I’m sorry I’ve ignored you like a poorly-watered houseplant. But by the amazing power of internet search engines, you’re still getting 10,000 hits a month. Even with a slow, sloth-like blogger such as I at the helm. I know you deserve more of my time, but you see, we bought another laundromat in January, and well, the remodel takes up a lot of my time outside the ‘ol day job. And then there’s the pile of reader mail I have to sort/respond to, oh, and before I forget, there’s that other thing called being a mom and wife.
So while I may not have paid you much attention the last few months, it’s not you, it’s me. Really.
Laura aka Mrs. Nickels
Ok, ok, in all seriousness, I realize it has been a long, quiet few months (for the blog, at least). Behind the scenes it’s been far from quiet. More like a herd of elephants all wearing tambourines and blowing those annoying birthday horns while a rocket takes off in the background. Yeah, that’s about right.
There’s so much to tell you, I almost don’t know where to start.
So you may remember from my last post, Randy was retired and enjoying life, our kids were gaining independence and disappearing on a regular basis, we were remodeling our first store and would be taking possession of our second store on January 1st.
Are you exhausted just from reading that? I am. And I lived it.
The Latest Life Update
First let’s get the life stuff out of the way, and then we’ll dig into our finances and laundromats. And if you just want to scroll down past this life stuff to get to everything else, then fine, I get it. But if that’s the case, then you’re lame.
So…Randy is still enjoying his retirement, and the weekly drum lessons continue as he aims towards legendary drummer status. Maybe at some point he’ll let me post a video of his progress. (No pressure or anything, dear.)
UPDATE! I secretly taped him and then convinced him to let me post it. You’re welcome, readers. (I’m sure this video will result in an onslaught of groupies, so let’s just get things straight right now. He’s taken.)
A Cheap Fantastic Vacation
In February, we took an amazingly cheap trip to Paris during Valentine’s Day. (Side note: We use SkyScanner.com to check for cheap flights to cool places. Just enter your departure airport(s), put the destination as “Everywhere”, and select “Cheapest Month”. It will show you the cheapest places/destinations for the cheapest times of year at the top. It’s pretty cool. Just the other day, I found ROUND TRIP tickets to Costa Rica for $274. I can’t even get to most major US cities for that price.)
Back on topic…
So we found Roundtrip tickets from Oakland, CA to Stockholm, Sweden for about $350 each. That got us across the Atlantic to Europe. Then we found a cheap little hop from Stockholm to Paris for $50. We almost couldn’t believe we could get from the West coast of the US to Paris for $400. Couldn’t pass that up.
Then I found a modern, centrally-located little flat in Paris on AirBnB.com for $50 a night. (We love AirBnb.com. Use my link above to book something and you’ll get a $25 credit towards your booking, as well as a $25 credit for me. Come on, it’s the least you could do, and it’s a win-win!) This means that altogether we spent less than $1,200 for flights and lodging for a week-long vacation in Paris (with sightseeing time in Stockholm too!).
We actually arrived in Paris on Valentine’s Day, so we took a $15 evening boat cruise on the River Seine, and afterwards, kissed under the sparkling, well-lit Eiffel Tower with all of the other lovebirds. Crossed that one off the bucket list!
That Endless Project We Call a Backyard
We also made some more progress on our “is-it-done-yet?” backyard. Long-time readers, do you remember when it looked like the photo on the left? Wow! What a difference a couple years makes, huh? We’ve since added a few more plants, an outdoor fireplace, new patio set, an outdoor fan installed in the pergola, and some decor. We’re thrilled with how it turned out, and it was all DIY. Not a contractor in sight around these parts.
Now on to…
Our Finances / Money / Moolah
I’ve been checking our Net Worth here and there the last few months, but not like I used to. I used to be a bit obsessed, actually. But our net worth continues to climb, thanks to the normal four: value of the businesses going up, a high savings rate, returns on investment and real estate value.
In fact, the increase in value of our home alone is pretty mind-blowing. It’s literally doubled in value in just 3 years. And with the home completely remodeled and a kick-@ss backyard, it’s certainly worth more than the Zillow estimate.
When I checked on May 31st, our net worth had reached $543,567.
I like that number. It makes me feel like we’re making progress. Especially when I think back to where we were in 2011. Our net worth was in the negative back then. Blows. My. Mind.
Another side note: Do YOU want to know your OWN Net Worth? Finance folks and regular Joes the world over, myself included, use Personal Capital. (That’s how I get that nifty Net Worth number I’ve pasted up above.) It’s FREE, it’s SECURE, and it’s EASY to set up, and for anybody who’s serious about getting their finances in order or buying a business, it’s a must-have. Using this link supports this blog, which helps keep this whole thing running, folks! Hosting fees ain’t cheap!
But we still have a long way to go until we reach our goal of $1.2 Million.
With our current net worth at $543,567, we’ve already met our goal for 2016, and it’s not even halfway through the year. Readers have asked if I’m going to increase our targets, since we’re blowing past them. (I guess meeting them so easily takes the suspense out of it?) But I’ve decided to keep them as they are. If we reach our goal early, then great. I’m not going to move the bullseye farther away just because things are going well.
I Forget…How Did You Do It Again?
After everything I’ve written on this blog, some readers still can’t wrap their heads around how we’ve managed to make this much progress in such a short time. But I think this is a perfect time to point out some differences between us and “other folks”.
- When Randy got a $32,000+ early payout from a pension he had forgotten about, we didn’t start dreaming of new cars or fancy vacations. We saved it.
- We sold our McMansion in the suburbs that cost us $3,300 a month (P+I / Ins / Taxes / Utilities) for a cute little 1,000 square foot home closer to the city that only costs us $770 a month. What did we do with the $2,500 monthly difference? We saved it.
- We paid off our debt until we had no debt payments. What did we start doing with that money instead? Yup, saved it.
- We stopped eating out so dang much, dropping our restaurant expenditure from $1,500 per month to closer to $300. What did we do with the $1,200 difference? I don’t even need to say it, do I?
- When our home doubled in value, we didn’t sell and buy something bigger. (People are funny that way. The value of their home goes up, so the first thing they think is “Hey, values are up! Let’s sell and get something bigger with the equity we have!” But prices of properties in the same geographical area are relative to each other, so if your home went up $50,000, so did the McMansion you want to buy that’s 15 miles away. You’re not gaining anything, except a larger mortgage payment.)
- We diversified our investing by purchasing two laundromats, which provide cash flow as well as increased asset values over time.
In other words, big changes can mean big progress. Don’t be afraid to make big changes.
Last you heard, we were in escrow to buy our second store. And on January 1st, just as planned, we closed escrow on what is now called Lincoln Village Thrifty Wash.
I can tell you that it was/is a major fixer, but we were able to get the price down to $28,000. Because it was so cheap, we paid cash. But it needed (still needs) a LOT of work, as you can see below.
And it’s profitable, but not by much. We essentially bought the customer base and sewer hookups, because not much else was worth anything. Most of the machines are 30 years old, but we knew we could get in there, rehab it and make it a successful location.
So we’re slowly getting it fixed up…and there will definitely be “after” pictures…at some point!
And as to our first location, things are going very well. Our remodel is almost complete. We had the floors done, and we also built new bar-style seating with integrated outlets so customers can charge their devices while they sit and enjoy the free wi-fi.
A New Competitor
But as life goes, just as we were counting down to our romantic holiday in Paris, we got some bad news. It actually gave us a knot in our stomachs. The broker that helped us buy this first store called us with an inside scoop that a competitor was looking to build a new store just down the street from ours. What??? No bueno.
So as soon as we returned from our vacation (and even while we were on vacation), we started brainstorming ideas to make sure we either convince them our store is so awesome that it’s not worth competing with us, or make sure they aren’t successful if they do decide to go through with the build.
The good news is that an owner in our position is already ahead of the game. The new store isn’t going to be that big and we already know what they are paying for it. $750,000. Yes, that is a 6-digit figure, and not a typo. They will have to bring in so much money just to break even that it’s going to be difficult for them to stay in business. And they have a very strong competitor, ahem, right down the street. We’re in a more convenient location in a major shopping center and our customer base is established.
Are we worried? Not anymore. At first we were, but after talking to other owners who have experienced the same thing (and their stores aren’t as nice as ours), we don’t think the competition will hurt us too bad. Even if 15% of our business went to them, we’ll still be making good money, and they will be struggling to survive. The new store isn’t supposed to open until early 2017, so we’ve got plenty of time between now and then to improve further and build up our customer base even more.
The Latest Laundromat Numbers…
We’ve now owned the first laundromat for over a year, and the other for only 5 months. I haven’t run the numbers for the second location yet, but the first location I have some updated figures for you. (And with everything going on, I’m lucky to even have those.)
In our first 12 months in business, our gross income blew past the prior owner in both his last 12 months, as well as his higher 3-Year Average. And our net profit just surpassed his 3-year average as well.
Net Profit is NOT Cash Flow!
A reminder, however, that Net Profit is not Cash Flow. Net Profit (aka Net Income) is just the Gross Income minus the Operating Expenses. It does not take into account any debt payments an owner may make. This is because debt is unique to the owner, and not to the operation of the store itself. This allows for an apples-to-apples comparison of profitability between stores because it eliminates the effects of financing.
Once we account for the debt payments we made towards the purchase loan and the new equipment loan, the Cash Flow is closer to $31,000 for the 12 months. And technically, we also rolled a portion of that cash flow back into the business as part of our ongoing improvement efforts, which then increased the value of the asset itself. But thankfully, those are one-time costs.
So when you go to compare one store’s profitability to another, you’ll only compare net income figures. Then from there you can determine what your actual cash flow and ROI will be after financing (if any).
Well…I think that’s enough for tonight. I’m sure your eyes are starting to glaze over, and my fingertips are getting a little numb. I actually had one more thing I was going to mention, but I think I’ll save it for next time. I’ve got something on the horizon that I’m really excited about, and I think many of you will be too. (No, I’m not pregnant.)
Until next time…