Why should anyone get into the Laundromat business?
If you put your money into a savings account you would get 1-1/2 % Return on your Investment (ROI). Terrific Money Market Funds are currently paying around 8 %. If you have a good year in the Stock Market or invest in good Mutual Fund you might get 10% ROI.
With Laundromats it is extremely possible to realize a 35-90% return on investment. Laundromats are also a cash business. Advantages of a cash business include: 'no checks in the mail', no inventory, and no account receivables because the customer pays in advance and supplies their own labor.
A coin-operated laundry is a recession proof business, as witnessed in our last recession. Economic conditions have little effect on the overall volume of business. Some of the best times for Laundromats have been in times of economic down turn. Available monies are limited and people will defer purchasing and repairing household laundry equipment.
There are several major tax advantages that are available to the Laundromat owner including equipment depreciation and the deduction of any financing interest. These situations may lead to a very favorable tax position.
The basic formula in buying a Laundromat is to put down at least 30 % (approximately $80,000-$120,000) and finance the balance over a 7 year note. This in conjunction with at least a 15 year lease will assure you a handsome return on your investment even if you can't renew your lease. The equipment in a HK equipped Laundromat will easily last 15 to 20 years, and longer still if you keep the equipment in good repair and provide proper preventative maintenance.
After the commercial laundry equipment notes are paid off, the store is all yours and then the money being paid to purchase the equipment now goes into your pocket. Now is the time that Laundromats show their real profitability. Remember, just a slight increase in sales over the break-even point creates a substantial profit. The more the store grosses above the break-even point the greater the profitability.