Buying a laundromat can be a great investment, but it’s also a major business decision that should be carefully considered.
Laundromats generate around $5 billion in revenue combined across the U.S. and laundromat owners earn anywhere from $15,000 to $300,000 per year.
Owning a laundromat can help you earn some passive income, but you may need to make a sizable investment of funds and your time upfront.
There are several factors to consider, such as location, competition, and equipment.
In this step-by-step guide, we will walk you through the process of buying a laundromat so you can make an informed decision.
Key Things To Know About Opening A Laundromat Business
- Laundromats can be a profitable venture for entrepreneurs who are willing to put the time and effort into building a successful business.
- You’ll likely need a business loan, investor, or both to gather the funds needed to either buy an existing laundromat or establish your own from scratch.
- It’s important to hire a team of experienced professionals like a mechanic for your machines and team members to assist customers during the day so you can successfully run your laundromat business.
7 Steps To Buy A Laundromat
1. Determine Whether You Want To Buy An Existing Laundromat Or Build One From Scratch
Before you buy a laundromat, first you need to decide whether you want to build one from scratch or buy an existing one.
When you choose to build one from scratch, you can design it yourself according to your needs.
While on the other hand, buying an existing laundromat can save you a lot of money and will have a fixed customer base already in place.
Buying an existing laundromat would also give you immediate access to washing machines and other equipment.
Not to mention, the business you take over may already have customers and some recurring revenue.
This would also be a good time to find some videos explaining the laundromat business as well as personal stories and recommendations from business owners.
Take notes on what people say they like and don’t like about owning a laundromat, whether they bought an existing business or built one from scratch, and any challenges they’ve faced in this business.
2. Start Researching And Check The Market
Once you have decided whether you want to buy an existing laundromat or build one from scratch, next you have to research the market.
Determine the demand for a laundromat in your area and analyze the competition.
If there are already many options, you may have a tough time finding customers.
However, healthy competition doesn’t mean your laundromat business won’t do well.
If you drive through some neighborhoods you may notice several laundromats within a mile or so of each other or even on the same street.
It’s important to know what customers expect from a laundromat.
For example, most customers would probably like to have a parking lot, convenient location in a well lit area, and easy payment options.
Also, consider the demographics of the area to ensure there is a need for a laundromat business.
For example, in some states it’s standard to have a washer and dryer in homes while in other states this isn’t the case.
Some apartments also don’t have laundry machines in each unit or a laundry room in the complex.
3. Narrow Down A Location
The location of your laundromat plays an important role in ensuring its success.
Your laundromat should remain in a high-traffic area near residential areas, apartment buildings, and university dormitories.
A well-placed and easily accessible location is important, or alternatively, look for areas where laundromats may make an excellent addition to your area.
You may also want to look for a location with plenty of parking.
If you’re looking at an existing laundromat, you’ll want to visit the location at different times of the day to see how busy it is.
This will give you an idea of how much business you can expect.
4. Determine Your Method Of Financing
Financing is the most important part of your business.
You need to evaluate the total costs of owning and operating a laundromat.
You will require a considerable amount to buy equipment and renovate a place, so ensure you have enough cash on hand, investors or financing options.
Most people take out a business loan to start their laundromat business.
To do this, you must have a solid business plan, a good credit score, and some money to put down.
To determine how much you need, start searching to see how much commercial spaces cost or how much existing laundromats are going for on different business sale websites like LoopNet.
While the average cost to open a laundromat can range from $100,000 to $500,000 depending on factors like location, type of equipment, and the building size, you may not have to spend multiple six figures to start a small laundromat business.
One Reddit user broke down some costs you can expect for a small storefront.
- For a small store with a lot of top loading washers and old dryers, maybe $40k – $75k depending on location, also assuming rented space.
- A medium store with newer equipment, depending on location, maybe $125k – $200k.
- For reference, new front loading washers can run between $3k – $15k, depending on capacity, plus hard-mount bases. You would expect brand new machines to have some kind of card / Bluetooth payment capabilities. Dryers are about $8k for double pocket, $5k for single pocket.
5. Do You Due Diligence And Close The Deal
Once you’ve secured financing, you’ll want to do your due diligence.
This includes reviewing financial records, equipment inventories, lease agreements, and any other relevant documents.
You’ll also want to have the equipment inspected to make sure it’s in good working order.
Once you’ve done this, you’re ready to close the deal.
This includes signing the purchase agreement, transferring ownership, and making any necessary payments.
When the deal is complete, you’ll be the proud owner of a laundromat!
6. Get Equipment And Staffing
Once you have purchased and set up your laundromat, the next step is to equip and staff it.
You want to buy the best equipment so that your customers can easily get their clothes cleaned.
If you don’t have any experience in running a laundromat, it’s a good idea to hire experienced staff members who can handle tasks easily, especially bookkeeping.
You can’t be at your laundromat 24/7, so be sure to install security cameras and hire an employee or two to provide assistance to customers during the day.
Another thing to consider is working with a local mechanic who can fix and repair your machines in a timely manner (unless you plan to do this yourself).
Shop around for equipment and slowly update your washers and dryers if you buy an existing laundromat that comes with a few machines.
One laundromat owner gave this advice:
“ I started a coin laundry route in Santa Cruz, CA in 1985 and operated it until 2000 when we sold it and moved to Arizona. At its peak I had about 90 machines around town, and it was a great business. The key to a successful coin laundry is GOOD EQUIPMENT. I rigorously maintained my machinery.”
7. Find Creative Ways To Market And Promote Your Business
Next, you want to create a marketing plan that will help you reach out to potential customers.
There are several ways to market your laundromat:-
(a) Take advantage of your grand opening or grand re-opening by decorating the outside of your building and parking lot with banners and signs.
(b) You may want to offer a special promotion to the first 50-100 customers during opening weekend to drum up business.
(c) You can also give out coupons and attend local events by setting up a booth to promote your business.
(d) Use social media and other digital channels to promote your laundry services as well.
(e) Share updates about your machines and what makes your laundromat unique on social media.
Additionally, you can offer other services like same-day drop off service to increase your profits.
Don’t forget to add a television somewhere so people can watch TV and a few vending machines with refreshments.
You can collect money from the vending machines and restock them each week.
Conclusion
Buying a laundromat can be a great investment, but it’s important to do your research and make an informed decision.
You want to make sure you have the right financing, a solid business plan, and the right location for your laundromat.
Above all, realize that you don’t have to do everything alone.
Teaming up with an investor or industry expect along with hiring a small team to help with operations and maintain the equipment is essential.
If you’re serious about exploring the idea of buying a laundromat, get connected with the Coin Laundry Association, an organization that provides resources, educational material, and more.
Starting any business will cost money and the financial factors are often what keeps many entrepreneurs from pursuing their dreams.
Check out these 11 best ways to get small business financing to see how you can fund your business and start preparing your credit score by making on-time payments and reducing your debt balances.
FAQs
The average return on a laundromat business is 25% to 35% according to Laundromat Resource. Your ROI will vary though depending on the location of your business, condition of equipment, and rate of customers. Also, keep in mind that most businesses have a lower rate of profit during the first few years due to startup costs and needing to establish a solid customer base.
Before you can start your own laundromat, you will need to obtain the necessary permits and licenses. Depending on where you are located, the requirements may vary. Generally, you will need to obtain a business license, a state sales tax permit, and a federal tax ID number.
You may also need to apply for zoning and building permits before opening your laundromat if you’re starting from scratch. It is crucial to research the permit and license requirements in your specific area before starting your business.
Use online resources such as business-for-sale websites or work with a business broker to find potential businesses to purchase. Website like LoopNet is great resource to start with. Analyze the financial and operational history of the business, and take note of any outstanding debts or lease agreements that may impact your purchase.
