It’s an exciting moment when you are ready to invest in a cash-producing asset. You may have spent years flipping real estate and hustling to get to this point, and you deserve lots of praise and commendation for staying so focused and no raising your spending along with your earnings.
I have been talking about evaluating brick and mortar businesses. I already talked about carwashes, so today let me talk about coin laundries.
Remember that perfect Forever cash assets must meet four criteria: 1) the asset must go up in value, 2) the asset must be cash-flow positive, 3) the cash flow must not end in the near future, and 4) it must require little time to maintain.
Coin laundries (the Laundromats where people can use coin-operated washers and dryers) serve a real purpose in the community and can make their owners a lot of money. They can often be run with just one attendant on duty, and the machines only need periodic maintenance.
Aside from the usual considerations for evaluating a business (do the books show positive cash flow, is there a lot of competition, when will the machines need to be replaced, how long is the lease for, etc.), here are a couple of ideas for making sure that a coin laundry maximizes its profits.
Is the owner willing to sell with financing? One way to guarantee immediate cash flow while minimizing your out-of-pocket investment is to negotiate a sale with owner financing. Let’s say that you agree to buy a coin laundry for $150,000, and the monthly cash flow would be $5,000. But you only have $40,000 to invest. If the owner were willing to accept a deal with financing, then you could pay him a little over $2,000 a month for ten years, and the remaining $3,000 in cash flow would go towards your overhead and profits. Immediate cash flow.
Instead of waiting until you have the full purchase price, you can leverage the money you have to create cash flow and reinvest that cash flow into more and more assets.
Can vending machines be installed? People need to wait at a Laundromat for their clothes to get washed and dried. Aside from providing vending machines for products like detergent and fabric softener, can you sell snacks and drinks to your customers? Or rent out the space to an outside vendor and collect 100% passive income!
How can you set yourself apart? How can you make your coin laundry different than the others in the area? Will you have an espresso bar? Live music? Free Wi-Fi? Will you cater to people trying to live green and use biodegradable materials or will you stay open late to cater to the people who work? Find a niche and then make yourself stand out in it.
A coin laundry can be a great asset that requires little time to maintain but that brings in large checks each month.