Brainstorm: Building a coin-op laundry route empire (F&I X-post)

[TwoOuter]

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A couple other thoughts from someone I know in the business, keeping in mind that he's in it for the long haul:

1. Buy quality commercial equipment rather than the sub-$1000 top-load washers and dryers. Machines from Wascomat et al run more like $3k -$5k. Obviously it's a bigger investment but the maintenance costs are lower and they'll provide many more years of service.



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I agree in principle, but I do think that this is overkill for the type of investment that your talking about. You'll never service that amount of debt.

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Good point, spex x. The commercial models are geared toward a larger operation. Regular machines get beat up pretty fast though, both cosmetically and mechanically.

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2. Learn how to fix the machines yourself. Depending on where you live, washer and dryer repair can be very costly.



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Yes, some companies offer training seminars for owners. Take advantage, b/c w/ only 6 machines you can't really afford to have even one out of service for days at a time. Plus, the maintenance will kill you over time if you always gotta pay someone.

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So true. A single service call could easily cost you an entire month's profit. And if you're talking about replacing bearings then you're talking about putting in $350 in parts and labor for a $1000 machine (with an even lower depreciated value).

[Lunger]

It can be a very profitable business however, there is more to it.

I think you have not considered the issues of vandalism, theft, machines eating quarters, and liabilty for damaged clothes. Other things can breakdown that you will have to take on that will not necesarily be your responsibility. Property owner not paying the utility bills, drain getting clogged, lights going out in the laundry room. Who will you get to empty the coin hoppers? Are you going to the bank every month to deposit $3200 in quarters? Are you thinking about security?

Also, this is a very competitive, mature industry. The more profitable locations are always in fierce competition. I have seen deals where the property owners get paid huge sums of upfront money. You better have an air tight lease with good lawyers to back you. If the place is profitable, the other companies are going to come around and tempt the owner to break the lease.

If the place was abandoned by Coinmach, I think your income calculations are way off. Coinmach knows this because the are the ones who have been collecting the quarters. They would not refuse to replace old machines if the profit numbers were there.

[spex x]

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It can be a very profitable business however, there is more to it.

I think you have not considered the issues of vandalism, theft, machines eating quarters, and liabilty for damaged clothes. Other things can breakdown that you will have to take on that will not necesarily be your responsibility. Property owner not paying the utility bills, drain getting clogged, lights going out in the laundry room. Who will you get to empty the coin hoppers? Are you going to the bank every month to deposit $3200 in quarters? Are you thinking about security?

Also, this is a very competitive, mature industry. The more profitable locations are always in fierce competition. I have seen deals where the property owners get paid huge sums of upfront money. You better have an air tight lease with good lawyers to back you. If the place is profitable, the other companies are going to come around and tempt the owner to break the lease.

If the place was abandoned by Coinmach, I think your income calculations are way off. Coinmach knows this because the are the ones who have been collecting the quarters. They would not refuse to replace old machines if the profit numbers were there.

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These are all very good points. As to CoinMach pulling out of this location, I disagree with the sentiments in this and other posts. The fact is that we really don't know CoinMach is pulling out of this location. It could be any number of reasons. Maybe they don't have any money to buy new machines and they don't have good enough credit to finance. Maybe the location is profitable but not profitable enough to focus their attention on - $350 a month isn't very much money. Maybe they've got 2000 machines to deal with and these six just aren't a priority. Maybe owner of CoinMach intends to retire in a year. Who knows? But we can't assume that just b/c the company isn't focusing on this small location that its not a profitable location.

IMO, it appears to be a very profitable location. You're offering a needed service to a semi-captive clientele. That is a very good situation to be in.

As always, however, you need to consider if you can live with the downside. What will you do if the whole thing is a bust? If you can live w/ the worst case scenario then you're in great shape.

[MuckerFish]

lots of cost have been left out of the start up calcs that need to be considered. Legal fees, insurance, licenses, etc. Add on the taxes, and the tax ramifications of debt financing of the machines and I think you're looking at break even at best for first few years. Consider the time and cost (probably both more than you think) to future income stream (probably less than you think) ratio more carefully before going forward.

[dc_publius]

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If the place was abandoned by Coinmach, I think your income calculations are way off. Coinmach knows this because the are the ones who have been collecting the quarters. They would not refuse to replace old machines if the profit numbers were there.

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The first thing you need to do is figure out why Coinmach left. They don't just leave profitable places for no reason. If the place was worth keeping, they would buy new machines, etc, to service the building.

[Lunger]

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The fact is that we really don't know CoinMach is pulling out of this location. It could be any number of reasons. Maybe they don't have any money to buy new machines and they don't have good enough credit to finance. Maybe the location is profitable but not profitable enough to focus their attention on - $350 a month isn't very much money. Maybe they've got 2000 machines to deal with and these six just aren't a priority. Maybe owner of CoinMach intends to retire in a year. Who knows? But we can't assume that just b/c the company isn't focusing on this small location that its not a profitable location.

IMO, it appears to be a very profitable location. You're offering a needed service to a semi-captive clientele. That is a very good situation to be in.

As always, however, you need to consider if you can live with the downside. What will you do if the whole thing is a bust? If you can live w/ the worst case scenario then you're in great shape.

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I worked in this industry for several years with a competitor of coinmach. Coinmach happens to be the largest company in the industry with well over 600,000 machines. I doubt that they are unable to pay for new machines due to a lack of funds/credit. The owner retiring would not change their day-to-day operations.

So coinmach may be too big and might let a few small but profitable locations slip. The owner's particular rep at coinmach might be inept. All possible. What leads me to believe that the location just isn't making much moeny is that the owner called and complained and coinmach refuse to change the machines. For coinmach to come out and pick up their machines rather than work with the owner is a big red flag.

Also, just because the machines are gone doesn't mean that coinmach abandoned their legal rights to lease the laundry room. It might take a legal battle to actually break the lease that the owner signed with coinmach.

Also, did you actually use the machines before they were removed. If they worked fine, it's posibble that the owner was being unreasonable and making demands for the machines to be replaced when it did not call for it.

I have seen how profitable this business can be, just make sure that you know what it takes to get into it.