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We Bought a Laundromat…and It’s All About the Numbers

Yup, we bought a laundromat.

Randy and I were tired of watching our money slowly grow in savings accounts and the stock market, and being in the corporate rat race was getting really old.  It felt like the right time to change things up, but we had no idea what or how.  We wanted full-time income with a part-time commitment.

Do you know what I’m talking about?  You feel like it’s time to do something big, something life-changing but you’re not sure what?  You want to reach your savings and income goals faster, but you feel paralyzed where to start?  That was us.

So in 2014, we put our finance and management backgrounds to work and bought our first unattended laundromat.

That went so well, we bought a second one. 

But when we first started, friends and family were a little skeptical.  “A laundromat? Seriously?”, they asked.

They wanted to know…

“What in the world made you want to own a business?”

“Why a laundromat?”

“Does it make a lot of money?”

Those were all great questions.  The truth is that we really wanted to try investing in businesses, get a great return without a ton of time and effort, and eventually leave the cubicle life behind.

In Search of Semi-Passive, Recession-Proof Income

But, it couldn’t be just any business. It had to be fairly passive (not a lot of work), allow us to keep our day jobs if we want, but still provide some nice cash flow each month. There are only a few businesses that meet this criteria, and a self-service laundromat is one of them.

Owning a laundromat is not glamorous or fashionable (but we hope to change that).  When the economy is down, folks may eat out less or put the brakes on frivolous purchases, but clean laundry is a necessity.

We decided up front that we were comfortable investing $50,000 into a business venture.  (We had saved some money in order to purchase the business, but don’t let that number scare you.  In fact, for several of the laundries we were interested in, the seller was willing to carry the financing and take payments.)

Risk vs. Reward

A general rule of investing is that the riskier the investment, the greater the profits (or losses). With less risky investments, you may not get skyrocketing returns, but you won’t likely lose your shirt either.

One of the ways we lowered our risk is by buying an existing business with an existing and steady customer base.

Investing in a brand-new startup restaurant would be much riskier than investing in a laundromat that has been in business for 20 years, for example.

Another way we lowered our risk was to buy a business that’s relatively recession-proof, as I mentioned before. No matter what the economy is doing, people never stop doing their laundry!

Our Target Store

Then we found it.  The unattended laundromat in our neighborhood shopping center was up for sale.  And they had just lowered the price from $150,000.  The new list price was $129,500.  (Hmmm…a motivated seller?)

But we had agreed to only invest $50,000 of our cash into a business venture.  So we knew we’d have to get the rest through financing; either a business loan or perhaps even the seller would be willing to carry the financing?  We weren’t sure.

We gathered our wits and every bit of courage, and reached out to the listing broker for more information.  

He arranged to meet us at the laundry the next day to go over more details.  We walked into the laundry that next afternoon, and knew we had a diamond in the rough on our hands.  It needed a major cosmetic overhaul, but the customer base was solid, and the incomes were consistent.

But we had some work to do before we made our move.

What purchase price were we comfortable with?  And if the seller is as motivated as he seems, would he accept an offer below asking?

Let’s Dig In to the Numbers, Shall We?

We decided to offer him $105,000, and let him counter if he wanted to.

Below are the initial numbers I ran. I used a purchase price of $105,000, with a down payment of 35%.

This meant we would make a down payment of $36,750 and finance the remaining $68,250.  We had a rough idea that a lender would give us terms in the range of 8.25% for 5 years, based on information from the broker.

So our initial investment would be the down payment ($36,750) plus the estimated start-up costs of $12,400, for a total investment of $49,150.

Perfect. It would put us right around our target investment commitment of $50,000.  (But again, if the seller is willing to carry a larger loan, then the cash you need could be much, much smaller. )

Once we knew the amount of money we’d be investing, it was time to determine what the return on our investment may be, based on prior history for the laundromat. We took the average annual gross revenue for the prior 3 years, subtracted the most recent annual operating costs (expenses), subtracted the annual debt payments we’d be making and determined our annual profits/cash flow.

(Note: Eventually we reviewed the seller’s bank statements, tax returns and profit/loss statements. These documents allowed us to confirm his stated revenue/expense/profit numbers.)

Alright friends, let’s get back to the numbers…

After reviewing the sellers rough numbers, we knew that the average annual sales for the prior three years were about $139,846, and his expenses were $90,276.  Once we subtracted our loan payments of $16,704, then we would be left with net cash flow of $32,866.  

And since our initial investment was $49,150, we would earn an ROI somewhere in the neighborhood of 66.9%.

 

The Adventure Began

So we made our offer of $105,000 and after some back and forth, the seller accepted!

Then our escrow period began.  

I used a combination of research and my finance and analytics background to perform all sorts of due diligence reviews on the numbers the seller provided.  Reviewed tax returns and profit/loss statements, ran a water bill analysis, attended collections for 30 days, etc.  It all checked out.

We also convinced the seller to carry the financing, which was a bonus.  Then came some negotiations with the landlord on the lease.  (We documented the purchase process in much more detail in our earlier blog posts.)

And on February 28th, 2015, escrow closed and our dream of owning a passive business became a reality.  

That morning, the seller did a walkthrough and handed us the keys.  We celebrated by spending a leisurely afternoon together; we had lunch and went to a movie.  And the whole time we marveled at the idea that we were making money without even being there.

As time goes on, we’ll see how our results line up with expectations, and I’ll eventually share that with you too.

Stay tuned!

********    Here’s a 2017 UPDATE!  ********

[We now own two coin laundries, and business is going fantastic.  With our first store, we increased sales by $30,000 in just the first year alone, and we doubled our net income to $61,029 after two years of ownership.  Our second store we bought for only $28,000.  After just some basic cosmetic updates, incomes doubled at that store, and continue to grow month over month.  

Buying coin laundries was one of the best decisions we’ve ever made.  Not only are we earning cash flow each month, but when we’re ready to hang up our keys, we’ll sell both stores for a nice chunk of change.   

Since our journey began, a lot of people have reached out to us asking for a step-by-step guide on how to duplicate our success.  

So we’re excited to announce our official “Laundromats101 Guide to Purchasing a Laundromat”.  It also includes a Laundromat Analysis package – a download of the spreadsheets, calculators and formulas we used to find, purchase and operate our own stores. Click HERE to check it out!]  

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And if you do nothing else, you at least owe it to your future self to join our Laundromats101 community.  You’ll get insider information, updates, special offers, etc.  Just enter your email below.  (We promise not to spam you, and you can unsubscribe at any time.  We even send you a FREE 4-page Laundromat Purchase Checklist that lists every step of the process, as a welcome gift.)

Lastly, if you’re the curious type, and want to see some before/after pictures of our first laundry,  and some gnarly before photos of our second laundry, check out THIS post.  Or, just start digging around the site, there’s plenty more to see!

Until next time…

 

 

 

 


 


116 thoughts on “We Bought a Laundromat…and It’s All About the Numbers

  1. I’ve considered a laundromat as an investment before. It’s a cash cow when managed adequately. I live in Southern California though where my initial investment would be 3x yours for a 35% down payment, which is why I’m still considering whether it’s a viable option for me. Your move does encourage me to keep saving. Please do continue to share about the business and what you’re doing to bring additional value to the business. Thanks for being transparent.

    1. You’re right, depending on your location, it can be difficult to make the numbers work.
      We were lucky to find a motivated seller. There are stores in our region that sell for nearly $1 million dollars, but we were able to find a small store that does a lot of business.
      Keep your savings up and your eyes peeled, someday you may find your own “diamond in the rough”.

      1. I’ve been looking for a laundromat for a while. Finally found one but the owner wanted $60,000 and the equipment was old and tired. Would have to buy new equipment and fix up the place. Also once I talked with the landlord he told me that the laundromat was on a month to month and he’s was in the process of kicking him out do to him not keeping up on the business. So i am going to wait till the landlord kicks him out because I feel that the existing laundromat still has value do to all the plumbing and hookups but I still need a good lease to make this work since I’m starting with new equipment. Any advice on this or did you have to get new equipment too. The laundromat I still feel is a gold mine since it still is very busy and their isn’t one for another 11 miles. Any advice would be great!!

        1. There are way too many variables to give you specific advice. Saying that, I wouldn’t let the laundromat close for a long period of time. During the closure customers will be forced to find an alternative and you will be fighting to get them back. Also, you need to check with your local county. If the store is closed will you have to pay for water and sewer hookups again? At our location, sewer hookups are $500 for each machine.

          We are actually in a similar situation with our second purchase. Our plan at this point is to take the store as is and do a complete cosmetic make over. (To make the landlord happy and increase profits) We plan to buy new equipment as we build the business. Let the store pay for itself. We are still negotiating the lease and will probably have to have specific plans written in.

          You need to look at current net profits and demographics and decide if it makes sense. Hope this helps.

          1. I have found in most cases with dealing with laundromat owners they won’t tell you what they net or just don’t know! It’s hard to evaluate once a owner runs it into the ground. Also having to buy all new equipment doesn’t help either.

          2. A laundromat that is “run into the ground” is a potential gold mine. Valuation is based on net profits at the time of sale. If you can turn it around and provide a safe and clean place for your customers, your machines don’t have to be new. They just have to work and be efficient. Most commercial machines are built to last.

            If you wait until the landlord kicks him out, you will never know what the net profits are. If you are purchasing from an owner, you can ask to see his schedule C, P&L statements, and all the actual bills for the laundry. If they refuse to give you access to this information, walk away. By doing a water usage analysis you will be able to tell if the owner is blowing smoke. During escrow I always tag along on collection days to verify income. Be careful though, unscrupulous owners have been known to seed the collections. You can always revise your offer based on your findings or walk away if it isn’t the right deal for you.

            I also visit a lot. We have spent hours in laundromats, doing our own laundry while we covertly check it out. Talk to the customers too. They provide a wealth of information about the area and how the laundry is managed.

      2. Laura, did you use an agent to find the seller? We are thinking about opening a laundromat. Our cost would be high because we live in the LA/Ventura area. Southern California is crazy expensive.

  2. zzzzzzz drool drool drool zzzzzz – ummm, very interesting and informative blog post there, Laura (j/k) 🙂

    Looks like you guys have checked things out pretty carefully. I assume that your estimated annual expenses ($90,276) includes sufficient guestimates on annual operating / maintenance expenses, supplies, and recapitalization expenses. I read (previously) where you had your techie check out the equipment. From what I read (elsewhere), maintenance time/cost and machine replacement are obviously issues that need to be properly managed. I was googling for reviews on “Rosemount Thrifty Wash” and think I may have found a link that describes the “Thrifty Wash”, as run by now former owner (although it may not be the correct one that you are referring to). I also ran across a website that did label itself as “Rosemount Thrifty Wash” but it currently looks like just a shell of a website (with very little details). Is this a site that you plan to set up to market your new business?
    (see – http://www.rosemontthriftywash.com)

    1. Oh Rob, you’re a man of few words… 😉 j/k

      Yes, your assumption is correct. The expenses include all maintenance, repair, supplies, etc. Essentially everything that was an “outflow”. The only thing it doesn’t include is any capital improvements we may choose to make down the road, which will require its own ROI calculations anyway.
      And you’re also correct that with a laundromat, since the machines are income-producing assets, they must be maintained and/or replaced over time. I did work replacement costs into our 5-year business plan, which was a ridiculously lengthy document that we submitted as part of our lease application and financing.
      The laundromat was named just “Thrifty Wash” under the prior owner, but yes, it is now called “Rosemont Thrifty Wash”. I’m still pulling together our social media and internet presence strategies, but the website you found is indeed the “shell” until I’m ready to do the full roll-out. 🙂

  3. I’m loving following along with you guys on this journey. A few years back we had considered investigating opening up a laundromat but decided against it in the end. But I’m starting to get intrigued again, especially considering how laundromats are “recession proof” businesses as you adequately stated. Might be time to do some more research. Thanks for sharing.

    1. Buying the laundromat reminded me a lot of what I’ve heard about buying investment real estate; find a slightly distressed property in the right area from a motivated seller.
      You’ve got to find the right one for the right price, or the numbers don’t work.
      Keep your eyes open, you never know when the right opportunity will fall in your lap. 🙂

    1. It was officially listed for sale, but it was overpriced. Before we found it, it was listed for $150,000. By the time we found the listing, it had been reduced to $129,500. From there, we negotiated it down to $105,000.
      At $105,000, the numbers looked good enough that we felt the calculated risk was worth it.
      And ‘knocking on doors’ is definitely another method, which we may have moved on to if the ones we found listed hadn’t worked out.
      Although, in the case of our laundromat, it’s unattended, so if someone ‘knocked on our door’, there wouldn’t be anyone ‘there’. But you can locate absentee owners through your local chamber of commerce or business licensing division based on the address.

      1. I have an opportunity to acquire a laundry mat that the owner wants out of the lease. To get out of the lease that ends Oct 2016, he is willing to leave the equipment. The landlord is my father and his partner. Here’s wear it gets interesting. The laundry is full attended all hours of operation with a payroll of 50000 per year, but it’s losing 1000 a month. So could step into this business for almost no money down. The landlords said they would be willing to renegotiate the rent from 2750 per month to 2000. This includes taxes and utilities.

        If we were to switch it from fully attended to partially attended and cut payroll down from 50000 to 25000 that would make up the 1000 a month loss and then some. My wife and I both work full time and have 2 children, so hours we could put in would be limited. Our children would be old enough to help in a few years.

        Any thoughts?
        Thanks
        Chris D

  4. This is fascinating — thank you for sharing this. How did you find this laundromat? Why was the owner selling, and how did you two connect? I’d love to hear more about the process of searching for these businesses.

    1. Hey Paula…first of all, love your blog. I’ve read your real estate series “front to back”. We met at FinCon back in Sept (but yeah, I know, we all meet a ton of people at FinCon and don’t recall 99% of them!)

      I go over a few more details on the process we took in the blog posts leading up to this one, but here’s the nutshell: A lot of it was plain ‘ol fashioned luck, in the form of means and opportunity colliding.

      One random night last November I decided to log on to a business buy-sell website to see what was for sale in our region. Amazingly, the laundromat less than a mile from our home was for sale. The asking price was too high though. Thankfully, the seller was motivated, and we ended up negotiating it down from $129,500 to $105k. Now that was a number we could get excited about.

      He decided to sell because he started his own custom motorcycle shop a while back and it’s really taking off. Plus he lives almost an hour away, so his brother used to run the store for him, but now the brother moved out of the area, so he was stuck managing two businesses. He decided to just sell it and cash out.

    2. Chris D,

      Talked to the owner today and got his financial statement. He is just broke even this last year. He does have 50000 in payroll expense, and he said if he was going to continue with the business(he is ready to retire and has others businesses around town) the first thing he would do is cut payroll. I would of course be working hours as well, so getting the payroll down and going to a partially attended mat would save lots of money.another bit of good news is that our state changed some tax laws that will save the business 4000 per year.

      Any thoughts?
      Thanks,
      Chris D

      1. If it is just breaking even, and payroll needs to be cut in order to make money, and that means you ‘working a shift’, you need to be careful that you’re not just buying yourself a job. Is there significant room for improvement? In other words, can you identify ways in which you can improve the store so that you can increase revenues? If you are confident that it’s a diamond in the rough in a great location that just needs some TLC, then it may be worth pursuing. But at a rock-bottom price. At this point it is only worth the machines inside, and that’s about it.
        Another thing to be aware of, is that a store that moves from fully attended to part-time attended, or from part-time attended to completely unattended usually gets a LOT of negative customer reaction. Stores that have always been unattended do not have that issue. Just food for thought.

  5. That’s awesome y’all purchased a laundromat. They can be very great businesses that provide a great service to many people. I’ve been waiting for my chance to buy one. I have looked at several but once again as you stated its all about the numbers and sometimes it takes time to find that gem.

  6. Hey Laura,

    Great post. Love how you broke down the numbers and used leverage!

    To the critics:

    When making most investing decisions it is the percentages, not the numbers that should guide you. Can’t stress that enough. I see far too many poor real estate investments because the “investor” ignored the percentages.

    Just curious… What are the depreciation and tax advantages (if any) to a laundry mat? I assume there’s a lot of equipment to depreciate.

    Thanks,

    Jeff

    1. Thanks Jeff. And yes, it’s critical that folks understand that it’s the percentages that count in investing, not absolute numbers. Too many mistakes are made when people run cash-flow scenarios, and don’t calculate their actual percent return!

      And in addition to the general tax advantages of owning a business, there are certainly additional tax advantages for laundromats.

      One great thing is that when you buy a laundromat, since a large part of the purchase price is based on the acquisition of a lot of fixed assets (washers, dryers, sinks, boiler system, etc), this means that a large portion of what you paid for the business is tax-deductible.

      And, when it’s time to buy new or (newer) equipment, you can decide whether you want to claim the entire purchase (up to a certain $ amount) as an expense in the current tax year, or you can choose to depreciate it over time. And as with many things, there are pros and cons to each method.

      Claiming the entire purchase of equipment as an expense in the current tax year lowers your tax bill quite nicely, but it also means that on paper, your business doesn’t look like it’s doing as well.

      On the other hand, using the depreciation method may not do as many favors for your tax bill in the current year, but your profitability looks much better on paper which is important if you want to get a business loan or sell the business.

  7. Great post, I was under contract to buy a laundromat about 3 years ago. It fell through due to equipment condition, but I still wonder what would have come from this. I have been keeping an eye out for another deal. Was the purchase for the business only or did it include the Real Estate as well? I always want the real estate as part of my deals, but this definitely eats into the cash flow.

    1. Bummer that deal didn’t work out for you.
      Our deal did not include real estate; we are leasing our location. We certainly would have preferred to own the underlying real estate as well, but then again, that would have required a much larger investment up front and then we’d be well past our initial investment target of $50k. 🙂
      From a comfort-level perspective, I think buying the business alone was a good starting point for us anyway. After we’ve owned this at least a year or more, I think we’ll be better equipped at that point to make a decision on purchasing a laundromat with real estate included, should that opportunity come our way!

  8. Hey Laura,

    Thanks for sharing these insights and allowing us to live vicariously on this adventure! I was unsure about your rationale for financing rather than buying though so I ran the numbers you gave.

    Scenario A
    Total cost = $117,400 ($105k cash+ $12,400 start up).
    Yearly profit = $49,570 a year ($139,846 income-$90,276 op expenses)
    Payback = 2.4 years ($117.4K/$49570)

    Scenario B
    Total Cost = $132,672 ($36750 Down payment + $12,400 start up + $83,522 principal and interest at 8.25%)
    Yearly profit = $49,570 a year ($139,846 income-$90,276 op expenses)
    Payback = 2.7 years ($132,672/$49570)

    It actually looks like buying is slightly better. The returns you show on the second chart only consider the financing of the $68,250, omitting the $36,750 + $12,400 you paid up front. Even though you don’t pay it annually, it’s still a factor in your break even point.

    Still not a bad move to finance though if you plan on owning two at a time and don’t want to spend the cash to buy one outright as it’s only a 4 month difference.

    Good luck to you!

    1. I admit my calculations are of the ‘back of the napkin’ variety. There is certainly a lot more I could get into (depreciation, equity, etc), but I wanted a quick and dirty non-sleep-inducing overview. (Not sure if I succeeded though.) 🙂
      At the end of the day, we knew we were only comfortable investing about $50k in cash, and we’d still rather leverage debt and be able to purchase a second laundromat down the road.
      Glad to hear you’re enjoying the “adventure”, and thanks for stopping by!

  9. Those numbers are impressive, I like how what looks like a ‘low-key’ business is generating so much cash.
    I guess I need to start looking into Laundromats!

    Looking forward to follow your blog and read more on how this business goes.

    I’ve nominated you for a Liebster Blog Award here http://www.themoneymine.com/liebster-award/. It’s a way for the community to discover new upcoming blogs and learn from each others!

  10. Hi Laura, wonderful info. But could you please post details or break up on the op-expenses of ~90k? Also how the unattended mode is supposed to work?

    1. Hi Niki, if you go back through the other posts in my “We’re Buying a Laundromat” series, I talk about what is involved in running a laundromat unattended. As to the breakout of the $90k expenses, I can see about adding that detail in an update. Cheers!

  11. Hi Laura,
    I am in the same position as Kevin and would be ver interested in your reply to his comment. There’s a dilapidated laundromat that is loosing it’s lease in my neighborhood and I’d like to take it over, but would have to buy all new equipment.
    I’ll post Kevin’s comment here too. Would love to hear your response.
    Thank you and best of luck to you in your endeavors!!
    Elizabeth

    Kevin: I’ve been looking for a laundromat for a while. Finally found one but the owner wanted $60,000 and the equipment was old and tired. Would have to buy new equipment and fix up the place. Also once I talked with the landlord he told me that the laundromat was on a month to month and he’s was in the process of kicking him out do to him not keeping up on the business. So i am going to wait till the landlord kicks him out because I feel that the existing laundromat still has value do to all the plumbing and hookups but I still need a good lease to make this work since I’m starting with new equipment. Any advice on this or did you have to get new equipment too. The laundromat I still feel is a gold mine since it still is very busy and their isn’t one for another 11 miles. Any advice would be great!!

  12. My husband and I are interested in buying a laundromat but both have demanding full time jobs. You mentioned that you also have a full time job – can you provide some advice on how you run the business while working? Ie. Do you hire staff to run it or is it fully self serve?

    1. Our laundromat is unattended, so we can have full time jobs and run the business. Our situation is a little unique. Before I retired, I was off work every day by about 2pm, so I was available during the busiest part of the day. Also, I had some flexibility if there was an emergency that couldn’t wait. There is some controversy in the industry with attended versus unattended stores. Obviously, you will be able to provide better customer service with the right attendant on site, but for smaller stores it can really eat into the profits. Bottom line is; if your equipment is in good shape and well maintained, you can only work there 4 to 5 hours a week (machine maintenance and collecting quarters) with very few customer issues.

    1. Our laundromat is unattended, so we don’t have any employees. We pay a janitorial service who cleans every night, which IS included in our 90k operating expenses. The door locks, alarm and lights are all automated to come on and off each day. We come in and collect money, handle a few customer service issues, and perform minor repairs.

      1. I have really enjoyed your blog! What are the hours it is open? Also if everything is automated (locks, lights, alarm) What happens if someone is still in there when the doors lock and alarm sets?

        1. Thanks Jason! Our laundromat is open 7 days a week from 6am – 10pm. The doors automatically lock at 10pm, but there is an exit button on the inside that still allows people to leave once the doors lock. The lights automatically dim at 2am, and our cleaning crew sets the alarm when they leave every night. The alarm, lights and door locks all open up automatically at 6am the next day.

        1. Our cleaning service comes in after closing, so no issues with people trying to sleep inside. They clean and set the alarm at night. And yes, we have 8 HD cameras with remote monitoring from our phones and laptops, including outside the front and back doors. The system works well.

  13. Hi,
    Thank you for sharing your knowledge. My boyfriend and I are both working Full Time and we are a young couple in the early 30s. We recently noticed that a Laundromat was for sale. We spoke about it and thought it was a great idea to put in an offer. However we are not experienced in this field at all and we thought this will be a source of additional income for us. We have put in an offer and right now our best option is to finance it. The owner asked for $85,000 and accepted our offer of $67,000. The laundromat is located in a college area and the owner mentioned that the place gets very busy with many college students. We are planning to meet with the owner again to ask about his utility costs, the length of the lease and the year of the machines. Is there any advice that you guys can provide to us to make sure we don’t get played?

    1. 1. Read all of my posts about the laundromat (if you haven’t already) 2. Find everything you can online about pre-purchase review of financials, utilities, etc. There are a lot of resources available, including this website!
      Good luck!

      1. Hello Laura,

        Thank you for all your post! I really like your blog. Would you sell the book by Jason Lombardo? If yes, please send me a message via email.

        1. Thanks David! And can you clarify your question? Are you asking if I recommend the book? Or if I would consider selling it from my blog? Just need more info, thanks!

  14. Hi Laura. Im interested in buying a laundromat. However I jyst dont know where to start. Right now its an idea for me but i want to make it real. How do i get started? Im starting at 0. How tanmenmuch money do i need to be taken seriously and will a low credit score stop me from being able to purchace a laundromat?

    1. Having a decent credit score is helpful, I’ll be honest. Unless you can find an owner willing to carry the financing for you (who is also okay with low credit), you may find it difficult to get financing. If the owner is willing to sell to you with little to no down payment (which is not likely), you would still need at least $10,000 cash to cover a lease deposit, utility deposits, start-up cash, closing costs, etc. Good luck.

  15. I’m considering starting a laundromat because the owner of the one I use has raised prices, cut services and even shut off the bathrooms to customers! Is there a way to lease the equipment instead of purchasing it? What is the average cost of a commercial washer? and dryer?

    1. Hey James – If leasing equipment is an option, then I’m not aware of it. But I would want the tax benefits of purchasing the equipment, and leasing doesn’t give you that. And, I would never consider starting a laundromat from the ground up until I had been in the business a very long time. There are too many variables to consider, as well as the sewer hook-up fees (per washer) are astronomical. In my opinion, almost always better to purchase an existing store.
      And asking the average cost of a commercial washer and dryer is a bit like asking the average temperature in California. So the quick answer is “it depends”. But I can give you a few ballpark figures for different sizes. A standard double-load front-loading washer can cost anywhere from $3k-5k, a typical top loader about $1k-2k, a four-load machine $4k-6k and a six-load machine $6k-8k. Again, these are just ballpark figures, but building a brand-new store, even a small one will cost at least $200k-300k, and that does not include any real estate.

  16. I am looking into buying a laundromat. There is a mat for sale, which is around 45 minutes to an hour away from where I live/work (my office is very close to home). There are attendants taking care of all the house keeping work, selling lottery, etc.

    My situation is, I have a full time job. Though I have some flexibility, I cannot quickly sneak out and come back (due to the distance of these mats). I am willing to setup security cameras and do all what is requires. I have following questions. Can someone shed some light please?

    1. How often the machines need to be emptied out of coins? Since I live far, can I empty out every week?
    2. The seller says the machines are in good shape. How do we find out?

    This forum is awesome. Thank you for all your advises.

    James

    Reply

    1. If the laundromat is fully attended (which it sounds like it may be), with hard-working trustworthy attendants, then you can be a semi-absentee owner as you describe. There still may be an emergency that comes up once in a great while (water heater goes out, etc), which will require immediate attention, but again, that is rare.

      And the frequency that you need to collect will depend on how busy the store is, and how much your change machine holds. Our business has picked up recently, and we’ve had to move to collecting 3x a week instead of 2x. As far as the shape of the machines go, I would look for a commercial laundry repairman and pay him to do a once-over on the place before you buy it. He should be able to tell you if you have any time-bombs on your hands. (Have him check the boiler as well.)

  17. Hi Laura, Randy. I found your post as I was searching for information on owning a laundromat. One of the things that I have a question on is the lease negotiations. Do you have any tips on how to go about this? I am very new to this kind of thing and I have no clue where to start. The reasons you pointed out for owning a laundromat was exactly the same for me. I’m glad I found your post. Any help is greatly appreciated.

    1. Hey Bryan…lease negotiations can be a difficult topic to discuss. Only because it isn’t a topic that has an easy concise answer.

      But one thing you need to know going in to a lease negotiation is how much leverage you have. Because in the world of negotiation, leverage is power. Check out the shopping center where it is located. Are there a lot of vacancies? Or is it full? Is it a bustling shopping area, or slow and quiet? Are there any anchors in the center (well-known major stores) that help draw customers? The answers to these questions will help you determine what kind of leverage you have.

      Shopping centers with many vacancies, that are quiet and have no anchor stores will be much more likely to work with you in regards to lowering the rent (or even offering free rent for a few months) than a bustling, anchored shopping center that knows it can easily fill a vacancy and charge premium rent.

      On the other end of the spectrum, it is harder for a laundromat to get as much leverage as a regular retail store, because a laundromat is essentially stuck where it is. The sewer hook-ups, plumbing, ventilation and hard-mounted machines mean that the likelihood of a laundromat owner picking up and moving are slim to none. So they’ve kind of got you by the ahem, well, you know.

      When you’re reviewing the lease itself, be sure that the CAMs (Common Area Maintenance) fees are pro rata. Meaning that you are only responsible for your share of the common maintenance fees, based on the share of the total square footage you occupy. In other words, if your store represents 10% of the total square footage of the shopping center, you pay 10% of the shared maintenance fees.

      Also insure that there is a cap on scheduled rent increases (i.e., no more than 2% increase every other year).

      And, you must get a LONG term lease. Optimally, 25 years, 15 at the absolute bare minimum. This may come in the form of a 5-year lease with three or four additional 5-year options, which is fine. But you need to make sure your lease sets you up for the long term. You may not own it yourself for 25 years, but if/when you try to sell your laundromat, a buyer is going to want a lease that has many years left on it.

      Also, review the assignment fees that are charged. Some landlords are sneaky and try to include a clause that charges an exorbitant fee when you want to sell and it comes time to transfer the lease to your buyer.

      Lastly, if you can’t get a reduction in the rent, see if they will give you the first few months rent-free. No hurt in asking.

      Hope that helps…thanks for stopping by.

  18. Hello Laura
    Great information from an experienced owner. I have zeroed in on a building that has been operating as a Chicago style hot dog restaurant for the last 18 years in a very high traffic area. The building was used as a laundry mat for many years before the restaurant. The building needs a lot of update and maintenance but is priced right for the area. I would be purchasing the real estate and would have to purchase all new equipment so my investment would be at least $323k. Do you think that the fact being it was a laundry mat at one time that it would have the expensive drain/ sewer hook ups in place? I know you had mentioned that could be $500 and up per machine. The real estate is on a busy street in a decent area with 3 trailer courts within a mile. I believe the real .est to be a sound investment . What are these sewer hook ups and because the building was a self service laundry many years ago, would it be done already?

    1. That’s a very good question. A sewer hookup or ‘connection’ permit is literally a permit that states you have permission to connect a single drain to the sewer line. My understanding is that once those sewer access/hookups are in place, they are one-time fees that are good ‘for life’. But that could differ from county to county, from one state to the next. And it is a good thing that you are thinking of things like this, because it is expenses like this that many folks completely forget about, and can make or break a budget.
      The ideal scenario of course is that the hookups are still in place and accessible and that the county doesn’t require ‘renewal’, but you would need to check with your county sewer/water office to be sure.
      One more thing…since it stopped being a laundry back years ago, make sure there is no obvious reasons why it closed and became a restaurant. Is the parking limited or inconvenient? Have the demographics changed a lot? Is there tough competition nearby? Good luck and keep us posted.

      1. Thanks for the reply. I have been trying to put a business plan together and I am stuck at trying to figure out how much I need to spend in machines. The building is about 2200 sq.ft. Do you have any ideas of the amount of machines I should start out with? Also trying to figure out how much $I need for machines and other equipment like water heaters etc.. I really need your advise to be able to move forward with my business plan so I can figure out weather this would be a profitable business.
        Thanks for your help Laura!
        Mike in Wisconsin

        1. Our first store is roughly 1500 sq ft, with 38 washing machines and 29 dryers. However, where we are in California, square footage is at a premium and rent is high, so we have a lot of machines considering the size of the space. Truthfully, the best folks to help you with planning are equipment distributors. My suggestion is to find a local distributor for either Speed Queen, Huebsch or Dexter brands. (The best brands in our opinion) Any reputable distributor will pull together a floor plan for you, based on your location demographics and square footage. They will go over the number/size of machines you need as well as their placement in the store, usually at no cost to you.

  19. Hello everyone wonderful blog and great people.

    I have been looking for a laundromat for a year. I found a fairly new laundromat with equipment that is only 2 years old. There is still a loan that is approximately 130000 and it is 22 washers and 22 dryers (dexter) in a busy area. the owner would not share with me the net cash flow but he shared with me the bills which are
    Per month
    Gas 1000
    electricity 800
    water bill is 600.
    Store rent 3000
    workers 4000
    loan 2500

    he also does folding for .7 cents and that brings approx 8000 a month (verified)
    Also a monthly company contract for a 1000
    The lease transfarable for 10 years.

    He is asking 150, 000 and for me to carry the loan.

    I am in dilemma. I still can negotiate the price down but wonder is there any way to a have a rough estimate about the net cash flow.

    I greatly appreciate your help

    1. I understand if the seller doesn’t want to divulge the net cash flow BEFORE you’ve made an offer, but I do find it a little odd that he’s shared all kinds of other information. If you’ve made an offer and he still won’t divulge the cash flow numbers (or at least his Schedule C from his tax returns for the last few years to get an idea of annual gross income), then move on. He’s acting squirrely for a reason.

  20. My grandmother owned a small convenience store/gas station/ Laundromat for almost 50 years. My dad and I recently tore it down and rebuilt the store. We have been open for about 15 months now. The store is doing well so now I’m thinking we should add the laudromat.

    I’m wondering if we should just add a decent size room to start off just to see how it will do and to build the revenue to completely add the size space my grandmother had.

    Our store is located in a small country town. I’m just curious as to how much revenue a Laundromat can actually produce weekly.

    1. Congratulations on successfully re-opening the convenience store. That’s an accomplishment by itself. As to the laundromat side, since you’re located in a small country town, and revenues could be inconsistent, I would start small and see how it does. It sounds like you could build out bigger later once you get a feel for how much demand there is for a coin laundry where you are. And it’s difficult to say what kind of weekly revenue a laundromat could pull in, because there are so many variables. Rural vs urban, families vs college students, low-income vs middle-income, # of competitors, etc, etc.

      But we all like figures, so I’ll throw some out. A very small store could do $8,000 in gross revenue a month, average size stores like ours would be closer to $16,000 a month in gross revenue, while a very large store could pull in as much as $40,000 a month or more. And a general rule of thumb for profit margins in the coin laundry industry is 25%. So going back to those same gross income figures, you could estimate monthly net income as $2,000…$4,000…and $10,000.
      Good luck, and keep us posted.

  21. Hi Laura my name is Jio and just like I realize I want to reach financial independence so I was looking for business ideas that are simple enough to oprate for some one with no experience in bisuness found out about Laundromat and it seems like to way to go I just started learning about this industry And im currently reading “An Investor Guide for Coin Laundromat” which I downloaded for free online, im really enjoying the blog and found very usfull and good vibes Lol 🙂 so thank you and every one!!
    I just started looking for Laundromat for sale in my state just found seems like not the best deal but I thought it would be a good learning exprience!
    I spoke with a broker and he gave some numbers of this coin laundromat but the numbers he gave me does not add up according to him the place is generate cash how ever it seems that when factoring the true cost according to the revenue of the place they are actualy loosing money he said the owner does not report on all the revenue, how can I make a realitevly good edtimate of how much revenue this place realy make?

    I Would love to hear tips and pherhaps a process of how to check a Laundromat to potentaly buy?

    As well how can I find out how much electricity water and gas are cpnsumed by each laundry seasion?
    And simerly how much electrity/gas the drier consume for each seasion?

    Thanks in advance

  22. Hi Laura, we live in a somewhat land constrained beach are with a lot of rentals. Only one laundromat on our island, and he charges $6.50 a load for medium sized washer, $.25 for 4 minutes on a medium sized drier. Does that sound pricey? Also, people at the beach have big towels and many sheets to wash. Does “going big” make sense? Lastly my son’s dorm sent an email/text when the load was done. Does it make sense to locate near a pub or restaurant? The other place has nothing near by.

    Thanks

  23. Hello, I love your blog. lots of great questions and answers. I find myself in a different situation but i think you may be able to advise me also. My brother is renovating a small 8 unit apartment complex and he is having me help him do some research on setting up a small Coin operated laundry mat for the tenants. Would you have any advice for this situation?

  24. I’ve been looking to OPEN a new facility……I’m haviing real issues with the equipemnt and costs.2,400 sq ft how should I best occpupy that space?

  25. is there a formula to use for predicted income…ie: how many machines need to run at $ to net income/?

  26. Hello Laura… Its seems like I just started reading this and just cant stop… I am looking to purchasing a laundry mat that has been closed down for years in my hometown… Hopefully less than 5k for existing building and land.. The only competition is 40miles away.. But trying to factor the cost of machines, where to purchase machines from, coin machine.. Etc.. I think this’ll be a good investment because I’ve been getting a lot of calls from family members and other people wanting a updated or better laundromat. The one that was in the town over half of the machines don’t work and the place doesn’t have a TV in it and is no place to sit down and things of that sort. I was also thinking because it’s a bigger building possibly doing like a side burger and sandwich place in it in the same location what are you guys ideas on this type of scenario although I know there are a lot of variables not listed. Still waiting to speak to the local company that owns it and or going through the tax portion and just paying the taxes that are owed if I do that then that would amount to about $3,000 and then I were on the property but it would take three years to acquire verses trying to just purchase the property outright and then pay up the taxes which are $1,000 yearly. Any ideas? Also love the photos I liked it before and afters and I also like all the stories I think I’ve read every old and current blog before sending this message thank you again for making yourself available to share a blessing to your family with others..
    Danadrian

  27. Hi Laura, I wanted to thank you for sharing your story. I own a business I have owned for 8 years and next to the business there’s a three building package for sale. In one of the buildings is a laundromat. Never really thought about owning one but when I found out that it was for sale my brain turning. lol Below is a little info about what this laundromat has. Would you mind giving me your thoughts? If you need more info please let me konw.

    All equipment was bought new in 2003 and all take coins
    12 large washers (Continental Girbau Inc) 3 Phase motors
    8 small washers (Continental Girbau Inc) 3 Phase motors
    10 double stack driers (Continental Girbau Inc)
    2 larger driers (Continental Girbau Inc)
    5 top load washers (Whirlpool HD Washer)

    Has a Soap bleach and softener machine selling the packs for $1 each
    2 change machines
    1 Candy vending machines

    Owners says he mades $2500-$3000 a month profit. Says one week of the month is profit and the other weeks are paying the overhead.

    Basically if he is truly making that kind of money then that would pay the mortgage for all three buildings. I would use the laundromat not to support my living but to pay off the buildings. The builds are located in a up and coming part of downtown and should be worth some money in the near future.

    Do you know anything about these machines? How long do these machines last(I’m sure depends on how they are taken care of and how much they are used)? If they have been taken care of well should I be able to get another 15 years out of them?

  28. So the only problem you run into with a low entry cost if your worst case scenario is realized and customer ramp up goes extremely slow on a new location the amount of money you could have to feed the store monthly to keep the bills current could break your household,

    Store 1 October 2009 right before the economy collapsed was a operating location and a cosmetic disaster needed retooling and remodeling, Re-tooled at beginning but took 2 years to remodel one item at a time, Slow revenue growth and no cash in my pocket to do cosmetic remodel all at once

    My first location cost me 16K out of pocket up front but then I fed it 44K the fist year. 17K the second year. It broke even the 3rd year. the fourth year it made about 17K the fifth year it made about 30K and paid off the equipment note. in year 6 it made over 60K.

    2nd store was a closed existing location. Closed for 2 years, Owner died, Got space and the infrastructure for the cost of the lease, also needed to be retooled and light remodel.

    My second location cost me 25K out of pocket going in but I had to feed it 74K the first year and 34K the second year, we are a little over 4 months into our 3rd year and we are predicting break even this year. and will start to get that 150K investment back over the next three years. I guess my confusion is how do I actually look at this.

    Lets say year 3 is break even. and to date I have invested 133K into this store and it now starts to make 30K a year at the 4 year mark. Does that mean I am making 22.5% on my 133K investment.

    So if after 4 more years I have recouped my 133K and the store has paid off its loans and now it is making a net income of 60K a year am I making 50% +/- rate of return on my initial 133K that I fed into it over the first 24 months. There are so many ways to look at this.

    Then there is this way to look at it. Not only did I spend 133K in the first two years but since I have gotten my 133K back in years 3-6 and now I am making 60K off a Store that has a value of 300K. How is one suppose to calculate that. I turned 133K into a 300K asset and that 300K asset now has given me back my 133K it is debt free and makes me 60K a year in profit I can go invest in another store. This can be Oh so confusing, and this is why my GF hates to discuss money and my business, She cant wrap her head around this. and some times I wonder myself if my head is wrapped around it.

    I have a Habit of jumping off the ship with no life jacket.

  29. I am interested in buying a Laundromat, I live in a small town in Northern Ca. there was one Laundromat here but they closed down and the building ( store/gas station) is for sale, not something I can purchase. The nearest Laundromat is 30 minutes away and there is only one. Is it a good idea to have one if the 3 surrounding cities only total 20,000 people? It is a rural community.

  30. NOTE:
    If this story is too far off from your blog, I understand. Its just a universal story about doing your due diligence…..and re-birth.
    When buying a small business, do your due diligence. When I read that you suggest checking bank deposits, it reminds me of how I began losing two million dollars….almost everything.
    .Going from zero to a couple million took 20 years. Real estate, Multi-family, the most sure way to wealth. My problem is that after doing larger deals, and flipping houses that I could buy by writing a check for it, I did not do my due diligence on the two hair cutting franchises I bought. The total for both was less than $100,000
    Both sellers completely lied. The broker on one of them lied for the seller as well, employees were steeling cash, while others took customers phone numbers and opened up a business two block away.
    Yes, I was completely stupid here. I let my guard down.
    Next thing you know, I am losing $10,000 a month, which snowballed into selling a property for the needed cash.
    AND THEN, 2008 HIT……
    I sued no one…… I was beat.
    At the very bottom, on paper, my $2,000,000 was just about zero if everything I owed was paid minus debt.
    We let the big house go, and moved into one of the rentals we still had
    The one multi-family property that I held onto is now worth more than 2007, and I am just about to begin flipping houses again.
    Older, and smarter, I will go way beyond where I was before.
    I am lucky. The best part is always somewhere in the middle when your plan is starting to look like it will work.
    I get to do that a second time in life!!!

    _________
    I have always thought about owning a laundry. I usually end up comparing the numbers to rental property.
    laundries will have a higher cash return of course, but the numbers make a giant turn when the end of the road is considered.
    Compare the risk of a Laundromats business ending by landlord changes, fire, or other, with the multifamily being worth for times the price in 20 years after a 25% down payment.
    That bulk sum at the end is zero compared to continuing wealth accumulation.
    And yet,…..I still daydream about a Laundromat ……….

    1. What a story! I think it’s an important one to tell, so thanks for sharing.

      About comparing the numbers in owning a laundromat to owning rental property, you’re right, there are a lot of differences.

      While real estate has its advantages, it’s a long-term game. We wanted a short-term game; get in with a low upfront investment, enjoy the cash flow/equity increases/tax advantages for 5 years, and then sell the asset free and clear for a nice chunk of change. When we finally sell, our $50,000 initial investment will have netted us about $500,000 (annual cash flow + selling the asset). And, this can be doubled, since we now own two locations. (We could also decide to hold on to them and enjoy $50,000 x 2 = $100,000 cash flow each year.)

      If you remember, we first looked at rental properties, but a $50,000 cash investment doesn’t get you very far. As you mentioned, you were scooping up properties paying all cash, so who do you think the seller is going to go with…you with all cash, or us with $50k cash and a financing contingency? We had a very hard time finding a property where we could make the numbers work, and after finding a few, none of them ever went through. Larger, cash-ready investors always won the war.

      And as you well know, there are also risks/disadvantages in real estate (changes in value/vacancies/eviction issues/squatters/trashed properties), and you’re not going to see even close to the same ROI in the near-term (as you mentioned).

      We also have to remember that the average Joe trying to enter the semi-passive investing arena (whether it be multi-family, single-family, commercial real estate, businesses), may not have $100,000 or more to put down on a multi-family property (which is especially true here in California). They need something accessible that gets them in the game for less upfront cash.

      So for our goals, laundromats made sense for us. But I understand your affinity for real estate as it certainly has its own unique advantages, and I also understand your intrigue with laundromats, for what they bring.

      Maybe you can invest in a laundromat, and consider it to be diversifying your portfolio? Wishing you the best, and keep in touch!

      1. I have been thinking about a Laundromat. That’s how I came upon your blog.
        I think the hardest thing about it, is learning to spell the word laundrymat er….Laundromat!!! LOL
        I have to ask you about your numbers. I admit I haven’t read all of your blog, but…..In five years, $500,000 total return from $50,000???
        That seems crazy high to me.
        I haven’t crunched the numbers in a long time, and I will. For now, I thought it was something like 20% cash on cash return every year.
        I remember talking to a laundry owner over 20 years ago. He reminisced about the “Old days”. The 1960’s when giant dash returns were to be made. He said that if one is good at it, and during good times, you could double the number of stores every seven years.
        That is about the same timeline for an active person in multi-family real estate.
        I need the cash flow now. Laundromats might work for me.
        One other thing…….do you fix your own machines? That seems to be an issue with many owners. If you own a lot of stores, you have an employee that works for you. If you don’t, the costs can eat into the profits.
        Martin

        1. Our ‘back-of-the-napkin’ ROI is in the 40-45% range. We found a solid location with a seller who wanted out, negotiated the price down to rock-bottom, and then increased business with basic improvements, amenities, advertising and creating an online presence. So we’re getting a pretty nice return on our investment.

          I need to correct my earlier statement though. I forgot to include our upfront investment for our second store, which we purchased for $30k cash. So it’s $500,000+ in profit from an $80,000 initial investment. To be clear, that $500,000 figure is the combined annual cash flow over the 5 years for both stores, PLUS the selling price of the stores themselves (because they’ll be owned free and clear by the time we sell).

          But, my $500,000 rough estimate is a bit on the conservative side. I didn’t account for the fact that our cash flow will very likely increase each year, and I also believe we’ll be able to sell them for more than my estimated values. In fact, I’m hoping that our grand total by the time we cash out is closer to $600,000 from an initial $80,000 investment, after 5 years.

          Because business loans usually have short terms around 5 years (10 at the most), it’s like a forced equity plan. Just like the mortgages on your rental properties, our customers are paying off our purchase loan for us. So while this also means we give up some cash flow because of the debt service, we’ll own it free and clear in only 5 years.

          And we do fix most of our own machines now. It was a learning curve at first, while we gained valuable information from the repair technicians that came during the first few months. But now about 90% of repairs are handled by us.

          Certainly owners that have enough stores in their portfolio would need to hire a repairman at some point, but with that many stores, I’m sure the income would be there to support it.

          1. After looking at the numbers, and internet researching….
            I’M GETTIN A LAUNDROMAT.!!
            I did some calculations, and now I remember why in the last 25 years I stuck with real estate in the past.
            First, there are some structurally basic numbers, then numerous variables including the buyers ability, and market forces.
            If you average decades of the average cash return on apartments, its about 15% the first couple years. When they aren’t in favor, the prices reflect it, and the cash return on a purchase can be 25%. NOTE: This doesn’t include the equity build up.
            Right now is a goldilocks economy for apartments. Prices are at a premium, so investors look for appreciation. Most on the market today have virtually zero cash return.
            ______
            I found one of the main differences to be leverage. Laundries typically require 50% down. Multi-family 20-35%. Usually about 30% down payment.
            A million dollar building with 30% down could double price in ten years. the leverage makes the equity grow from $ 300.000 (down payment) to $1,300,000….And there is no end of lease for you.
            Real estate in California has doubled prices on average every ten years since 1945.
            I thought it would never do that again after 1990…..but it still has. Now, I see the only way that can happen again is through high inflation. That IS coming, but a different subject.
            From my amateur understanding right now……
            If there ever was a very strong reason to buy a Laundromat over apartments, this is one of those times.
            During an average market, the returns on apartments are great.
            When prices are down, buying right, can make some giant returns. For those that might not be aware, prices in many areas are higher than 2007. My apartments are worth about 20% more.
            Someone buying now, might be entering a market top. When interest rates go up to normal, apartment values take a direct hit.
            Someone might buy now with zero cash return, and a market that stops rising, or declines.
            It might even be possible to have almost zero equity if prices fall 25%
            Then the large variable is the buyers savvy. I looked through 150 listings of Laundromats, and it looks like you made one heck of a great deal.
            Thus, if we are near a market top for apartments,(could continue higher) Laundromats will outshine them as an investment by a margin as wide as the Grand Canyon.
            While I have over a million in equity, my credit is still recovering from 2008-2010 disaster.
            A hard money loan to cover 100% of a Laundromat still works.
            If the loan is 10%, then a 30% return becomes a 20%, which is infinity in a way. I would have zero out of pocket. The major drawback is the loan would be backed by my real estate. If I only have one location, and God forbid…fire…earthquake…….I am still liable for the full amount of that loan.
            Two Laundromats, one loan. Save the cash returns to pay off the interest only loan.
            Still a bit risky.
            In one month I will know much more.
            This is phase one.
            Sorry if I am running long on your blog. You are smart, and an inspiration.
            I’ll talk to you when I get to phase two in a couple months.
            _______

          2. This is what I read: “blah-blah-blah”…you are smart…”blah-blah-blah”. JUST KIDDING! Have to take the humor opportunities when they come.

            And don’t forget that we are insured, up to $2,000,000 in fact. Fire, acts of God, even something not-so-significant that forces closure for more than a week, and our “loss-of-income” insurance kicks in. We even have a provision in our insurance contract that if the laundry is essentially destroyed, we can decide if we want to rebuild the laundry or to take the cash value and walk. In other words, I sleep pretty well at night.

            And as I said before, I’m admiringly jealous of what you’re able to do with real estate. Truly. But the reality is that so many folks (including us) struggle to get our foot in the door, so to speak. The number of investors looking to buy investment property is far higher than the number looking to buy a laundromat. We just couldn’t compete.

  31. Laura,
    Looks like I made a major mistake on my rough calculations.
    I looked at Laundry listings that had the asking prices, and the net profit.
    http://www.bizben.com/business-for-sale/coin-laundry-laundromats-businesses-for-sale-type-california-ca.php
    But the return is higher.
    I didn’t go the next step and calculate the percent return when from a 50% down payment.
    Thus the profit minus loan interest against the down payment.
    Yes, now I see how 40% or more cash returns every year is possible.
    But………..this seems to easy. Looking further, Do the numbers include paying someone to clean, and/or fix machines? I guess each listing will have its own story.
    But still……it looks to easy for the money.
    Otherwise, someone on a mission could double there Laundromats every three years, using all the proceeds to buy more.
    Damn……I should have started this when I first thought of it 25 years ago.
    I will update when I reach the next phase. If this is close to as good a thing as I see now, after the first one, then its Laundromats instead of flipping houses!!

    1. You’re right, the number of variables makes things a little tricky. You really have to run the numbers on a case-by-case basis.

      And whether the numbers include paying someone to clean, fix, etc, is another variable. In reality, the numbers provided by a seller should always reflect the cost of cleaning as an expense, whether it is performed by the owner or by an outside service. Some sellers clean their stores themselves and then list “cleaning expenses” as zero, which artificially inflates their net income. Not accurate. When we bought our second store (which I fully intend to write about soon!), the owner was claiming a certain net income, but I knew that he was cleaning it himself. So we had to confirm that he was in fact cleaning it himself, and we let them know that the net income would be adjusted downward by what it cost to hire a cleaning service (which we already know because our first store has a cleaning service).

      Repairs are supposed to be accounted for in the expenses as well, but that’s such a gray area, and often performed by the owner, it’s harder to pin down the money/time really required on that one.

      And there are indeed “people on a mission” who expand to additional stores quite quickly. They do like you describe; roll their current profits into purchasing the next store, and the cycle continues, much like the real estate world. We purchased our two stores just 10 months apart, but with the second one we paid $30k cash, so we didn’t have to use the cash flow from the first store to support purchasing the second store. But many do. And just like with real estate, you have to be careful not to over-leverage, or it’s like a house of cards, just one strong wind away from collapsing completely.

  32. I have read your blog and it is very insightful. Great work here. I’ve done some research on this endeavor and I have a few questions that I believe have not been covered. Please forgive me if they’ve been touched on. Thanks for your time and keep up the good work!

    1. What is the best/safest means to make collections (i.e. Coin pickups)?
    2. If you are away for a few weeks on vacation or simply out of town, what is the best way to make collections?
    3. If a machine needs servicing who do you contact? Is it a national company? Local?
    4. How do you go about counting coins for deposit into a bank account? Is this something your bank handles? If so, are there any fees associated?

    1. Collections were my biggest concern when we began the process of buying the store. Right now I collect twice a week. I usually vary the days and times. I find it safest to collect during the day when customers are present. Nobody is going to mess with me with all those witnesses. After a scary incident late on a Sunday night, I decided to get my CCW permit. Now, I always carry when collecting. Nothing bad happened. Just some sketchy looking charters came through and were watching me little too close. They didn’t mess with me, but it made me nervous and I ended up dumping quarters all over the floor.

      When we have gone on vacations, I have used someone trustworthy to collect for me. Of course, my change machines keep track of the cash coming in, but there is no way of tracking the coins on my older equipment. Find someone you can trust. Just this week, I have started using dollar coins in our bigger store. I am converting the coin drops over myself. As I convert more machines I should be able to go longer between collections. So being out of town for an extended weekend won’t be a problem.

      For machine issues, I try to fix everything myself first. If I can’t figure it out, I will call a local technician. Ask other mat owners in the area. They will have a list of people they use. Equipment distributors also have free training classes covering maintenance issues. Most offer classes twice a year.

      I weigh the coins I collect on a coin scale. That gives me an accurate count of what my machines are bringing in. I separate my collections by machine size. This way I can track machine usage (turns per day). I use this information in deciding pricing and which size machines are due for a price increase. I rarely deposit coins in the bank. They all go right back into the change machine. Our bigger store usually has a surplus of quarters. (meaning customers are bringing in more than my change machines are dispensing). The smaller store is usually short. A lot of people in the nearby apartments are using my change machine for quarters at the apartment laundry. I don’t mind this happening. It gets people in the door and when they see the improvements we are making, they will hopefully start bringing in their laundry. Ironically, most banks charge for depositing excess cash. Crazy right?

  33. Speaking of coins, I haven’t read, but do you ever take the time to look for valuable coins. If so, have you had any luck – is it worth the time?
    What is the best (and 2nd best) area/neighborhood to have a laundromat? Which to avoid?

    1. No, we really don’t look through them. 🙁 When you’re handling nearly 6,000 quarters at a time, it’s usually a quick collect/weigh/load-the-changer scenario. We’ve had several people asking us that same question, and we just don’t have the time to look through them!

      The best area/neighborhood is going to be a blue-collar, working class, family neighborhood, with a high percentage of renters (40%+). You can usually look up neighborhoods online and get those kinds of demographics. The next best is low-income urban areas, but you need to be aware of crime rates in those areas. And generally I would avoid affluent areas, low renter areas and neighborhoods with very few apartments.

  34. Hi! Thank you for this excellent resource! My husband and I are inheriting a small laundromat after my dad’s death in December. We are excited to put new life back into it and want to keep it as efficient as possible. I have been looking into the automatic locks and security cameras that can be accessed from a smart phone/computer. If you can, I would very much like your recommendations on reliable brands and costs for installation, etc. Thank you!

    1. Sorry to hear of your father’s passing.

      We purchased and I self installed a camera system from Avertx. They are more expensive than others, but the quality is amazing. I paid $1800 for the basic set up (four cameras and a DVR) from Costco. I then added four more cameras from the Avertx site’s refurbished section($600). Our other laundromat already had a Q-see system installed. It is decent, but nowhere near the quality of the Avertx system. We are able to monitor both from our mobile devices and our computers. Both are pretty much plug and play.

      Both stores came with the auto locking/unlocking doors already installed. I did have trouble with one magnetic lock and looked into a replacement. It was going to be $1500 just for the 4500 lb locking force magnet. I opted to fix the one I had myself. Our stores locks are not accessible over the internet, but I have only had two calls where customers were locked out and still doing laundry. The price can vary greatly on these systems too. I have seen them as low as $500, but like everything else in life…You get what you pay for.

      For more input, I highly recommend checking out the open forums at http://www.coinlaundry.org. Just do a search on both subjects and you will find a lot of information and recommendations.

      I hope this helps and good luck on your new adventure.

  35. Thank you for your excellent help!

    Now, here is our first challenge. The washerette was broken into last night. The good news is no money was taken, but the bad news is there was some damage to a bathroom window, the changer and a drink machine.

    We are going to replace the changer, and would very much appreciate your input on what brand is best/most reliable. We would like one that has maybe four hoppers, and accepts debit/credit cards. I found this, but would very much like your input: http://www.standardchange.com/changers/mc840da.html

    Thank you!

    1. So sorry to hear about the break in. We just had the change machine in our new store destroyed by a couple thieves. They got away with about $400. So I feel your pain.

      The big manufacturers (American changer, Rowe, Standard) are all about the same. Good quality products. I would recommend getting one like the one you mention. Two bill validators is always better than one. The only way you can accept credit cards at the change machine is if you are dispensing tokens. Otherwise it is considered an ATM transaction.

      The Mei (Mars) validators are the best you can get, but they are pricey. Because I wanted a lot of options I went with the American Changer AC2225, with an additional coin acceptor.

      Do you have plans to offer more options (tokens, dollar coins) in the future? If so, be sure the change machine you buy can be changed over easily. If you don’t have the funds, you can also find good deals on used change machines. The guts of most machines can be upgraded.

  36. There is not an existing laundromat in my area so what’s your advice for a possible start up? The closest one is 15 min away but has complaints.

    1. If you suspect the surrounding demographics could support a new store, drive around and check for possible locations. I talk about demographics a little bit in this blog, and there’s also a WHOLE section on it in the laundromat investing guide we just released, but in general, you want a lower-to-middle class neighborhood with little to no nearby competition with a high percentage of renters (40%+), with a storefront that is visible from the street with plenty of parking (that is not taken up regularly by other businesses).
      Once you have found a few possible locations, you need to reach out to your local equipment distributors who can help with much of the process (planning, confirming the demographics, store layout, financing, etc). Major equipment manufacturers we recommend are Speed Queen and Dexter. Reach out to their sales department and they will put you in touch with someone who can walk you through it.
      Personally, we wouldn’t be comfortable being first-time business owners building a brand-new laundromat, only because the upfront capital required is so substantial. Build costs run about $300-400 per square foot with an average store being about 1,500-2,000 square feet. ($450k – $800k, more for a larger store).

  37. If you remember, my very first comment was about my lack of due diligence for a different type of biz, which ended up sucking a ton of money down the drain.
    The lessons there have already saved me from a Laundromat I might have bought just because it was very close.
    Investments have the risk to reward ratio. More risk, more potential rewards for negative issues.
    I thought that a business like a Laundromat can’t possibly have a 25% cash on cash return, on top of paying of a 50% loan in five years can be problem free, and mostly absentee ownership. Both the cash return, and the loan payoff means tripling your money in five years.
    If that were the case, more people would be in the biz, and the prices would rise to meet that.
    Even at my age, I still go out all bright eyed and bushy-tailed, and want to believe I will get that kind of return.
    HOWEVER…… Now that I have looked at every Laundromat for sale in L.A. county…….several times over, I am aware of one thing. The prices are all over the place, with some fair priced, and some wildly overpriced.
    The seven or eight that I hand picked for all the available info from the brokers are much different than the Bizben ad states.
    Suddenly the income won’t match the breakdown. Some costs were not disclosed until directly asked. Some had machines that are 20 years old and 15 broken ones with leaking ceilings, and no air conditioning.
    I just spent a day watching the traffic of one Laundromat I really liked, and crunched numbers, etc.
    Today was the meeting with the seller, and broker. Oops. Income 40% less than advertised, ,OH OOooooops…..the seller works there full time cleaning and doing fluff and fold!!! Not disclosed until I specifically asked about payroll, and time the owner puts in. And half the machines, and dryers are 20 years old, and older.
    Apparently they overpaid, and thought that asking 25k less than what they paid should do the trick. Try half the price.
    Thanks God I made those mistakes 12 years ago…….but now I wonder if success hinges more on the find than what you with it.
    So, I ask, did you look at tons of Laundromats, or hit it good early on? I thought I would have several to pick from in a week.

    1. We got lucky in some respects. The laundromat we were interested in from basic information alone turned out to be in our neighborhood shopping center. And we were very detailed in our due diligence. We were able to verify the incomes and expenses, with the exception of discovering that the seller had been withholding rent because of a dispute with the landlord, so the rent expense was actually higher than stated. Once we re-calculated value based on the newly accurate rent expense, the price dropped and we revised our offer (which was accepted).
      We did look at several before purchasing our second store, and we were in escrow for almost 6 months on one location. But in the end, we couldn’t negotiate the terms with the landlord to our satisfaction, so we backed out and got our deposit back. Just a few months later ended up finding the second store we now own.
      Turn-key laundromats are hard to come by, that’s why they’re not on the market very long. That’s why for our second store we decided to buy a real fixer-upper, and retool it with new equipment. You can always offer what you think a laundry is worth, and the worst thing they can do is say “no.”
      I also suggest reaching out to brokers that have several laundry listings and let them know you’re looking and to keep you in mind when they get new listings. Sometimes it’s just a matter of which bird reaches the worm first.

  38. INSURANCE. Laura, Randy, & all: I would think insurance is a significant fixed expense but never hear it discussed. Can you even get insurance for unmanned laundromats? Any cost approximations and tips for getting reasonable rates on manned vs unmanned sites?

    1. It’s not a significant expense, so that’s probably why it’s not discussed much :-). I include it in my list of expenses in the 4-month update post, but it’s a fairly minor expense compared to most other items. For $2 Million in coverage, we pay $138 per month, per location (we have two). If we were attended, that cost would go down of course. So in the grander scheme of things, with our first store bringing in $14-$15,000 per month in gross income, $138 is pocket change.

  39. Hi, everyone I’m in the beginning process of purchasing a laundromat and was wondering if anyone could point me in the right direction for these two questions:
    What’s the average life span on commercial washer/dryer? And average rate of return per washer/dryer?

    1. The average life span of a top loader is usually 10 years or so, depending on the brand. Front-loaders last longer, 20 years is not unheard of. And there is no real average ROR, as it is so dependent on the turns-per-day (uses per day), the cost of the underlying utilities required per use, and the vend price being charged. But usually, new equipment will pay for itself in just a handful of years.

  40. I have been looking around for a business opportunity and came across a laundromat for sale but the numbers don’t look correct.

    Asking Price:$55,000
    Gross Income:$91,000
    Cash Flow:$20,000

    Does the cash flow aka NI look to good to be true to anyone else?

    1. The numbers alone don’t alarm me, assuming the store is in relatively poor condition. The asking price is roughly 2.8x the annual cash flow, which would be appropriate for a fairly run-down store. Typical multipliers are in the 3 to 5 range. So a run-down store would have a multiplier between 2 and 3, an average store would be between 3 and 4 and a turn-key operation would be closer to a 5.
      And a rule of thumb in the industry is that net income is roughly 25% of gross income, and this store is at about 22%. There is plenty of due diligence left to do of course, but looking at the numbers alone nothing looks unusual.

  41. Hi Laura,

    I also want to buy a laundromat and have located a couple for sale, 1 in particular I’m interested in. However the realtor I’m working with said the person would not give any information without us signing a disclosure agreement. So I have no idea where it’s located nor will he answer questions about the laundromat. At present I haven’t secured any funding for this project so the realtor didn’t seem interested in going much further. Is this how this works? Can I sign the disclosure agreement and view financials and THEN find financing? It seems to me I need to at least know where it’s located and if it’s thriving. What do you think? How can I commit to anything if I don’t even know anything about it.

    1. That is very standard in the beginning of the purchase process. You’re not committing to much when you sign a Non-Disclosure Agreement (NDA). You’re simply stating that you will not discuss the details of the business with anyone who is not involved in the purchase. That’s all it is.
      We signed an NDA for our first store before we could even confirm the address (although we were pretty sure it was the one near our house just from the pictures).
      So yes, what you describe is very normal. Owners don’t like the idea of the financial specifics of their store just being freely passed around, and I don’t blame them. Some owners don’t even want their employees knowing that the place is for sale, so it is not unusual for the details (including address) to be kept private.

  42. Hello, I’m considering purchasing a laundromat and wanted to know if there if there is a ballpark average for net return on investment year to year for a cash deal? I’m used to purchasing real estate and know what my is acceptable on a return in our area. Businesses generally sell at a multiple to net earnings. Is there an average multiple for the industry that I should be looking for?

    1. Hi Tim – I hesitate to provide a “ballpark” or average net ROI, but let me say this. Most owners with successful laundries expect and achieve an ROI in the range of 25-40%. When we bought our first store, the seller was motivated, so we were able to purchase it for a very good price of $105k. We didn’t pay all cash, but if we had, our ROI would have been somewhere in the 40% range.

      And laundries generally sell at a multiple of 3X to 5X net annual income. Our first store was purchased at a 3.2 multiplier. Our second store was so run into the ground, we basically paid for the equipment, sewer hookups and a small customer base, for $28k.

  43. I have a laundromat in the Atlanta area. We have been open almost a year. My question is do we need to keep a constant count on the change in our money changer and does that get added to the profits? I’m really not sure how that factors into the P&L statement?

    1. I do keep track of how much is in my changer, but that money doesn’t have anything to do with income. Income is just the money brought in by my washers, dryers, vending, or any other services. Your changer is more like a small bank in your store that allows customers to exchange bills for change. All stores are different, but I had one store where I always had an abundance of quarters, so I was depositing the extra quarters once a month. My smaller store always runs short of quarters (people use the changer but leave with quarters in their pocket). When I go to the bank I just exchange cash for quarters to refill the changer. I try to keep the same amount in my changers when I do collections. Nothing is more frustrating to customers than to not be able to get change.

  44. What a great service you’re providing with this blog, thank you! What state are you in? I’m moving to L.A. and and wondering how many times more expensive your purchase would have been if in L.A.

    1. Thanks Linda! We’re in northern California. And that comparison to LA is hard to make. Valuations are based on the same things no matter where you are in the country. (ie, a multiplier of net income, store condition, machine condition, lease terms, etc, etc.) However, what may drive the price up in densely populated places like LA is demand. There are more buyers interested in laundromats for sale in LA than in Lincoln, Nebraska for example. So while the valuation would theoretically be the same, the demand might drive the price up a little bit more. With that said, there have been laundromats for sale in LA for very close to what we paid, so it’s not impossible. In fact, right now, it looks like there is one for sale in LA for $125,000 that is twice the size of our first store!

  45. Haha! Sounds like a great deal! Wish I could look into it. Turns out I probably won’t be headed out for 4 more years; so I think I will start researching in my home state and see what I can do here in four years, then take my knowledge (and success!) with me out there 🙂
    I saw a video of a girl holding a washing machine closed that was leaking all over the floor, then she fell in the soapy water! Do you have any horror stories, have you ever been sued? Just trying to imagine all scenarios 🙂

  46. This is a great site! I am interested in purchasing a laundromat and have found one for sale at $73000 asking price. The owner isn’t too cooperative – no model/serial numbers to check age of equipment, his lease wont roll over to the new owner it will have to be renegotiated with the building owner. Currently the rent is $1250/month which is reasonable for the area. How do I decide if this is a good investment without a lot of information from the owner? Thanks!

    1. Do you have an accepted offer? Most owners won’t reveal any information without an accepted offer in place. Once you enter the due diligence period during escrow, the owner should become much more open. The offer shows you are seriously interested. Structure your offer with contingencies so you will be able to get out of the deal if you run into issues with your purchase. Use this time to dig in and get the information you need to feel comfortable with the purchase. If the owner is still hesitant to cooperate, that’s a sign you should be hesitant to purchase.

  47. Hi guys. My friend and I are looking at purchasing our first laundromat, it looks to be a good deal but this is our first time buying a business and we are not sure if the numbers are right. They sound good to us but again we dont have experience. We are going to take the financial statements to an accountant but would you be able to let me know what you think? We stopped in for a tour and it was very busy which was nice to see, every machine was being used the whole time we were there.

  48. this facility has 25 washers and 25 dryers of various sizes, some are 2 years old and most are 7 years old. It automatically locks and unlocks everyday. there is also a small convenience store that the current owner works himself, we are not sure if we are going to hire someone to run it or not as of rite now. the numbers they are telling us are as follows
    Gross Income – 187000
    Utilities – 27000
    Gross Margin – 139000.
    They are saying that they paid themselves 100000 last year. The business is forsale for 150000, and the business with the land and building is forsale for 425000. Rent would be 2500 a month if we leased the building. I have asked for a break down on more of the costs that i am currently waiting on. I realize that the store is adding some revenue here but i am unsure as to how much, its small so i cant imagine it a large number. Its about 1400 square feet, the roof was re done last year and the boiler system was done a couple weeks ago (on demand hot water).
    Any input on the above information is greatly appreciated.
    thank you.

    1. Without seeing the store it does sound good on paper. There are way too many variables for me to determine if it’s the right deal. Other things to consider: Competition, future competition, demographics (rentals vs home owners, population), pricing structure, income verification, etc. Once an offer is in place, verify the owners claims by requesting tax returns and profit and loss statements. The machines are not too old. Most machines if maintained well will last 15 – 20 years. I also suggest you become a customer of the store. You will be able to see how it is run and gauge if the current customers are satisfied.

      Typically, a laundromats net incomes is 25% of gross. It sounds like the convenience store is bringing in a big percentage if the numbers are correct.

  49. hey guys
    This page is amazing and I learned a lot so far, I am thinking of opening a laundromat ,but I don’t understand the cost break down and why Laura says you need 350k to start the business from the scratch? would anyone please break it down for me?

    1. Hey Navid…first, just to make sure we’re clear, I’m not saying you would need $350k in CASH to start a business from scratch. I’m saying that typically a new build runs about $300-400 per square foot, so at the minimum we’re talking $350k for a very small store all the way up to $750k or more for a decent-sized store. So it will all depend on the size store you build, but…the largest expense of course is the equipment itself. Equipment will run several hundred thousand. Brand-new washers can run anywhere from $3,000 for a small front-load washer to almost $10,000 for a large 8-load washer. Dryers usually run about $4-6,000 for a double-stack dryer, and about $4,000 for a single pocket dryer. Then you have construction costs; to run the plumbing, gas lines, pour concrete bases, electrical, drywall, paint, bulkheads, folding tables, seating, equipment installation, floors, ceiling infrastructure, lighting, security systems, etc. That can easily reach $100,000. Then the sewer hook-up fees (the one-time fees your local utility company charges for you to connect your washers to the sewer system), can run about $500 PER WASHER.
      I can’t really pin numbers to each category since there are so many variables, but that should give you an idea of where the costs come from.

  50. Good Morning,
    I have been inquiring about a local laundromat that is selling for 100k flat, basically they said that was the price for the businesses is being sold at asset value only. Furniture, fixtures, and equipment represent a value in excess of $100,000. Should I counter offer for 80k? Either way I was looking to finance all of the amount owed but invest like 10k upfront. Please provided guidance on any new questions I should ask for.

    1. This is a fairly specific scenario I can’t really get into in a comments section. There are a lot of questions that would be involved in making a purchase; whether it is asset-only or the full business being purchased. But it’s much more than we could get into here. If you haven’t already, read through all of our free articles on the website. There is a lot of information there. We also offer a deeper level of information in our eBook package.

      1. Hello,

        Well they told me once you buy the assets you get the business. They are selling the bussiness at the asset value. I have look through the comments section and have received a lot of good information. The reason for selling is that the owner is retiring.

  51. Hi,
    Thank you for this blog so helpful! I am looking to be a first time business owner and found a laundromat. However, I am very hesitant to trust what the owner says his profit is. Not because of anything he did or said but just because people lie. I have been told that regardless of him providing me documents like taxes etc. He could still be lying. So my question to you is Is there a formula based on his pg&e and water bill history that I can use to verify his actual earnings? I was told that based on the type of machine energy efficiency that somehow I can calculate. Please help with a possible formula thanks!

  52. As a general rule how many people would it take to support a laundry mat. Our small town has 6000 people and has one laundry mat on a highway not in the middle of town, which is were I think is the best place for it (not sure if that statement is correct or not).

    1. As a general rule of thumb, a population density of 10,000 people in a one mile radius is decent, 20,000 people is considered very good, while a population density of anything 35,000 or greater is excellent. You can certainly open a laundry with a smaller population, but it would need to be a very small store.
      And keep in mind that the ideal demographic will consist of a minimum of 25% renters, with anything over 50% being excellent. If the folks in your town generally own their own washer/dryer, you’ll have a harder time staying in business. Good luck!

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