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May 25, 2022

The Benefits of Buying an Existing Laundromat

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The Benefits of Buying an Existing Laundromat

Unconventional Acquisitions

May 25, 2022

So, maybe your traditional 9 to 5 job is working out for you. Maybe it’s not. Either way, it’s time to think about how you can make money work while you aren’t. You might be able to clean up by buying an existing laundromat.

We’re talking about a business that can generate passive income with little risk with a high success rate. Does this actually exist? Sure it does!

Buying an Existing Laundromat: The Benefits

According to Speed Queen, U.S. laundromats have a 94.8% success rate. That’s right, you should consider buying a laundromat.

Ok, but I hate laundry. I don’t like fabric softener, either, and I can’t fix machines if they break.

That’s ok! If you’re buying an existing laundromat, chances are that’s all set up for you. It’s probably already zoned and permitted, too.

Still interested? Here’s some info to get you started.

Owning a Laundromat: Pros

Perhaps you had your sights on a more…glamorous investment? It’s time to reconsider.

Laundromats are a great diamond-in-the-rough business opportunity if you get it right. Here’s why.

1. Passive Income Potential

Unless you own a massive franchise, buying an existing laundromat requires a relatively small investment. Especially compared to real estate or rental property. Once you set up your laundromat and hire one or two people to run it, you can sit back and watch the coins pile up.

Apart from general maintenance, rent, utilities, and paying one or two employees, there’s not much expense. The likelihood of dumping massive amounts of monthly capital into your laundromat is minimal. At least it should be if you’ve done the sale right.

2. Laundry’s Gonna Laundry

Demand? It’s always there. People will always have dirty clothes.

Some apartments or condos don’t offer laundry machines. College students living away from home might need laundromats.

There’s no laundry season. Clothes washing isn’t subject to the latest laundry fads or trends. The plain simplicity of dirty clothing will always plague humankind.

Why not capitalize on it?

3. Minimal Maintenance

The amount of maintenance you’ll have depends on the condition of your scrubby, sudsy sanctuary. Once your laundromat is up and running, you probably won’t have a lot of extra expenses.

You’ll have predictable costs like rent, maintenance, cleaning, utilities, and paying employees. You should also have a nice little nest egg in case something big breaks down. These numbers will all depend on the size, location, and age of your laundromat.

After your ducks (read: machines) are in a row, there shouldn’t be a lot of extra expenses going in each month. But, if you’re successful, there will be plenty coming out!

4. It’s Not Risky Business

Buying an existing, functioning laundromat can cut your risk by a lot. If you started spinning one from the ground up, you can expect a minimum investment of $200,000.

Buying an already functioning laundromat cuts your start-up costs right away. If you’re smart about the purchase, you probably won’t have a giant liability on your hands.

If you buy an existing business, chances are pretty good it has a built-in customer base. You’ve got the laundry baskets through the door. Now all you have to do is keep them happy (and returning).

5. Did Someone Say “Cash Flow”?

The nice thing about a laundromat? The cash comes first.

Your patrons have to pay before they can use the laundry machines. This means you have an almost guaranteed cash stream upfront. Not defaulting on rent checks or chasing down people who owe you. 

Owning a Laundromat: Cons

Nothing is a sure-fire win. Here are a few things to consider before you splash down your cash (or borrowed funds) and buy one of these things.

1. Lots of Suds in the Bucket

Depending on the community, your laundromat could be just another suds bubble in the bucket. If you’re looking at a saturated market, think again before you buy. Will your laundromat be able to compete with the others or will you just be spinning your machines? Pun 100% intended.

2. The (Non) Allure of Lady Laundry

Some entrepreneurs may not want to talk about the luxurious laundry life. If you’re ashamed to say you make a living off other peoples’ dirty laundry, this isn’t a smart investment for you.

Among its many upsides, laundromats can be very helpful for communities. Think about the access you could be providing for those who don’t have machines in-home. Clean and safe laundromats can add value to a neighborhood.

Now that’s something to brag about.

Steps to Buying an Existing Laundromat

If you’re still with me, it means you’re ok with the whole dirty laundry thing. Which is good because it can make you a lot of money. Of course, you should make sure you’ve done all your homework. 

Here are several things to consider if you’re serious about buying a laundromat.

1. Check Listings

Ok, but wait. How can I find an existing laundromat to buy? Marketplaces like Bizbuysell and Flippa are good places to start. If you’re looking for other reputable sites, check out our list of online marketplaces here.

If you’re more of an in-person kind of person, take a drive around. You could also search business listings for area laundromats. Many times you can find out who owns the business by looking up county tax information online. If you’re not above cold calling (and you’re not), call up the owners.

Write down a loose script or outline before you get on the phone. Ask the owners if they’d ever be interested in selling their business. If the answer is yes, ask why.

If the answer is no, thank them for their time and ask if they have any other businesses they’re interested in selling. If they say no again, thank them for their time and tell them to keep you in mind if that changes.

If they do have other businesses find out more about them. You could end up with a sweet vending machine or car wash business out of the deal!

2. Take a Spin Around the Area

Before you get too far into the buying process, get a feel for the neighborhood. Find out how many other laundromats operate in the area. Learn about how many community members rent apartments or condos.

Do most rental homes and apartments have laundry machines? Are the non-laundry renters nearby or across town?

What’s the business community like in the area? Are they small-business friendly or do corporate conglomerates rule the town? It’s helpful to have an understanding of community needs and the environment before buying an existing laundromat.

3. Make Sure It’s Not Washed Up

If you’re not using a broker, take extra steps to make sure you’re getting all the legalese right. Ask why the current owners are selling their laundromat. Here are a few common reasons people might be selling a successful laundromat.

  1. They want to retire
  2. They’re moving out of the area
  3. They need to sell it to fund their businesses/investments
  4. The business is not doing well and they’re trying to offload it (Pro tip: don’t buy this one)

You can ask to see the last few years of tax returns to find out how profitable the company has been.

4. Money Making or Money Taking Machines? Or Both?

How much will it cost you to let people wash, rinse, and repeat? Calculate costs like machine maintenance, chairs, water bills, electric bills, any city ordinances, machine hookups, wifi, vending, and security.

If you’re planning to be coin-based only, you need to figure out how to operate or fix coin machines. If you don’t know how, ask the owner who they use for servicing?

Accepting credit cards adds cost to your bottom line. Credit card fees can range from 1.5% to 3.5% of each purchase price. If you have enough volume, this investment could be worth it.

If you only have a few swipes a day, you might want to stick to the sweet sound of clinking coins.

5. …And How Will You Be Paying for This?

Buying an existing laundromat? That’s great and all…but how do I pay for all of this?

Cash

Buying a laundromat with cold, hard, cash is most likely the simplest form of purchase. Cash offers are often more attractive to sellers.

Cash doesn’t involve third-party lenders. Cash is almost always faster than waiting on conventional loans and their red tape. Cash offers assure the sellers that they’re going to get paid.

Sometimes, business sellers are willing to take a lower purchase price if it’s an all-cash offer.

Traditional and SBA Loans for Laundromat

Nervous about applying for a loan? Check out the Small Business Association’s (SBA’s) funding programs. If you invest your own time and/or money into running a for-profit business in the U.S., you could qualify for an SBA loan.

If you’re eligible for a more conventional loan, you may not qualify for an SBA loan. HELOCs, business lines of credit, and traditional business loans are all common ways to finance a small business in the U.S.

Contact a few banks or credit unions in your area. You’ll likely be asked to provide proof of income and other ways to prove you’re not going to default on your loan. Once approved, you will most likely get a preapproval letter.

This letter is proof to a business seller that you have financing lined up. You may also want to check out some online lenders. Just be sure you’re dealing with a legitimate lender and not a scammer.

Investors/Private Loans

Maybe you’re not excited about dealing with a bank or traditional lender. Do you know anyone with deep pockets? What about a group of investors?

Once you have your detergent in a row, contact a few people you know with a short and thorough sales pitch. The nice thing about private investors is that you can set terms with them. Maybe they want a certain percentage of your sales until you pay them back.

Can you get a better interest rate than you could with a bank? Probably. Just make sure you have all your contracts in writing with the proper legalese.

This will probably mean hiring a lawyer, but it will be worth it to make sure you haven’t missed anything big.

Seller/Owner Financing

Yes, you read that right! Sellers who are willing to work with you might just be on board with this option. Almost always, the first step to this method is getting to know the business owner. They need to know you, like you, and trust you.

This could mean a lot of hard work for little to no profit for a short amount of time. However, once you start making money, you can really take off without the hassle of paying off a bank loan.

Maybe you agree to take over the laundromat for six months if you can make 35% of the company’s profits. The other 65% will go to the business owner until you’ve paid half of the purchase price.

After that, your percentages increase, and the owners’ decrease until the loan is paid off. This method works well with those who just want to retire from a business they have built. They want to see the next owner succeed and might be willing to play a larger role in the sale to see that happen.

Still not sure about all this? Check out this guide on effective dealmaking processes.

6. The Dirty Little Details

Due diligence Is. A. Must. Don’t go through with a sale until you’re sure there aren’t any tax liens or holds against the property. If there are major issues (read: mold, asbestos, broken equipment), you need to be protected against that.

That’s why it’s smart to hire a lawyer to oversee your sale. You may not want to spend the money, but it will be worth it in the end. There’s too much on the (drying) line to assume hidden conflicts will just come out in the wash. Puns 100% intended.

If you’re buying an existing laundromat, it should already be zoned and permitted. Make sure the business is in good standing with the business community as well. You can refer to your step two research to help with this.

‣‣ Be a Little Extra

So let’s say you’ve crunched the numbers and you’re happy with the potential return on investment on this laundromat. Once you’re up and running for a bit, think about selling snacks (hello, vending machines!), coffee, or wifi. If your competitors are offering these things, think of fresh new ways you can be different or niche.

Maybe you can offer folding services. What about some (coin-operated) massage chairs? Different amenities can make your business more attractive. Which should make you more money.

Why Buying an Existing Laundromat Can Be Wicked Smaht

Buying an existing laundromat can be a great source of passive income. With the right price, location, and financing, you could be counting stacks of change all the way to the bank. Before you go all Scrooge McDuck, make sure you’re dealing with a profitable business.

Of course, there’s a lot more to buying a laundromat than one post can tell. To find out how buy a laundromat and make between $60k to $150k per year, take our Laundromat Acquisition Masterclass. We’ll tell you how our friend Michael’s $35k four-laundromat investment is now valued at over $1 million.

This is a perfect opportunity for entrepreneurs with full-time, W-2 work to start a business without quitting their jobs. Sign up for our master class and learn how you can make serious money off other peoples’ dirty laundry.

Curious about other unconventional acquisition opportunities? Tell us about your goals and we’ll tell you how to get there.

Learn How to Buy a Laundromat with Industry Experts

We’re Teaching You Everything You Need To Buy And Manage A Successful Laundromat, Making Between $60-$120k A Year— All With Minimal Set Up And A Simple Management System. How Do We Know? We’ve Done This Again And Again. Now We’re Teaching You!

You’ll Gain The Knowledge And Tools Necessary To Generate A Significant Monthly Income Without A Backbreaking Amount Of Work. Laundromats Offer A Steady And Recession-Proof Business Model, Remaining Open And Bringing In Revenue For Owners Even Through The Business Closures.


Unconventionally Yours,

Codie Sanchez & Ryan Snow

Co-Founders, Unconventional Acquisitions

PS – For more reading on buying laundromats:
How to Buy a Business with No Money – A Complete Guide

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