Posted by Mike Cheatwood on November 08, 2005 at 20:27:59:
Thanks Paula.
Mike
Advice for Start-up Laundromat inside MHP (long) - Posted by Mike Cheatwood
Posted by Mike Cheatwood on October 30, 2005 at 16:03:03:
Ray/Board,
I am interested in adding a laundromat to my MHP and would like the boards advice/comments. I used Ray’s “Dealmakers Guide” to buy this MHP (Thanks Ray) and purchased the comprehensive “Commercial” book at the CRE Convention in St. Louis 6 months ago. However, this question seems to be more of a “hybrid” since I already own the underlying land and have most of the systems in place.
Background - In Jan 2005 I purchased a 117 lot MHP within town limits and with all cities utilities and separate meters. However, the point of this post actually concerns developing additional profit centers. Specifically, I am looking at starting an on-site laundromat within the MHP to take advantage of economies of scale and enhance the property “services” available to the residents as well as the overall property value. There is another 45 lot MHP located directly beside my 117 lot MHP that has no office or ammenities whatsoever (other potential customers). We would probably also sell a few retail higher margin items such as soda/chips/candy bars, detergent, provide Notary Services, copy/fax services, etc…
Additionally, I learned last month that the 52 machine laundromat located 3/8 of a mile up the road will be closing since Wal-Greens is buying the property for it’s definition of a higher and better use. This leaves only one other laundromat inside the town of 10,000.
The original approved site plan for my MHP had a store located between the 2 main entrances where I placed an office (1985 2BR/2BA 66’ long MH) last January with all proper permits and inspections by the town inspector. I have not yet verified with zoning/planning that I would be allowed this use of the property but it does help that my Park manager’s brother is on city council and that the town inspector went to high school with my Managers wife (small town realities). As I have 6 current vacant spots in the rear of my Park, I would first move the exisiting “office” MH to one of those spots and then plan to stick build a new combination office/laundromat in the same spot between the 2 paved entrances.
I have also not verified that the old laundromat will not “rise again” at another location but there seems to be a window available for me to gain market share in the expected downtime. My closer proximity (in any event) to over 160 renters also seems to hedge a decision to go in this direction.
Employees - I do not want employees but I do want to follow the good advice contained in the 142 archive posts that I just finished reading as concerns having an “attended” facility. In this regards, I currently have a Park manager/wife combination that comes with a dedicated 25 year old son who all have shown alot of initiative. As a separate family enterprise, they also own a roofing subcontracting business with 2 crews (don’t ask me why they have lived here for 13 years and want to remain). The Managers residence is the first home behind the office (35’ distance).
My “attended” plan (already discussed with them) would be to provide them with the building with installed W/D’s and have them lease it back from me for X_ each month ($1,000?) with them also doing the W/D maintenance (I would pay for the son’s technical schooling). I would also have them opening/closing cleaning each day and with them also paying for the utiltities out of their side of the lease deal. Of course, I want them to make money and the proposed plan structure that I have roughly worked out seems to place the burden of keeping the place up on them as the laundry business owners with them leasing the business from me as their “hands-off” landlord.
I would probably do as Ray did by assisting them with getting their separate business licence and other startup issues… They are already familiar with the “folding service” concept.
Equipment - I am toying with buying the best of the old equipment from the going out of business laundromat since my facility would not be as large (closer to 30 machines). I have also owned a number of scatter Apt Bldgs with laundry rooms using commercial grade Sears W/D’s (both gas and just electric), but am curious as to other’s ideas concerning are the options of buying machines? I have heard that ADC is one source of high quality machines with easy to get parts…
Building - I am leaning towards being my own GC by using a stick built contractor in building a 24’ X 45’ shell building on piers (25% office and 75% laundromat). This would allow me to bring in local subs that I have done a good bit of work with this year in order to do my inside finish work, rerun piping, upgrade the meter box to the higher amp box needed, carve the inside up into an office/laundry area, bathrooms, etc… I understand that a poured concrete foundation building with all the plumbing already inlaid/stubbed off is probably the “right” answer. However, I do not want to pay for this as it would entail a “design” of the building that seems to be wasted on my South Carolina boondocks mentality. Please point out if I am being too cheap or shortsighted in this regard. Note - In a former life I served as “Chief Engineer” on US Navy ships.
Utilities - I do not have gas available and would be using electric dryers and city water/sewer.
Projecting Income Questions - The business at the laundromat that is closing seems to be fairly brisk and as such it appears that from that point and the comments from my MHP residents concerning wanting me to open a laundry to replace it that having sufficent customers seems probable. Pricing the same as the currently closing facility seems to be an easy default but does not allow me to match up the income to expenses so as to establish a “margin” to plan on or to construct a “win-win” agreement with my MHP Manager/Laundromat “Leasee”. Note - My Apt Bldg laundry room experience shows me about $20/month per tenant (2 BR Apt units). A friend of mine who owns a laundromat says he gets about $500/year per customer, which seems a bit high to me but he has a stand alone laundromat too… Appreciate advice on projecting (predicting) the income in this startup, scenario.
Thanks,
Mike
Been there done that - Posted by Eli
Posted by Eli on November 03, 2005 at 03:26:15:
I came across the same decision as you are in now but for me it was about 18 months ago. I can walk you through the good the bad and the ugly. Overall I would do it again, I LOVED my laundromat and I wish I would have kept it when I sold the park it sat on…
It sounds like you have a GREAT thing going if you do it right, If you play the cards right this might be your new favorite investment. And just wait till you have buckets of quarters and you come up with creative ways to spend them so you dont have to roll them. YOu would never believe how much money a cerial bowl full of quarters is…
Contact me by email and I will give you my number - PS lets talk about Rays book on Comercial RE as well.
Talk soon,
Eli
Re: Start-up Laundromat inside MHP (long) - Posted by ray@lcorn
Posted by ray@lcorn on November 01, 2005 at 12:12:15:
Hi Mike,
Good to hear from you and I’m glad things are going well. Your add-on project is a great way to improve the MHP by providing an additional amenity to the tenants and additional cash flow for you. The help you’re providing the PM’s son is icing on the cake, and hopefully turns into a win/win for everyone.
We’ve done exactly what you are contemplating… and also have built several freestanding laundromats. If you read through the archives you know we had mixed results, and the park laundry did not perform as well as the free-standing operations.
However, market is everything, and it sounds like yours is ripe for picking. With the closure of the existing facility you can step into the void without having to compete.
As to your questions, the equipment issue is a double edged sword. Buying used is definitely cheaper, but depending on size, age and condition it can be a case of getting what you pay for.
The one thing we learned over and over with machines is that bigger is better. Double and triple load washers will out-perform top loaders two to one. Most folks hate doing laundry anyway, so the faster they can get in and out the better.
Dryers are similar. As they age they become less efficient, and actually wear out quicker than washers. But I have no experience with electric models, so I can’t say whether that holds true.
Building: That’s on the small side… we did two at 2400 sf and one at 1500 sf, and the smaller one suffered from looking too cramped. It was freestanding, but it never performed as well as it should have. Since you’ve essentially got free land, you may want to give some thought to expanding the size.
Projecting the income is a crapshoot to be honest. We always keyed on the number of rental untis within a one mile radius, and tried to locate in proximity to rental housing concentrations. Your $20 per month is in line with our last in-park laundry, and your friend’s $500 per customer per year is in line with the best of the free standing locations. So somewhere between those is a likely number. Your town is small enough that it will likely pull from most of the market area. One caveat: I assume you have a good idea of how many of the MH’s have their own washer and dryer?
Not sure I helped much… best of luck!
ray
one more thing before we talk… - Posted by Eli
Posted by Eli on November 03, 2005 at 03:33:39:
One more thing I want to put in your head… If I were to do it again - I mean WHEN I do it again, I am going to incorporate some other businesses that are synergistic with it. For example, I would do a Dry Clean DROP station (dont even get me started why not to have a cleanign facility), I would ALSO do an ebay drop site, and if there is space and a need maybee a few coin op car washes next to it.
I think that it would help to have a full time employee but you need things to keep them busy and I think a ebay drop with a computer to post things, a dry clean drop, then fluff and fold service and if you had the car wash too I think that would keep an employee hoping at all times.
Re: Start-up Laundromat inside MHP (long) - Posted by Mike Cheatwood
Posted by Mike Cheatwood on November 01, 2005 at 17:10:26:
Thanks for the great advice Ray.
One of my thoughts is that I would be happier with a smaller more crowded laundromat rather than one with excess/unsued capacity (just me being cheap/conservative I guess). Of course, there is also a limitation on the available land between the 2 park entrances since I need to allow for a decent size parking area too…
I am also concerned about customers overloading the machines and I want it clearly posted/understood that “machine abuse” will not be tolerated and if it happens you will have to take your business elsewhere. If we are usually “full” then it seems to me to be less likely that customers will want to challenge my policy.
Thanks for the “pricing” help too.
Mike
Re: one more thing before we talk… - Posted by Woody
Posted by Woody on November 20, 2005 at 07:34:19:
Would you outsource the dry cleaning? What is fluff and fold service?
Re: Start-up Laundromat inside MHP (long) - Posted by Paula K.
Posted by Paula K. on November 07, 2005 at 12:24:50:
I own and operate 5 laundromats. Contact the Coin Laundry Association (www.coinlaundry.org) - they are a wealth of information and for a small fee you can join and have access to all sorts of info. ADC makes a great dryer and Wascomat makes the best front loading machines (we have been Wascomat for over 30 years) for durability and longevity - You can scale down the # of toploaders you have, they are more maintenance, not as efficient and people always tend to stuff them and burn the belts out - Maytag is the toploader we provide. I have no idea how much money per year the average l-mat customer spends. You do not need an attendent but it will be a consideration if you truly want a clean facility. Our l-mats do well because they are fully attended (therefore clean and safe) and rarely are machines out of service.
Re: one more thing before we talk… - Posted by Eli
Posted by Eli on November 21, 2005 at 24:20:50:
yes I would outsource the dry cleaning. Fluff and fold is where workers (or whoever for that matter) just drop off a big bag (or truckload) of clothes and you wash it and dry it and fold it and charge by the pound. Give the person who does it a cut of the profits and pay them minimal wage. you need some volume to justify it. but if this person ran an ebay drop, fluff and fold, dry cleaning drop, etc etc, you could keep them busy.