UPDATE – We now have a NEW website, Laundromats101.com!
This blog, MyShinyNickels.com, will remain a personal finance website, while all laundromat-related goodies, including this blog post, have been moved to Laundromats101.com.
Click HERE to read this post on the new site…
I’ve debated on whether I wanted to publish this post or not. I’m an admitted cynic, er, realist, and I tend to live in the “something [will/might/could] go wrong” camp. (Now go back and read that part again with an Eeyore voice, please. That’s how I said it in my head. Thanks for indulging me, kind reader).
But I’ve decided to be optimistic and post it anyway, as premature as it [might/will/could] be.
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If you’ve been keeping up lately, five months ago we purchased our first laundromat as an investment towards our goals of early retirement. We were originally going to wait for the ink to dry on the first one before diving into a second one, but…
Back in March of 2014, I wrote about the story of Sam*. [If you haven’t read it, I’ve provided a link. You should take a moment to read it and come back so you have some context. It still gives me goosebumps.]
As those who have read the story know, when my husband was hired at his company, he took Sam’s old job. At the time of that writing, I used Sam’s story to illustrate why we should live with our priorities in check. That if you want to spend the better part of your lifetime living on your terms, and less in a cubicle, then make the financial lifestyle changes necessary to reach those goals more quickly.
I implored all of us to not be the next Sam.
Do as I Say, Not as I Do…
But in a strange twist of life imitating art, my husband is now Sam. Both literally and figuratively. After nearly three years of going in to work at 3am, for 55 hour workweeks, and dealing with toxic upper management, he is a shell of his former self.
But let me back up for a moment. At first, this job was a blessing. He tripled his prior income, and this is when we realized our early retirement plans were really possible. We danced in the family room when we found out he got the job. (Well, technically I danced, while he did more of a manly high-five type thing.)
He would come home from work and we’d talk about the victories and the frustrations of his day. Laughter came easily. There was optimism in his voice and a little pep in his step.
The Stress Fractures Begin
Less than a year in, the job began to get to him. He called me one particularly difficult morning and told me he wanted to put a sticky note on his computer monitor with the words “My Job is the Key to My Independence”. He said he needed to remind himself why he put up with his job every day.
At the time, I thought he was kidding. I soon received this photo.
The Current Reality
How are things now? Well, the victories we once rejoiced in are few and far between, and the frustrations are consistent and ever-present. It saddens me. I’ve been putting on my supportive face, trying to remind him “just a few more years, dear”, but even I was no longer believing my false optimism. He now comes home from work, falls asleep on the couch, wakes up long enough to catch a favorite TV show and eat some dinner, and then he’s off to bed to start the cycle all over again.
This isn’t a life. For either one of us. I miss cool evenings in the hammock together, his quick sense of humor, the witty conversation, late nights watching movies, family outings during the week. Those things still occur once in a while, but not often enough.
Practicing What We Preach
Fast forward to a few weeks ago, July 14th. Randy and I are at our kitchen table. I tell him I’m worried about him. I insist that he needs to choose one of two options: Either quit his job to focus on the laundromat full-time, or find a new job. But we quickly realize that the laundromat won’t replace all of his income, and jumping through the hoops of finding a new job (which may be just as toxic) isn’t appealing to him either.
We didn’t want to jeopardize our savings efforts, but there’s a point when quality of life must take priority over all other goals. I’ve always said that if you live and spend with your priorities in order, you’ll be happier than you’ve ever been. I agree with a little sacrifice in order to reach our goals, but it doesn’t mean either one of us should have to be miserable in the meantime.
It was time to practice what I preach. My husband needs to quit his job.
But convincing Randy to quit without replacing his full income was not an easy task. He didn’t want his actions to impact our early retirement timeline. (He can be quite stubborn, and freely admits this fact.)
The answer? We needed a second laundromat.
The Odds Are Good, But the Goods Are Odd
That evening, Randy said goodnight and headed to bed.
I immediately made my way outside to the hammock with my laptop, and swayed back and forth as I looked at local laundromat listings. But inside I felt hopeless. What are the odds that another store would be available right now? Pretty good, actually. There are always a handful of laundromats for sale at any given time. But that wasn’t the real question.
What are the odds that another store would be available and meet our criteria? Not so good.
But as I browsed, I noticed that the broker who arranged our first laundromat purchase had a few listings for sale in our price range. I emailed him about our admittedly crazy plan to buy a second laundromat already.
He wrote me back within the hour, sent the non-disclosure agreements for a couple of listings. By the next afternoon, we were driving out to take a look at the laundromat we’re now under contract for.
In the time since, we’ve met with the seller to go over his financial records (does this feel like déjà vu for anyone else?) and he gave us official approval for the seller financing (we submitted a credit report and financial statement to him to show our creditworthiness).
Assuming this all goes as planned, and we are owners of a second laundromat, Randy will quit his job.
Are We Crazy?
Yes. A little.
This step we’re taking is bold. Randy leaving his job is a bit scary. But it could be worse. Because we adjusted our lifestyle long ago so that we’re living on less than 50% of what we make, Randy could quit tomorrow without any laundromats and we could still live on my income alone, completely comfortably. (Yet one more reason why living well below your means is a good idea. The loss of a job doesn’t mean disaster.)
So while we’re taking a leap of faith, it’s an educated, well-padded leap.
But this is only my perspective. I was interested in what my husband thinks about all of this, so I asked him, Q and A interview style.
I’ll post his answers next time (soon!), and let him tell you his side of things, as well as the single event that took him from “I can last a few more years at this job” to “I can’t last another day”…
Until then…
Wow! Wow! Wow!! Praying it all works out 🙂
Thanks!
I’m in a similar boat with my job, except, you know, without the savings and laundromats part to fall back on. 😉
But even without that, there comes a time when your job becomes so damaging to your physical, mental and emotional health, that all other peripheral reasons to stay need to be temporarily paused, until you find your footing again.
I’m actually local to you. Do you guys need a laundromat manager? I come with a wealth of HR experience! 😉
You said it well, Mike! And someday we just might need a manager… 😉
Ah! What an exciting post! Can’t wait to read the 2nd chapter ! 🙂
You’re taking a risk with the second laundromat, but honestly it looks like a well managed one considering the success you’re having with the first one.
In addition, you have so much energy and business acumen, I have no doubt you’ll succeed.
Go Team ShinyNickels!
Thanks TMM! Another reader asked about a ‘6-Month Update’ which I’m planning to write soon. (Although, ‘soon’ can sometimes mean ‘next week’, and sometimes mean ‘by the end of the year’. Hopefully it will be the former…
And yes, there’s some risk with adding a 2nd laundromat, especially this soon, but we see it as a calculated risk, and will do what we have to in order to make it a success! Thanks for the well wishes!
“Randy could quit tomorrow without any laundromats and we could still live on my income alone, completely comfortably”
Clint Eastwood said it best (in the movie Dirty Harry):
“A man’s gotta know his limitations”
To which I would add: “and accept them”
Years ago, I hit the “rat race wall” – a young manager, working 12 hour days, 6 days a week – for 3 years – while my wife was home with our 2 kids (both toddlers). It wasn’t fair to them as well as for me.
So I looked for another job, with less responsibility, and then quit that rat race. No regrets. No nervous breakdown. No heart attack. Stopped sweating the small stuff. Regained my sanity.
Now debt free for some years now, fun comfortable retirement (if not an early one).
Tell Randy to look at the big picture, think outside his self-imposed mental box, and take the action required. He knows what he needs to do. Just needs the courage to do it. Time to change jobs. Downsize if required. Btw, early retirement isn’t always worth the sacrifice nor what it’s cracked up to be. Just saying …
Hey buddy! The good thing is that if the laundromats continue to bring in at least what they’re projected to, his income will be completely replaced, and our savings rate (and early retirement goal) won’t take a hit.
Besides, my income more than covers the bills, spending money, maxing my 401k and maxing both our Roths. So it wasn’t so much a matter of “can we do it?” as much as it was “quitting a job is scary, what will happen?”
You mentioned downsizing, but if you remember, we already downsized and our mortgage is only $520! (I love that number.)
And early retirement could be only half as good as I think it is, and it’s still something worth sacrificing for. We want the freedom. But while we’re fine “sacrificing” new cars and fancy houses, we’re not okay sacrificing our health and quality of life.
So it’s time to pull the plug. 🙂
I’m glad you decided to post this! The psychological challenges are often bigger than the financial ones. For a long time my wife and I were so scared to loose our jobs, that we would do anything to keep them. Now, we’re sooo afraid of having to work forever 🙂 I think jobs give us an illusion of security that is difficult to walk away from. So, indeed, it does take someone a bit crazy to do it, and I’m glad you guys have what it takes 🙂 !
Yes, Uncle! It seems obvious what to do in our situation, but yet there is a psychological security blanket that comes with having a consistent paycheck.
At this point I just feel blessed that we live in a way that makes either one of our jobs unnecessary. It’s good leverage to have. You can afford to be picky, or pursue other things!
New to your blog, but sounds like we’re coming in at an exciting time! I hope the second laundromat deal goes through as planned, and your husband can get out of that toxic job. We are no strangers to high-pressure jobs with long hours, and we can definitely understand the feeling of desperation that comes with them, especially if you feel like that job is your only route to financial independence. Good for you guys for finding another option! Rooting for you…
Thanks ONL! You are definitely coming at an exciting time. And I wish that my husband’s coworker could quit as well. He’s a really good guy, in the same toxic situation. But he’s told us that his finances are too tight, and he has good job security. He’s afraid to look for something else… 🙁
What does your husband do for work? Also, where does one go to find the “laundromat listings”? Is there a website dedicated to laundromats for sale?
Hey Paul! He is a Production Manager for a very large-scale commercial laundry company.
And the website we used to find our laundromats is called http://www.BizBuySell.com. Thanks for stopping by!
It’s so hard to be different. To quit your job and instead buy a laundromat sounds really really weird. It takes a lot of courage!! High five to you both for valuing your mental and emotional health and choosing the different route. And, now both laundromats will get the attention they deserve to really bring in all the coin…literally 😉
It does sound weird. If someone had told me even two years ago…”you’re going to own laundromats and Randy will quit his job”, I would have never believed it. And yes, now he’ll be able to pay a little more attention to them with some advertising, etc, which should only help sales.
Someone I talked to recently that wanted to go into business for themselves said that laundromats weren’t “glamorous enough” for them. They may not be glamorous, but they sure make good money for very little effort.
Hi Laura,
I must admit when I read the title and saw the image, I had on ohh sh** moment. But then I read through your blog and was left with a smile on my face and confirmation that I was on the right path as well.
I had commented on your July post that your blog had inspired me to look into a similar path. I did what I needed to do financially speaking to secure the capital to make an offer on a coin laundry in my area. I had eyeballed it for about 2 months made a lowball offer and got rejected (at the time I wasn’t sure how much I could put down.) I then went to the bank and secured the funds I would use to make another offer (more cash). As of Friday of last week, I am in contract for my own Laundromat.
However, I don’t think I am going to have a happy ending as you did because I can’t validate the income. The sellers provided most of the expenses, but even those I read between the lines and caught a few things. I had my accountant review everything they provided along with my analysis based on their said “income” and it’s still $10k short on the net profit they advertised. I plan on rescinding my offer tomorrow (to my dismay) but I don’t count this as a failure. I learned a lot on what to ask for up front as well as the confidence to try again, but armed with more knowledge.
When I read this post last night and saw your husband had quit his high paying job because of the stress of work, I felt like I was reading a post about me, just a year or two in the future. I am in a decently high paying job, but the stress of the corporate life is killing me from the inside out. Without you knowing it, you are still inspiring me and providing me the courage to move forward (on the right deal) when the time comes.
Thank you for not being afraid to put your financials for the world to see, for having the guts to take us on the ride with you, good or bad.
I’ll keep you posted on my journey through your comments section, but once again thank you!
PS – it’s not like I didn’t ask for proof of income, bank deposits, tax return, letting me turn on the counter on washers so I can have start and end usage points over the course of weeks. They just didn’t want to provide most of it or allow me to,
Jerry A.
Jerry, sometimes I have (fleeting!) moments when I feel like I’m wasting my time with this blog. I’ve got so many balls in the air, and life gets so busy, that I’m tempted to just retire it and be done. Then I get comments like yours. Readers like you continue to inspire me to keep writing.
And please please please keep me posted on how things turn out for you! It’s definitely a red flag when sellers are hesitant to provide documentation. They should be completely comfortable allowing you to review those kinds of documents. When we (someday) sell our stores, we will have all of the financials ready for review, without hesitation, because our books are clean.
I want to add a +1 to Jerry’s thank you. Because of your blog, my wife and I are looking into buying a laundromat in our town. Even if we don’t actually end up buying it, the experience will be beneficial for us. Keep up the good work! For every one person who thanks you externally, 25 more are thinking it internally.
Love your blog- – I was checking out information on laundromats & I found you by chance, just bought you latest book and I have almost read it all- Thank you for sharing your life!
Thanks Linda! There’s definitely a lack of real-world information out there for those considering coin laundry ownership, so it’s great to hear that we’re helping to fill that gap with both the blog and the book.
Hello, can you please advise if you worked with a broker or lawyer to help negotiate the purchase of your first laundromat? Did they charge you a fee and if so, what did it cover?
Hi Dawn, yes, we worked with a broker, but he was actually the listing broker. So the broker’s fees came out of the sellers proceeds. We didn’t pay him a dime.
However, some may see a conflict of interest there, since the broker is technically ‘working’ for the seller. But in our case, after meeting with the broker, and talking with him, we didn’t feel that way. He was very fair to both sides, negotiating things in a way that made us feel that he represented both us (the buyer) and the seller equally in the transaction.
Lastly, if the listing broker is NOT a laundry broker specifically (just a generic business broker) and does not have a lot of laundry buying-selling experience, I would be more inclined to hire my own broker to negotiate the transaction. There are a lot of industry-specific items that I wouldn’t be comfortable letting just any business broker handle.
Hello,
Just a few more questions. I’ve made inquiry to a laundromat for sale in my area. I was provided just a basic spreadsheet from the listing broker. I had a lot of questions because some things does not make sense to me. He has two employees and his payroll taxes varied a lot compared to wages. For example, one month he stated he paid $2,400 in wages and payroll taxes were $742. Yet another month he stated he paid $3,100 in wages but payroll taxes were only $678. (Michigan)
He also indicates he pays nearly $700 per month for phone/cable/internet although there are no computers in the store for customers, maybe wifi enabled but no computers. He also doesn’t have a breakdown in revenue – just a total amount per month. The store has vending and WDF service.
Plus, he states gas and electric are nearly double the price of water. The water bill is paid bi-monthly and gas & electric every month. For some reason, I thought water would be the higher bill of the utilities. I know utilities should be around 20-25% of revenue and his for all 3 utilities combined are hovering around 22-23%.
Also, he states he spends about $150 per month on payroll processing fees. I always thought something like Quickbooks or Intuit could do the job for under $80 per month.
Could you give your opinion? Are these expenses reasonable? Am I over-analyzing these figures? There is 5 years left on the lease. Should I ask for a longer term if I decide to make an offer?
Thank you in advance.
Hi Dawn. When something doesn’t add up, just add it to your list of questions for the seller. But you also need to decide when a fine-tooth comb is necessary, and when it’s time to not nit-pick. We pulled together a list of questions, and for many of them, there was a logical answer. But one question ended up revealing that he wasn’t paying his full rent, which meant the net income had been a bit inflated from reality.
And if you don’t have them already, you should get copies of the actual utility bills themselves for verification. Our biggest utility expenses are water and gas. Unless they are in an area where water is really cheap, it definitely seems odd that gas and electric are double the price of water.
As far as the $150 per month in payroll processing fees, that’s pretty minor. You can ask the seller more details, but at the end of the day, $150 in payroll processing is not going to make or break your success.
Five years left on the lease is not long enough, you would definitely need to negotiate a lease extension for at least another additional 10 years, an additional 20 if possible. (That way if you decide to sell, there is still plenty of time left on the lease.)
You can make an offer before any of these items are settled. Your offer can plainly state that “sale is contingent upon buyers acceptance of seller financial records and utility statements and the obtaining of a favorable lease term”.
Good luck.
Hey Laura,
Great site and your writing is extremely well done! I found your site while researching laundromat ownership and it is a true gem. Would you be willing to share what type of research you do prior to purchasing the laundromat? I live in a tier 2 city that is growing rapidly; however, there is not one laundromat for sale. Rather than giving up, I am curious to know the “recipe” for a successful laudromat when starting new. I realize you bought two existing business, but assume you did your due diligence.
Thanks for any input you may have and keep up the great work!
Winston
It is a completely different ballgame when building out a new laundromat than when purchasing existing, so I don’t have nearly the knowledge in that area.
With that said, in general, the coin laundry industry is pretty saturated. Meaning that you don’t really ‘create’ new customers’; all laundromats within a few mile radius are fighting for the same customers, and they all want the largest share of the market. So when a new laundromat opens up, it must take customers from other nearby laundromats. If building new is the strategy, you must come to the market with something different. Offer amenities others don’t, offer value where other’s don’t, etc.
Blue-collar, working class, family neighborhoods are good, specifically those with a high percentage of renters (40%+). You can usually get those kinds of demographics online.
Lastly, just because laundromats aren’t listed for sale, don’t mean they’re not. Don’t be afraid to reach out to laundromat owners to see if they’d be interested in selling. Sometimes it just takes someone asking for them to consider it.
Good luck!
Thanks for the reply Laura!
Best,
Great story and thank you for the encouragement. I prayed about this myself and feel strongly in doing this. My son just sent me your posts. I am in the process of buying a coin laundry as well. I am a fairly recent widow and just did not want to work 60 hours a week so now this will be my second business. I pray all goes well for you and your husband.
Thanks Michelle, and I’m so sorry to hear that you recently lost your husband. I strongly believe that God directs us in the best possible path for our life, when we allow him to guide us. (What others may call a ‘gut feeling’.) Forge ahead and do what’s right for you.
I can’t wait to read the rest of your story. Strangely enough, I’ve always wanted to buy a laundromat.
Laura,
I’ve read your stories a few times over the past few months. I’ve been looking at buying a laundry, but have not found any investor like you who I can learn anything firsthand from.
Would it be at all possible to discuss by phone sometime?
It would really be a big help for me to hear what it is like to run a laundry day-to-day. I haven’t been able to actually hear this from anyone, but I feel like your experience might be similar to what I might run into because neither of us had experience in this industry prior to owning.
Drop me an email if possible at all — I’ll make any time work.
-Toby
Hey Toby, thanks for stopping by. The truth is that I get a LOT of reader mail asking for phone consults/interviews/etc, (some even offering to pay me a consult fee!) and I just don’t have the time to oblige these requests. I understand your desire to get more day-to-day information, as I was in your same shoes.
But since I’ve received so many different questions from readers, I may just write a post, Q and A style, that lists many of them, yours included.
Yep — that makes sense Laura. Difficult to discuss with everyone, and not everyone’s questions are guided to actually achieve an outcome.
Thanks for the reply. Maybe what would help both me and your readers is if I came back with a list of specific questions that you could think about and decide to respond to in the Q&A post you mentioned. That would work for me — and maybe others as well!
Were there any information sources you specifically used to learn initially? In addition to you, I’ve found Coin Laundry Association, Danny D’Angelo,and a couple random blogs. All of them are good starts, but they are all superficial if starting from zero.
-Toby
That’s a good idea Toby, send ’em on over and I’ll post my answers. Use my “Contact” link.
My initial information hunt began in a few places. Entrepreneur.com has a section on coin laundry ownership, I read through that. I also purchased the book “How To Find, Evaluate and Buy a Laundromat” by Jason Lombardo and read it cover to cover, twice. I googled laundromat purchase consultants; some of their websites gave helpful guidelines on what to look for/watch out for. Then I soaked up everything I could on the forums at coinwash.com and the CLA website.