by Randy Dobbins | Blog
Sometimes things happen that are beyond your control. It’s a part of life. It’s frustrating.
If you own anything (a car, a house, a pet), you know what I’m talking about. Cars break down, houses get a roof leak, pets get sick. But when you own a business, these little inconveniences are magnified at times.
Let me start by rewinding to two months ago.
The Bill We’ll Never Forget
We opened our laundromat gas bill to find it had doubled. Yes, DOUBLED. When I first saw that $3,200 gas bill I had a knot in my stomach. How is this possible? It must be that new meter the gas company just installed. It has to be. It better be.
You see, sometime in mid-November, our gas meter was vandalized. Some loser literally kicked the remote access gizmo right off the meter. As a result, our December bill dropped to nearly nothing. We noticed it, reported it to the gas company, and they came out and installed a brand new meter.
That first bill after the meter replacement was really high, but they told us it was because we had been billed almost nothing the prior month when the meter was broken. It made logical sense, passed the sniff test. So we went on our merry way.
Then the next bill came. It too was almost double our normal bill. What the heck is going on?
The Conversation That Went Nowhere Fast
There was clearly something wrong. Still. Laura called the gas company again.
Cranky Gas-Company Lady: “Well, your usage might have gone up, you know. There’s nothing wrong with the meter, there’s been a cold snap, everyone is just using a lot more gas now.”
Laura: “Um, we don’t even have a heating system in our store. The dryers alone keep it warm enough in there. Our only gas usage is for dryers and the hot water heater. Our dryer usage didn’t double from one month to the next because of a cold snap. It’s a laundromat; it’s seasonal, but it’s pretty consistent.”
Cranky Gas-Company Lady: “I don’t know what to tell you. The bill is the bill and you need to pay it.”
Laura: “Lady, there’s something WRONG. This is NOT NORMAL. And you’re about as helpful as a bag of rocks. Can I speak to a manager please?”
Cranky Gas-Company Lady: “Please hold.”
She transferred us to a lovely Bill Resolution Specialist named “Jane”. Jane was far more pleasant, and certainly more helpful. She offered to have a tech come out and check the meter…in a couple weeks. That wouldn’t do. The only way to get the gas company out to our store right away was to report a suspected gas leak.
It has to be a gas leak, right? Why else would our bill be so high?
The gas tech came in 30 minutes, and of course I had to shut off the gas and explain to customers why they can’t dry their clothes. I spent a couple hours tailing the gas guy around. Nope, no gas leaks.
They were able to send out a meter tech a few days later (instead of the several weeks we were originally quoted). He reported back that the new meter was installed correctly.
Great…What Now?
Laura called Jane back and asked what else we could do to figure out what was wrong. Jane asked, “Are your floors warm at the laundry? It could be a water leak.”
Hmmm. Good question. But it couldn’t be a water leak, could it? Our water bill hadn’t increased. Or had it? I checked our latest bills, and sure enough they had crept upwards quite a bit. Not like the gas bill, but enough to be noticeable.
I headed over to the laundromat, and oh boy, the floors were WARM. It was freezing outside, but the floors were a balmy 80 degrees, at least. We had a hot water leak. We called the plumber.
The plumber came out the next day. Before he even came in, he asked if the floors were warm.
Yup.
The Magical Leak Finder
The plumber got right to work. In fact, it was a very interesting process to watch. To search for the underground leak, first the water was shut off. All the machines, even the radio and the pumps for the boiler were shut down. It was eerily silent.
Another tech with headphones on slowly walked around the store with a probe, listening. They had hooked a CO2 canister to the hot water line so he could listen for the sound of bubbles. Amazingly, he was able to pinpoint the leak to within about six inches and even guessed the depth; two and a half feet under the concrete.
The store had to be shut down for an entire day to repair the leak.
Then came the sad realization that they were going to have to bust through my new epoxy floors to fix the leak. Out came the jackhammer. While I cried like a baby.
Once they got through the concrete you could see waves of steam rising from the hole. As they dug further down into the rocks and dirt, it quickly filled with hot water. Very hot water, actually. So hot, the plumber couldn’t put his hand in there to pull out the dirt.
Houston, we’ve found the problem.
A New Business Idea: The Thrifty Wash Laundry and Spa
Basically, we had a small hot tub under our store, which meant we’d been heating the whole place by way of a very expensive radiant heat floor system.
Yikes.
After creating the giant hole, the plumber pumped the water out. That took a while. Lake Tahoe doesn’t drain in a day.
Then he cut the offending piece of pipe out. A very tiny (the size of your pinky fingernail) hole was responsible for this entire mess. I could barely bring myself to post the image below. I’m scarred, I tell you.
A shiny new copper pipe was installed and the hole filled back up with concrete.
Thankfully, the gas company was willing to work with us to credit our account for the extra gas usage. They called it something like “credit for non-utilized gas”. In other words, because the extra gas wasn’t really “used” so to speak, they were willing to consider crediting our account. After a few months of normal bills, they will compare usage to the high months, and credit us the difference.
So, What Caused This Leak in the First Place?
I guess it’s rather common with old in-ground plumbing. A rock was resting against the pipe. Over time, as the pipe contracted and expanded from the heat, the rock slowly wore a hole through.
That stupid piece of pipe is now sitting on a shelf in my office.
The repair and leak detection cost $3,500. Needless to say, this last week really sucked.
But, as with many things in life, it could have been worse.
6 thoughts on “Reality Check: It’s Not Always Roses and Collecting Money”
it is so good to see another post from you guys. you have inspired my wife and i to possibly purchase a laundromat this year.
Glad to hear it! We’ve got some more posts coming down the pipe soon too. We’ve finished another phase of remodeling on our little $28k rundown store, and we’re excited about the results!
When you are in the middle of it, it can seem like the only thing in the world for a bit, but……it passed.
This gives you something. The next time you have a week like that, just say out loud, “This too shall pass” it will suddenly put it back in perspective, It actually works!!
You have to have one of those weeks first, and get through the week as you just did. Now you have mental help in the bank.
Having said that……..I am not always the best at handling situations like that.
One more thing. At some point you should probably drop the public announcing of your net worth. The more you have, the more you have to pretend you don’t have it. I started from zero. Somewhere after the first million, my old party buddies from the old days seemed to change.
1) Family and friends that you knew before will suddenly run to you first for money.
Some “friends” will actually resent it.
2) The more you have, is in direct proportion to how many people out there have an eye to take it from you.
It means anything from an honest person selling something to a highly skilled con artist.
I hope you don’t mind me saying this, but its true.
Good luck, you two are an inspiration!!
Hey Martin, good to hear from ya. Technically our net worth is only discussed in detail on our personal blog, MyShinyNickels.com. Here at Laundromats101 we just focus on the business side of things.
With that said, we’re pretty committed to being fully transparent about where we came from financially, to where we are now. While there may be downsides to doing that, we feel it really helps others realize what is possible when they finally change their hamster-wheel approach to money; that it’s much better to use your money to build actual wealth, than to spend your money for the appearance of wealth.
Thanks for stopping by!
You guys really inspired me a couple months ago with your blog posts! So much so that I’ve now added purchasing laundromats into my life plan haha. I’ve probably done about 200 hours worth of research over the last couple months just reading at work, on the train, at home on my PC, etc. If you don’t mind, I have a few questions that I would like to ask you guys, since the local owners aren’t willing to talk about their work for whatever reason.
1) Around what net/gross/cost level do you recommend buying your first store at, if you started off, out of college, with the idea of working and saving your money to buy a laundromat and convert that into your day job?
2) I know you guys don’t own huge laundromats nearby cities and large apartment buildings, however, would you be comfortable with the knowledge you have now to buy one near the biggest city wherever you guys live, that net roughly $500k per year? Given the opportunity.
3) Based on the businesses selling right now, would you buy a property for anything lower than a 25% ROI? I mean, 33% is the goal of course, but let’s say it would replace your main jobs with the net.
Thanks for any and all responses! I look forward to checking back every day for a response, haha!
I like that you’ve done so much research; we try to really drill that into people. Learn everything you can about the industry and business ownership. And yes, some owners can be pretty tight-lipped; they’re notoriously paranoid about the competition.
1) A typical laundry benchmark is that net income should be at least 25% of gross income. So the net/gross number you need can be determined in part by the income that needs to be generated. If a net annual “salary” of $50,000 is desired, then the store would need to be grossing at least $200,000 a year. However, if the purchase was financed, the monthly loan payments will eat into the net income accordingly of course. As far as cost, a laundry is typically valued anywhere from 3 to 5x the annual net income. This means the purchase price could easily run anywhere from $150,000 (3 times $50k) to $250,000 (5 times $50k), and even higher if the washers/dryers are new(er).
2) First, I don’t know that a laundry exists that nets $500k a year. Gross, yes, but not net. The “high end” in the laundry industry is a gross income of $1 million, so anything beyond that would definitely be a rare anomaly. With that said, now that we’ve owned a few, yes we would probably consider owning/buying one at that income level. However, our current investment strategy has us probably selling our stores in just a few years.
3) If the store was attended or managed (in other words could be run almost completely absentee), I would consider a purchase with a 20% ROI. But not much less than that.
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