Ultimate Guide to the Costs of Opening a Laundromat

“Boring” businesses are in right now, and few businesses are more mundane than owning a laundromat. But there’s a reason for this trend–laundromats can be great revenue generators with minimal oversight from their owners. All it takes is the right location and equipment. That being said, opening a laundromat doesn’t come cheap. Starting a laundromat typically costs between $200,000 and $500,000, and you can expect to pay between $100,000 and $400,000 for buying a laundromat. 

Since most people don’t have that kind of cash laying around, you’ll need to come up with funding to cover the costs. But before you apply for a loan, you’ll want to make sure you know what you’re doing if you want to succeed in the laundromat industry.

This article breaks down the various expenses involved in opening a laundromat, so you can make a smart investment in laundry and have the best chance of success in your new venture.

In this article:

• How much it costs to open a new laundromat
• How much it costs to buy an existing laundromat
• Ongoing costs of owning a laundromat
• How to get financing for your laundromat

Why Opening a Laundromat is a Profitable Investment

Opening a laundromat is often considered a recession-resistant business because laundry is an essential service. Since people need clean clothes regardless of the economic climate, laundromats will always be in business. Hence, opening a laundromat is a stable investment. Additionally, laundromats operate with low labor costs and can be managed remotely, making them an attractive option for entrepreneurs looking for passive income opportunities. Many laundromat owners also experience high customer retention, further securing their revenue streams.

Another advantage of opening a laundromat is the potential for diversification and additional services. Business owners can add value-added services such as wash-and-fold, dry cleaning drop-off, vending machines, fold service and even mobile laundry services. These additional offerings can significantly increase revenue and enhance customer experience.

How Much Does It Cost to Open a Laundromat?

Opening a laundromat typically costs between $200,000 and $500,000. The amount will vary based on location, size of the laundromat, and the age and type of equipment used. Below, we’ll delve into the specific costs you can expect when opening a laundromat.

Buying Into a Franchise 

Buying a laundromat franchise can cost as little as $75,000 all the way to $500,000+. These costs include franchise fees, equipment, training, plus support from the franchisor.

Equipment 

Laundry equipment is not cheap. It can cost upwards of $150,000 or more to stock a new laundromat business, depending on the equipment type, number of units, and other factors. Regular maintenance of laundromat equipment can also increase the overall cost.

For example, the price for a top-loading washer begins around $1,000 per machine, whereas front-loading washing machines might sell for several thousand dollars each. Laundry machines like stacked commercial dryers can cost around $6,000 per unit.

Other equipment to consider includes:

Legal and Licensing Fees

Operating a laundromat typically requires several permits and licenses to ensure compliance with local regulations and safety standards. Here are some common permits and licenses you may need:

Business License: A general requirement to operate any business in your city or county.

Building Permit: If you’re constructing or renovating the laundromat building.

Zoning Permit: Ensures your business location is zoned appropriately for a laundromat.

Health Department Permit: Ensures your laundromat meets health and sanitation standards, especially for water quality and cleanliness.

Environmental Permits: Depending on your location, you may need permits related to wastewater discharge or environmental impact.

Fire Department Permit: Ensures compliance with fire safety regulations, especially important due to dryers.

Occupational License: Some jurisdictions require a specific license for operating commercial washing machines and dryers. 

Sales Tax Permit: If your state or locality imposes sales tax on services like laundry.

Expect to spend between $1,000 and $5,000 for permits, licenses, and legal consultations. It’s essential to check with your local city or county government offices or a business advisor to ensure you have all the necessary permits and licenses before opening your laundromat. Requirements in this type of business can vary significantly depending on where you are located.

Location

The cost of securing a location to open a successful laundromat depends heavily on the real estate market in your area. Lease costs in this type of business venture can range from $2,000 to $10,000 per month, while purchasing a property can easily cost upwards of $100,000 or more.

Luxury items

Adding luxury items such as Wi-Fi, televisions, and comfortable seating can enhance the customer experience but will increase your startup costs. Budget around $2,000 to $5,000 for these enhancements.

Marketing

A high priority for new small business owners is getting the word out. After all, you want to attract customers to your business. Plan to allocate some of your funding towards marketing and advertising costs.

Print ads in newspapers or radio ads are the traditional ways of advertising, but also consider billboards or more modern marketing methods, such as having a website, claiming a Google My Business spot, using geo-fencing, and hiring a dedicated social media marketing manager. This type of marketing strategy can boost your new business.

While you have more control of your marketing expenses, remember that it can help propel you to success more quickly. All in all, plan for about $10,000 to $20,000 for your first six months of business, including a website. As time goes on, you’ll be able to adjust according to your needs.

Utility Infrastructure

Laundromats require multiple plumbing connections and accommodations and water line hookups. The building where your business will operate will also need to be able to handle the electrical load of numerous machines running at once. If the dryers in your laundromat are gas-operated, you’ll need to include that in your utility infrastructure estimates. The cost for this will vary, depending on how much work is involved.

How Much Does It Cost to Buy an Existing Laundromat?

Buying a laundromat can be a more straightforward option, often costing between $90,000 and $400,000. The advantages include an established customer base, existing equipment, and immediate cash flow. However, disadvantages may include outdated equipment and the need for renovations or upgrades.

Ongoing Costs of Owning a Laundromat

Operating a laundromat involves several ongoing expenses. Here’s a breakdown of common costs:

Commercial Insurance

Insurance for your laundromat is another high-priority item. You’ll want something to protect your investment, and your lender will also likely require that you purchase business insurance. Insurance costs can range from $1,000 to $3,000 per year, depending on the coverage level and location.

Equipment Upkeep

Maintenance and repair of equipment can cost around $500 to $2,000 per month, with prices increasing on older equipment that require more frequent maintenance and repairs. While the cost of upkeep may seem high, it’s often cheaper than replacing equipment.

Marketing

After a larger initial investment, ongoing marketing efforts to retain and attract new customers can cost $500 to $1,000 per month. This can include upkeep costs for your website, recurring ads in newspapers, and other associated expenses.

Operational Expenses

Every business has operational expenses to factor into ongoing costs. Common operational expenses include employee wages, cleaning supplies, and office supplies. The average monthly cost to cover these expenses will vary greatly business to business.

Rent or Mortgage

Monthly rent or mortgage payments will vary but generally range from $2,000 to $10,000 per month. Keep in mind that rents can widely fluctuate year-to-year, which may be a good incentive to purchase your property.

Utilities

Utility costs can be significant for a laundromat. These include water, electricity, and gas, and can range from $2,000 to $6,000 per month, depending on the size and location of your laundromat.

How to Get Financing to Open a Laundromat

Realistically, the cost to open a laundromat is a sizeable investment, no matter how you slice it. At a minimum, you can probably expect $200,000 or more whether you are buying an existing business or starting your own.

Once you’ve figured out how much you’ll need to open your laundromat business, you’ll need to fund your business. There are many types of small business loans that can be used to finance your new laundromat business. Financing options for opening a laundromat include:

Small Business Loans: Traditional term loans or SBA loans can provide the necessary capital with favorable terms.

Equipment Financing: Specific loans or leases for purchasing commercial washers and dryers.

Franchise Financing: If buying into a franchise, franchisors often offer financing options.

Personal Savings: Using personal funds can reduce the need for loans and interest payments.

Investors: Seeking out investors who believe in your business plan and are willing to provide capital.

Conclusion

Opening a laundromat requires a significant upfront investment but can offer a steady and reliable income stream. By understanding the various costs involved and exploring financing options, you can make an informed decision and set yourself up for success.

Frequently Asked Questions on Opening a Laundromat

What are the key steps to opening a laundromat?

To open a laundromat, research the market, choose a location, secure financing, buy equipment, get permits, and market your business. Set up utilities, hire staff if needed, and attract customers to maximize profitability.

Should I buy new or used equipment when opening a laundromat?

Choosing between new and used equipment depends on budget and goals. New machines offer warranties, efficiency, and modern tech but cost more. Used machines are cheaper upfront but may need more maintenance. Consider long-term costs when deciding.

Is buying a laundromat better than starting one from scratch?

Buying a laundromat offers a ready customer base but may come with outdated equipment. Starting from scratch allows more control but costs more upfront. Weigh both options to find the best fit.

What are the most important factors in choosing a laundromat location?

Choosing the right location is key. High-traffic areas near apartments or universities attract more customers. Consider parking, visibility, rent, utilities, and competition, as location affects costs and profitability.

What are the biggest challenges of opening a laundromat?

Opening a laundromat comes with high startup costs, location challenges, and financing hurdles. Ongoing maintenance and competition also impact success. Proper planning and research can help overcome these challenges.

Frequent searches leading to this page