Interesting topic and as usual, some solid view points and some ignorant viewpoints. It's funny, if you've been around this forum long enough you can probably identify who fits in which category

I work in corporate banking as a senior credit officer and see deals across all business models/industries. I look at financing business acquisitions on a daily basis.

The one common theme is leverage; with the right amount of leverage you can make anything go it just might take you longer to get your return depending on the cycle. You also need carrying capacity for the dips.

I continue to look for businesses to purchase but this cycle has the metrics too far out of bounds for what I consider a fair deal. I would hate to be in the hospitality industry but now is the time to buy at a discount.

Self Storage has been (as a whole) an asset class that has struggled along with office and hospitality and certain senior living facilities and that simply ties back to too much leverage in a unique economic cycle. Too much competition in SS (and other asset classes) has driven prices so high that the economics don't pencil out on most deals unless you plop down 50% equity. I'd rather push my chips in when everyone else is struggling or being forced to sale.

I do like the SS space for long term outlook; it's a solid covered land play depending on the location. I generally like service companies like HVAC, Plumbing, Electrical, Landscaping, etc. I like partnering with homebuilders on a profit split. I think retail strip makes sense at the right basis.

As others have mentioned though, I see a lot of businesses where people work their azz off for not much return. Car washes can be very profitable but that's on the larger tunnel washes that move volume and spend the money to maintain their equipment. I'm not sure I would mess with a small self service in a rural market. I typically won't finance a laundromat; I have yet to see one that pencils out but that could be b/c the majority of earnings are not being reported by the seller.

I think the most profitable business I've seen lately on a cash flow to revenue basis is the commercial landscaping/irrigation guys. Some of those margins are just insane but you can't simply hop into that business and I would be hesitant to pay the multiple they'd ask for.

Lots of options, just keep turning over stones until you find one you like. If you ever have any questions on what it looks like to finance said acquisition happy to give you some real world details/pointers or have one of my bankers reach out to discuss. I'm not on the forum a whole lot but will pass along my contact info if desired.

EDIT: I've financed some nail salons that have made quite a bit of money especially when packaged together. Women love getting their chit painted apparently.

I've owned both....a large tunnel wash and a good sized laundromat, along with others mentioned in this thread.

A car wash you can spend $100k to $10 million. You can make anywhere from $10k a year to $1m+ a year on a busy tunnel wash. If it's just a simple self serve, no employees is really nice, but it will still require maintenance and work. Car Washes are bad about needing equipment repairs. If you are going to buy a tunnel wash with employees, I wouldn't do it unless you can do it 25+ hours per week. Those take a lot of staffing, and the employees are typically not the best quality. It also requires a lot of capital for a tunnel wash....some of the equipment can be $20k+.

Laundromat was a fantastic business...it was kicking off a good chunk of cash per month. I wish I had that one back, but you have to have someone you trust handling that much cash. Location is huge on those....you need to be near apartments and better if in a Hispanic community. Machines also require maintenance, but a lot cheaper and easier to work on than car wash equipment.

Feel free to PM if you want any other info....I'm probably the only one in this thread with real experience with both.

Passiveinvesting.com

https://offerings.passiveinvesting.com/pic-fund-i

I've been in this over a year...pays me 9-9.5%. Very low risk. Monthly distributions.

This guy knows what he's talking about; thanks for the link I'm going to personally check it out.

Cool, thank you.

You're welcome, guys. I followed this group for about 2 years before I gave them my money....did a lot of due diligence. They are a large syndicator with multiple asset classes, and have over $1B in RE. If you want any more info, feel free to PM me.

Good real world info.


On the laundromat business......Would you say it was worth the initial investment?

I've seen some advertised at X and the cashflow at Y.....if those numbers were accurate, in my mind it wouldn't make much sense to sell it. I'm always a little skeptical on those deals

I loved the laundromat business. Only 2-3 employees, very little interaction with customers, all cash, very little inventory management. The only headache was keeping machines working. But we had about 90 washers and 70 dryers so if a few were down it wasn't a big deal.

It was definitely worth the investment as far as I was concerned. It was making a 20-25% return based on the purchase price. More than that if you factor in the leverage. I was paying a family member a decent salary to work there part time as well.

Here's the deal on the laundry business....being an almost all cash business you aren't going to get a straight answer from any owner on what they are really making. The only way, and how I verified, was actually go in when the owner is emptying the machines and see how much they had in them. And then match it to the change machines, and also compare to the utility bills to make sure it checks out.

Lots of reasons an owner might sell....the guy I bought mine from wanted a bigger one. I sold because the family member who was running it couldn't do it anymore, otherwise I would have kept it. I wouldn't trust some random person to be in charge of that much cash. It was making a lot more than 30-40k per year.

A fun fact I learned....20 lbs of quarters is $400. Lol. There were too many to count, so when we emptied the machines we weighed them on a scale and got a rough estimate.

Yes…. and include boat and RV…..very high profit to overhead margins…

You are wrong …. is that you don’t ever leave that cluster F Frisco or are you really that stupid?

A man I built a home for at Lake Fork looked into the boat storage facility biz. I don't remember what made him change his mind, but one thing he mentioned to me was the difference in insurance cost between having electricity or not having it. His insurance agent said the risk was all of the batteries, chargers, and fuel.

I agree, can be very profitable as well. But also takes quite a bit of capital and start up costs to build one or buy one. For a decent sized facility you are looking at typically $1m-6m....some significantly more than that, depending on finishes/enclosed/open/electric/concrete/etc. I am a limited partner/investor in 14 facilities and have been in that space for several years. COVID was great, but last 2 years have seen cap rates increase and of course borrowing costs sky-rocket. Also, acceleration on lease up has slowed down as well compared to 3-4 years ago. Land values have definitely increased, but with storage facilities you are looking at cap rate valuations so they are very sensitive to increased costs such as property taxes and insurance which have shot up as well. For most folks they are out of range for a build out or start up just because of how expensive they can be to build. Way cheaper to buy a laundromat and typically better initial cash flow from a % perspective.