7 Steps to Buying a Laundromat: Complete Guide for First-Time Buyers

Step 1: Understand the Laundromat Industry

Successful laundromats don't just make money from washers and dryers — many expand their income by offering additional laundry services that meet different customer needs.

Here's a quick breakdown of common revenue sources:

• Self-service washers and dryers. Customers pay to use machines at their convenience, generating consistent, daily income.

• Vending machines. Selling detergent, dryer sheets, snacks, and drinks adds extra revenue with minimal effort.

• Drop-off laundry services. Customers pay a premium to have their laundry washed, dried, and folded for them.

• Fold services. Folding-only services appeal to busy customers who want faster turnaround.

• Dry cleaning partnerships. Some laundromats partner with dry cleaners to offer an expanded menu of services.

Understanding these different revenue streams is key to running a profitable laundromat that maximizes both customer satisfaction and cash flow. For more in-depth market data, owner tips, and industry insights, check out the Coin Laundry Association. It's a valuable resource for anyone interested in the laundry business.

Step 2: Estimate Costs

Beyond the purchase price, it's important to understand the full range of startup and operational costs you'll face. Many new laundromat owners underestimate these expenses, which can hurt cash flow and delay profitability.

Here's a breakdown of typical costs to plan for:

• New equipment. Replacing old washers and dryers can cost tens of thousands of dollars if needed.

• Renovations. Upgrades to flooring, lighting, plumbing, or layout may be necessary to attract more customers.

• Lease deposits. You'll likely need to cover security deposits and the first month's rent for the space.

• Licenses and permits. Make sure you budget for business licensing and any local permits required for operating a laundromat.

• Insurance. Protect your investment with business insurance that covers property damage, liability, and equipment breakdowns.

• Working capital. Keep enough cash on hand to cover operational costs like utilities, employee wages, and machine maintenance for several months.

When evaluating opportunities, compare the total expected costs against your available cash and financing options, including business loans.

One Reddit user warned:

"You need to be prepared for call outs, broken machines, fire alarms, police issues, etc... Whatever cash you think you need, add 20%."

Factor in a cushion for surprise expenses to protect your cash flow. Another Reddit user emphasized day-to-day realities to consider:

"Are you able to fix the coin-changing machines if they break down? Who do you have to fix machines when out of service? ...Who will open/close? Who will clean?"

Maintenance, staffing, and operational costs are ongoing parts of running a laundromat business that directly impact your return on investment.

Old vs. New Laundromats

Carefully assess whether you're better off opening a new laundromat from scratch or buying an existing laundromat. Generally, purchasing an existing store offers key advantages:

• Built-in customer base. You start with foot traffic from day one rather than trying to build brand awareness from scratch.

• Known financials. You can review tax returns, profit margins, and cash flow before committing.

• Existing infrastructure. Plumbing, electrical, and buildout are already complete, saving significant startup costs.

As another Reddit user put it:

"The best way to enter the industry is to buy an existing store. You might overpay for it, but you'll get that back in education and experience."

Step 3: Do Market Research and Choose the Right Location

The right location can make or break a laundromat business. Market research about foot traffic, demographics, and local competition can help you thoroughly research the area and understand the real estate dynamics.

Key factors to research before buying include:

• Nearby apartment buildings. High-density housing can mean a steady stream of customers who rely on laundry services.

• Parking availability. Accessible parking makes it more convenient for customers to haul in loads of laundry.

• Proximity to commercial areas. Being near busy shopping centers or main roads can increase visibility and foot traffic.

• Competition from other laundromats. Study how many laundromats are in the area and what services they offer — overcrowded markets can lower profitability.

• Demographics of the neighborhood. Research income levels, renter versus homeowner ratios, and population growth trends to ensure a strong customer base.

Step 4: Evaluate the Financials of the Business

Once you find a laundromat you're interested in, it's time to dig into the financials. Evaluating the business's financial health helps you understand its true earning potential and avoid costly surprises after you buy. Look beyond just monthly sales and focus on several key documents and figures.

Here's what to review during financial evaluation:

• Profit margins. Analyze gross and net profit margins to see how much of the laundromat's revenue actually becomes profit.

• Cash flow. Look at cash flow statements to understand how money moves through the business month-to-month.

• Tax returns. Request at least two years of tax returns to verify reported income and expenses.

• Net income. Review net income figures to assess the laundromat's profitability after operational costs are paid.

• Loss statements. Look for any recurring losses that could point to declining business or poor management practices.

Examine multiple months of performance — not just one good or bad quarter — to get an accurate picture of the laundromat's financial health. Analyzing these documents carefully is critical to determining whether the business will support your income goals and provide a strong return on investment.

Step 5: Complete a Due Diligence Checklist

Before buying a laundromat, take time to dig into the details. Due diligence helps you avoid hidden issues and confirms that the business is worth what you're paying. You'll want to understand exactly what you're walking into, from the lease to the condition of the machines.

Here's a checklist of what to review before you move forward:

• Lease terms. Make sure you're comfortable with the rent, renewal options, and any restrictions in the agreement.

• Machine maintenance records. Ask for service logs and repair history on all washers and dryers.

• Equipment age. Older machines may need replacing soon, and that can get expensive.

• Distributor agreements. Review any contracts in place with equipment vendors or detergent suppliers.

• Pending renovations or upgrades. See if any upcoming repairs or improvements that could impact your timeline or cash flow.

Step 6: Secure Financing

Once you have a laundromat in mind and an idea of what it will cost you, the next step is securing financing. Most business owners use a mix of financing options to cover the purchase price, upgrades, and working capital needs. Lenders will want to see a strong business plan, steady cash flow projections, and a realistic valuation of the laundromat you plan to buy.

Here are some common financing options for buying a laundromat:

• SBA Loans. Backed by the Small Business Administration, these loans offer low rates and long repayment terms, making them a popular choice for laundromat buyers.

• Traditional business loans. Banks and online lenders like Clarify Capital offer business loans that can be used to purchase an existing laundromat or cover major upgrades.

• Seller financing. Sometimes the current owner will finance part of the sale, which can make it easier to close the deal if you don't qualify for a full bank loan.

Each lender will evaluate your application based on the existing laundromat's cash flow, your business plan, and the valuation of the business. Having a financial package with all this information ready can speed up the approval process and help you get better loan terms.

Step 7: Plan Your Upgrades and Marketing Strategy

Buying the laundromat is just the beginning — planning smart upgrades and a marketing strategy can help you grow revenue and strengthen your customer base quickly. Many laundromat owners invest early in improvements that boost efficiency and appeal to modern customers.

Here are common upgrades to consider:

• Installing energy-efficient machines. New washers and dryers that use less water and electricity can lower utility bills and attract eco-conscious customers.

• Updating the store layout. Fresh paint, better lighting, comfortable seating, and clean restrooms can improve the overall experience and encourage repeat business.

In addition to physical upgrades, marketing is critical for growing your laundromat business:

• Use social media. Promoting your laundromat through Facebook, Instagram, and Google My Business can help build local visibility fast.

• Run local advertising. Flyers, door hangers, and local newspaper ads can help you introduce your services to nearby renters and small businesses.

Clarify Capital's business loans and working capital loans can help fund both upgrades and marketing strategies, giving you the financial flexibility to invest in your laundromat's future. Whether you're refreshing outdated machines, expanding your laundry services, or remodeling your space, securing the right financing can turn your vision into a profitable reality.

Pros and Cons of Owning a Laundromat

Buying a laundromat can be a smart move, but it can also be challenging. Here's a quick breakdown of the pros and cons to help you decide if it's the right fit.

Pros:

• Steady cash flow. Revenue comes in daily and isn't tied to seasonal demand.

• Low inventory. No need to manage a warehouse or track product shipments.

• Can be semi-passive with proper systems. Hire staff or use tech to keep operations running smoothly.

• High demand in urban areas. Renters and apartment dwellers need reliable laundry options.

Cons:

• Equipment repairs and maintenance. Washers and dryers can be costly to fix or replace.

• Staffing and management headaches. Even part-time help requires scheduling and oversight.

• High utility costs. Water, gas, and electricity bills can add up fast.

• Competition and location-dependent success. Profitability often depends on picking the right neighborhood.

Is Buying a Laundromat Right for You?

Buying a laundromat can be a rewarding way to build a steady income stream, but it's not a decision to rush into. First-time buyers should take the time to do their homework, run the numbers carefully, and speak with experienced laundromat owners to understand the realities of the business model. Every laundromat is unique, and success depends on thorough due diligence, smart decision-making, and a willingness to invest time into improving operations.

With the right know-how and preparation, buying a laundromat can become a profitable small business opportunity that generates cash flow for years to come. Focus on finding a location with a strong customer base, evaluating the true financial health of the business, and planning ahead for upgrades and marketing. Business owners who go in with clear expectations and a solid plan are much more likely to create a successful laundromat that supports their long-term goals.

Ready to take the next step toward growing your small business? Apply for funding with Clarify Capital today.