There are a lot of things that go into the terms of the lease. So, if you can, do that work before you list your laundromat for sale and keep that value yourself. But, since they have to work that out during due diligence, that depresses the multiple. I advise them to make an offer contingent on negotiating a new lease or adding additional options to that lease. Even at 10 years, I’m feeling a little uncomfortable about that lease length. When I consult with buyers, I almost always advise them not to sign a lease under 10 years. Leases around 10 years, as a guideline, are valued at around 3.5-4 times NOI. Again, longer leases are better, so leases that are 15+ years tend toward 4.5-5 times the NOI. Here’s how the length of your lease can affect the value of your laundromat. This extra time will give buyers more confidence and increase the value of your laundromat. Therefore, when preparing to sell your laundromat, if you don’t have much time left on your lease, you may want to consider negotiating a new, long-term lease or adding options to the end of your lease. The reason for this is that a long lease gives stability to a business that is difficult and expensive to relocate if a lease is not renewed or the rent is increased dramatically. Longer leases make laundromats more valuable. Lease length is critical to the value of your laundromat. This needs to be factored into your financial model and may lower the multiple below that 3.5 times mark. Equipment that is 13-16ish years old is going to be valued at 3.5-4 times NOI.Įquipment older than that is nearing the end of its life and will need to be replaced soon. These numbers are not precise as there are a lot of factors to consider but in a neutral market, equipment that is 0-5 years old should fetch a 4.5-5 times multiple. Let me give you some rules of thumb to help you determine the value of your laundromat. Obviously, then, the newer the equipment, the more upward pressure it puts on the multiple, and the older the equipment, the more the multiple is depressed. That will factor into the value of your laundromat through its influence on the multiple. Having newer equipment in your laundromat is obviously more valuable than having older equipment. Now that we understand how market conditions affect price, let’s talk about how each of the three main factors in a laundromat’s value affects your asking price. Conversely, in a buyer’s market, you may want to subtract. 25-.5 to the multiple in your asking price. Is there pent-up demand causing a seller’s market? Is there an abundance of laundromats for sale and not enough buyers causing a buyer’s market? As a general rule of thumb, in a seller’s market, you can probably add. The other 3 main factors to consider are the ages of the equipment, the length of the lease, and the terms of the lease.Īnother to consider is the current market conditions. NOI is the gross income minus expenses (excluding taxes and loan payments). The way we measure performance is through a number called the net operating income (NOI). Laundromats, like any business or commercial real estate, are valued based on performance. When determining how much to ask for your laundromat, there are various factors to consider. (It’s usually only for pro members with the other webinar replays, but I won’t tell if you don’t tell!) See below to watch it! If you’re thinking about selling your laundromat, you definitely want to watch the replay of a webinar on how to sell your laundromat for the most money with Andrew Cunningham.
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