I was saying about waiting to start a family...)

Now here's where our logic was wrong with renting cheap space that only we used: We rent a space. Say we get an out of this world rate 'cuz it's in such a blighted neioghborhood. $5-600 a month. Next step is to rip up the concrete for plumbing, bring in electricians and plumbers, and buy machines. We're looking at 40k minimum just to get up and running. Then the college laundry business is left to float the bills and loan. By buying a mat(s), the infrastructure is already there and is paid for when we purchase the business. Plus by having the public come in and use the place too, their quarters etc help pay the bills. So essentially, if the mats' regualr customers do no better than allow us to break even, we get a free roll on the other side of our business. To repeat, if the mats make just one penny annually in profit, they at least pay the rent and other stuff that we would have to pay anyway.

Well, they do make money. Not alot, but after we did the cash flow analysis I described earlier and checked the utility bills to verify, they were making about 30k combined annually. The old owner's records matched up almost perfectly with what we figured were the actual revenues. The only thing we caught that he had left out was $2,400k per year for insurance. 30k annually divided between the two of us is not gonna make us millionaires by itself, but when you fit it in to our business plan, it's perfect. So we paid a little over 3x cash flows. To be honest, we would piad 4x or 5x if it was necessary.

Next, off to the banks for financing. Same damn problem we had with the realtors. A bunch a fat old dudes who just can't understand that we're not your average slacker, pot smoking, gangsta rap listening, 20 somethings. That was our biggest obstacle. We eneded up going through the same banker that financed the owner we were buying from five years ago. That worked because he was familiar with the businesses, saw that the guy was able to make payments, saw his weekly deposits, etc. He wanted a monster down payment though, so I used a home equity loan through a different bank, unbeknownst to either, to come up with the rest. Bottom line:

105k total selling price
45k down payment (procurred from home equity)
60k financed

So basically we financed 100% of the purchase price. We moved in in November, and everything has been great. And you know what? Even after we pay all the bills and the two loan payments, the laundromats, by themselves, are still profitable. I'm doing January's books right now and everything looks good. Then you add in the revenues from the college laundry business and we're rocking.

The moral of this extremely verbose story is:
Save, Save, Save. Business requires capital.

Bankers and realtors are just the pawns of the people who actually earn the money.

Don't ever let anyone tell you it can't be done. It always can.

Don't ever sit across from someone at a table and tolerate their condescension soley on the basis of your age.

Know your business plan, finances, and the macroeconomic factors of the day so when some dumb ass banker tries spewing a load of BS at you to see if you've got it together, you can blast him out of the sky. Allow me an annecdote on this: My banker in one of our first meetings said two ridiculous things that I corrected him on immediatley. The first was that we should get an variable rate loan. His reason: lol, lol, that interest rates we're bound to go down because inflation was on the rise!!!! hahahahahahahahahahahahahahahahaha I quickly pointed out that aside from the Reserve-Demand Deposit Ratio and its effect on the money multiplier, interest rates had possibly the second biggest effect on inflation. And contrary to his opinion, higher, not lower rates stem inflation.

The second retarded thing he said was regarding our haggling over the down payment he wated. The whole time John and I were very firm that we wanted only a three year term. That was the shortest we could get, we knew the business would support it, and we wanted the loan paid off as quickly as possible. He actually said... "Since you are renting the building, I am securing this loan with the equipment inside of it. That stuff is 6 years old. It's depreciable life span is about 12 years. You'll have to replace it all in 6 years. I can't have a lien position on equipment that you have junked and replaced. I laughed out loud and said, "Bill, since we're having a 3 year loan term here... you won't have a lien position on sh*t in 6 years. At least not on our business."

If you go to college, most of the crap they teach you will be worthless. Pay close attention and retain only what you learn in Microeconomics, Macroeconomics, Accounting, Finance, and English. The English aspect is because if you are writing business plans etc, poor gramar and diction will shine very poorly on your intellect. Everything else they teach you, from your Marketing classes all the way to your Management classes, dump from your brain the minute you pass the final. Very little of it works in the real world.

The End.

[Anonymous]

Wow I actually read the whole thing! Many good points, the highlights that I wholeheartedly agree with below:

Longest story ever... Part Deux...

The moral of this extremely verbose story is:
Save, Save, Save. Business requires capital.

Bankers and realtors are just the pawns of the people who actually earn the money.

Don't ever let anyone tell you it can't be done. It always can.

Don't ever sit across from someone at a table and tolerate their condescension soley on the basis of your age.

If you go to college, most of the crap they teach you will be worthless.

The English aspect is because if you are writing business plans etc, poor gramar and diction will shine very poorly on your intellect.

The End.

[Teskid]

thank you for that lovely story. Shared some parts of it with my mom, and a lot of it makes sense to me. Congrats on your success, and I wish to god i could find 2 laundromats for 105k out here in cali lol. I actually have been reading the books i got and a lot of people suggest realestate. I knwo down in texas where my dad lives i can get a bomb 4 bedroom 3 bath, house for close to $250k (To me out here in california that is unreal, and sounds like a piece of cake to get.) So im putting this all together if it were me in your shoes with only 1 laundromat...

$15k a year (lets say i bought 1 laundro mat for 105k)

In 7 years (with 100% financing) i would have it paid off, and then be making $15k a year, From that to me is the best start to life. The way i see it is do that, then puchase another one, then maybe buy some realestate.

Thanks for the story, i just love numbers and the what if's of life. Ill PM you with an actual question, and post it here as well just in case. How do you guys feel running the actual laundromat business is? Much work, or more work than you assumed? Just trying to get an idea if i would be able to run one of these, and work full time at t-mobile to get my living expenses taken care of.

[laundryman]

This is my advice to any young person who wants to be in this industry, Wait till you have the assets and money. Most stores that make $$ are not rented, most succsessful laundry owners had money when they got into it. Working for minimal untill you pay off your equipment is going to get old really fast.

I should note that if your only making 15k a year its really not worth the effort, all you are doing is buying a part time job.

The real money is owning big stores 3000sf + in a building that you own.

I'm telling you kid if you want a business, start a business with low start up costs. I mentioned a landscaping business because it’s in demand in any highly populated suburban area. Maybe on the high side you will have to spend 25k to get a small landscape setup going, you wont have any trouble financing for the trucks and equipment and if you and another guy get out and work you will easily make $500 dollars a day or more in profit. Eventually owning a landscaping business is very similar to a Laundromat its all cash and if you hire a good Forman you don’t need to do the physical work.

Save your money, buy real estate that you can put your Laundromat in. Then you will have cash and assets to buy a Laundromat, not to mention you will make allot more money. Trust me if you go the route I am telling you to and do it the right way you will have the money and assets you need by the time your out of college.

The best advice anyone ever gave me was " if you want to be rich do something no one else wants to do" that’s what I did and I cant complain.

[Teskid]

there were just a few things about that, that i had worries about. To start obviously california realestate is rediculous in price. I understand the fact to become rich and wealthy you have to take risks, but the reason i had decided to try out the laundromat business would be because it is a part time job sure, its generating money that i normally i wouldnt have, and hell if i didnt want to work part time there, i just hire someone (obviously i know that cuts into the profit margin, but you have to do something, sometimes). The reason i wanted to purchase and existing one was for the fact its easier than dealing with all the plumbing, and building one. Then again that could be much more profitable ill think about both sides of that. 1 other thing, the landscaping idea sounds like stories people tell to their kids, ive heard it before, but then again i would be working FULL time to make living expenses and live comfortably. I would still be putting away, what ever commision i made which would be close to 1000-2000 a month or more. So if i did that for 2 years till i turned 20, you got to think thats atleast $24,000 (now i know thats not a lot of money, i do think trust me), but what im thinking now is if i put that towards a cheaper laundro mat that did make 15k a year, and only had to work part time at it. So with in 2 years of lets say actually owning the mat after it was paid off, i would be making $6000 more than i could save, then with the money i was saving i could actually live more comfortably off of it, or save it again and buy more (realestate or anything). I see this huge picture coming up, but im not sure if im the only one seeing it. Then again i could be neieve right now, and not see the whole picture. I could lose everything, i could be completly wrong, but what if. I am not disregarding anyones information, im just trying to figure more ways and angels i can look at this, from the book i just read to raise your IQ level in simple words means "the ability to make finer distinctions" and by looking at things from every angel thats what im trying to do is just see things from everywhere, of course there is that fear of it not working, but it could happen, or it could be the greatest thing in the world to happen to me.

[laundryman]

You are going in the right direction. I just don’t think you are taking everything into consideration. If you really want to know about the ins and outs of this business PM me and I will talk to you more about it.

But the main thing you have to consider is why you want to open a Laundromat. There are many more ways to make money part time.

[laschmove]

There is plenty of money to be made in laundromats, or any other business under the right circumstances, regardless of whether or not you own your building or not. Major companies do sale-leasebacks every day. If owning were the key, this would not be the case.

As per a landscaping/lawn care business... Sure you could make a fortune at it, but you could make a mint w/ a thousand different businesses w/ low barriers to entry. I think the key is doing something that a)is profitable and B) YOU ENJOY. Whatever your business(es) is/are, you'll do a better job at it if you are passionate about it or at the very least, give a damn.

[laschmove]

Ohhh, by the way teskid, I got your PM and will be in touch shortly. I've been drunk for about 36 hours straight now and can't answer you to the best of my abilities. See what I was saying about staying single? Life is too much damn fun to p*ss away on a ball, chain, and kids. I love strippers, bartenders, waitresses, etc too much. Anyway, laundromat at 7am, so goodnight to all.