How Much Does It Cost to Own a Laundromat?
Millions of people have started to go to laundromats instead of getting a washer or dryer at home. Judging by this, one can tell, laundromats have started making huge profits in recent years. But how much does it cost to own a laundromat?
If you’re one of those people who want to take this opportunity and start your laundromat, you must know that opening one requires somewhere between $200,000 to $500,000. Whether you acquire an existing laundromat business or build from scratch, this is a ballpark figure you need to keep in mind.
Keep reading as I break down the cost of opening a laundromat and other work required.
How Much Does It Cost to Open a Laundromat?
On average, the startup cost for opening a laundromat is typically anywhere near $200,000 to $500,000 and even more if you live in high-end cities like New York City or Los Angeles.
The cost truly depends on whether you’ve decided to buy an existing laundromat or create a brand new laundromat business.
If you want to build a new laundromat the cost will depend on the price of land as well as the average prices in the city you want to open in.
Buying an existing laundromat will cost you around $200,000 to $1 million or more. This price includes the operating net income of the laundromat annually, the condition of the machines, and lease time and payment.
An existing business has multiple perks: several existing daily customer bases that can save you from the hassle of building customer loyalty from scratch.
» You can also read my post: How Much Work It Is Owning a Laundromat?
Now let’s learn about the initial cost of opening a laundromat.
#1 Property For the Laundromat
The first thing that you will need to open a laundromat is a property or a location. The land of an average laundromat needs to be around 2000 square feet, which will cost around $200,000 to 500,000 depending on which state you live in. It can even be $1 million in some states.
San Francisco and New York will have a higher cost for property or rental space in comparison to Texas or other states with low living costs.
The most common utilities you will pay for are water, gas, and electricity. Water and electricity in a laundromat can cost you around $4000 to $8000 per month.
Your laundromat will need a proper water line hookup and plumping infrastructure to function efficiently. Therefore, utility bills are an important consideration in the overall cost of opening a laundromat.
The cost to run a laundry machine depends on the type, capacity, and cycle setting. It can cost anywhere around 5 cents to 67 cents per load of washing, estimating that the electricity rate is 27.5/kWh.
To operate a laundromat, you need equipment. The equipment can include everything from washing machines to cleaning supplies. Here is a table that lists down the cost of each piece of equipment.
|Cost of Machines||Cost Per Unit|
|Top-load washing machines||$500 — $700|
|Front-load washing machines||$3,500 — $20,000|
|Dryers||$5,000 — $6,000|
|Card Reader System||$40,000 — $80,000|
|Water Heating System||$15,000 — $40,000|
|Bill-to-Coin Changer||$800 — $7,000|
|Soap Vending Machine||$300 — $3,000|
Note: The table contains per unit costs.
A laundromat typically needs to be stacked with multiple washing machines as well as dryers. An average laundromat can cost you around $150,000 to $400,000 to fully stock it with washing machines and dryers.
Since the world is moving toward plastic money, another thing that you will need to add to your laundromat is a card reading system. Adding a card reading system to your machine can cost you around $40,000 to $80,000.
However, many people who still follow the traditional cash on hand payment system of laundromats can be chased away if you only offer a card payment system.
So to retain these customers as well, you will need a bill-to-coin change machine which ranges from $800 to $7,000.
Moreover, if you want to provide hot water washers to your customers, then a water heating system may cost you around $15,000 to $40,000.
» Read my blog post: Why Do Laundromats Businesses Fail?
Getting insurance for your business is essential to protect your business and finances in case of any mishap. There are various types of insurance a laundromat needs, such as General Liability Insurance, Commercial property insurance and Workers’ compensation insurance.
An average laundromat spends between $350-$750 annually for $1 million in general liability insurance.
The average cost of insurance including general liability, workers’ compensation, theft, and property casualty is $30,400.
#5 Marketing and Advertising
Coming to the marketing and advertising aspect of your business, you’ll have to decide how you want your laundromat to reach as many customers as possible.
To market your business you’ll have to put up clear signages and distribute fliers for people to know you exist.
You can also advertise your laundromat on social media, create a website, and hand out business cards.
The marketing expenses for the grand opening of the laundromat as well as for the flier printing would cost around $3500 each.
To build a website you will have to take out at least $600, this will help you a lot in social media marketing and help you reach a more tailored market
#6 Municipal Fee
Before opening a laundromat, you must research the municipal fee around your location. Some cities charge laundromat tap fees and wastewater fees. This fee can cost you around $200 to $8000 per washer including the water utility fee.
So if the fee per washer is $8000 and you own about 30 washers, you have to pay an amount of $240,000 in hook-up fees.
#7 Legal Fees and Licenses
To successfully start a laundromat you will need to legally establish your laundromat business. To do that, you will have to pay a legal fee for permits and licenses. You may hire a legal professional to assist you with these contacts and permits.
The total cost of registering your business in the USA is $750.
On the other hand, legal expenses for several licenses or permits including a health department license, a business license, a fire department permit, an air and water pollution control permit, a sign permit, etc all cost a total of $15,300.
Laundromats seldom need any staff, so you won’t have to look for employees since laundromats are self-service. However, this can risk security sometimes.
Since there would be no employees to keep a check on the customers, a security system is important.
You should consider installing a security system to monitor your laundromat easily.
A security system for a laundromat with multiple cameras as well as sensors can cost you around $6,000 to $10,000.
Apart from the normal equipment, a laundromat also has some extra accessories and supplies such as wifi, vending machines, and television.
A WiFi connection and television will cost you $500 and $40 respectively.
You might also need a computer for your laundromat which will cost you $500 or more depending on the model. Other supplies such as carts, soap, cleaning supplies, mops, hangers, or chairs will cost you somewhere between $750 to $1000.
Here are some laundry management software you can use for streamlining your regular business operations:
Where to Get the Financing and Funding For a Laundromat Business?
Now that I have covered all the initial costs of opening a laundromat, let’s discuss where you can get the funding to open your very own laundromat.
#1 Funding Options
There are several funding options that you can try to get the funding for your laundromat, let’s discuss them one by one:
You can get a traditional commercial loan from a bank that will lend you money in exchange for any collateral such as property/car/equipment. This collateral will be confiscated by the bank if bankruptcy occurs.
Another funding option is a business line of credit (LOC) that can provide you access to a bunch of money that you can use any time you need, just like a credit card.
You can borrow from that in order to pay your short-term business expenses and pay it back to the bank with interest on just the amount that you’ve borrowed.
» Maybe this also could be of interest to you: Can You Lose All Your Invested Money? How To Avoid It
You can also take a small business loan. The small business administration guarantees to give a large percentage of bank loans. However, there are some requirements and your application can take some time to process.
A popular way of acquiring funding for your business can be attracting investors. You can find investors by researching through close family, friends, and social media.
Another option is getting an equipment loan. These are specifically meant for the purchase of equipment and supplies which also act as collateral if you end up getting bankrupt.
#2 Business Bank Account
An important part of running a business is opening a business bank account.
A business bank account is essential for keeping track of your business’s finances and it also showcases your business credibility to potential investors.
» This could also be something for you: Can You Make Money Without a Bank Account?
You will also need an accounting method to track your bills, expenses, and revenue. It is essential to set up your accounting after opening a business bank account.
Some software that can help you integrate accounting into your laundromat business are:
Is Going to a Laundromat Cheaper Than Owning a Washer and Dryer?
Yes, going to a laundromat is cheaper than owning a washer and a dryer. There are several reasons why laundromats are cheaper:
- Laundromat machines use less water and save money on water bills.
- Laundromats can accommodate larger loads such as blankets, unlike typical at-home washers which aren’t meant for heavy loads.
- Going to the laundromats can save you maintenance and repair expenses for your washer and dryer.
- Laundromats can save you equipment costs.
Hence proven, you save money by going to a laundromat than doing it all by yourself at your home. Laundromats are also particularly convenient for people living in tight spaces.
This is the overall cost that you will need to bear to open your very own laundromat.
Even if the total seems like a hefty amount, once your laundromat is fully running and generating a lot of profit, you can see that it was worth it. I hope this article helps you!