One of the biggest problems when it comes to buying a Laundromat is figuring out the actual revenue for the operation. Whether it is a new operation or an used store, an investor has to be 100% accurate on his or her assessment as erroneous assumptions can lead to detrimental financial consequences. I personally know because I have fallen for false numbers from sellers and have friends in the industry who were victims of unscrupulous Laundromat agents who sold new Laundromats on “projected” revenue. In my personal case, the seller essentially lied about his collections in order to make the Laundromat in question seemingly more profitable than it actually was and thus ask for a much higher price. And despite the fact that I had an agent from a well known Laundromat broker firm, the agent looked the other way and allowed the fraud to go on as all he was interested in was his own commission. In another case, an investor was asked to invest close to $1 million dollars on a new store based on fancy projections that had him netting over 20% on that investment once the operation gained traction. The problem was the sales figures never reached those projections and in turn the investor went from expecting 20% a year to avoid losing money, a nightmare for anyone who has earned his money the honest way.
I eventually ended up suing the seller in court and was able to win the case based on the an official Laundromat auditing method that provided clues on where the fraud was committed and now that I have been thru this experience (which I don’t recommend to anyone), I am able to help those who want to effectively assess revenue from a Laundromat. My friend however was not able to sue the seller since the revenue was a “projected” basis and in such, brokers and sellers are able to claim economic reasons, incompetence, etc as reasons why a Laundromat is not reaching the projected potential.
If you are seriously thinking about going into this industry, do yourself a favor and make sure you are 100% sure revenues are being assessed honestly. If you are in the market for an existing Laundromat, you can use the Laundromat revenue assessment guide or you can also email me for further assistance in the matter at vclinl at gmail dot com or by clicking here I can provide detailed analysis of water and gas bills that will reveal the true revenue range of any Laundromat. Always verify what is presented by the broker or seller with a third party objective source.