If you are looking for a recession-proof business with a high success rate (20-35% ROI), then investing in a laundromat business can be a good start for you. Not only is it a good side hustle but it will also help generate decent family wealth for you.
Here are the steps you need to take to invest in a laundromat business:
- Analyze your financial position
- Partner with an experienced person
- Buy a building and rent it out
- Consult a real estate agent
- Speak with various lenders for the loan
- Assess if you are ready for the business
Once you have this figured out, you will be ready to invest in a laundromat business.
Keep reading as I break down the steps of investing in a laundromat business and share with you how it can bring multiple benefits for you as a business owner.
6 Steps to Invest In a Laundromat Business
#1 Analyze Your Financial Position
Buying a rental property is far easier than opening a laundromat. The risk of your business falling through is much higher, and numerous elements that could affect profitability.
You need to be financially sound to launch your own business before digging deeper into the process.
You need to have money saved up for a down payment and improvements. If you’re stuck deep in debt, you should hold the thought of having a business for some time and pay back the loans before you start a laundromat.
» You can also read my post: How to Start a Laundromat Business With No Money?
#2 Partner With an Experienced Person
Having someone more experienced on a team is better than running a business all on your own. The pioneers know the ropes of successfully running a business, so newbies should take their advice every step of the way, or even better partner with them on the venture.
By following their advice, you can avoid most of the mistakes they made, and prevent your business from falling through.
They can even split the costs with you, which will save you from the trouble of looking for most of the funds.
#3 Buy a Building and Rent It Out
You could even explore the possibility of buying a property that has existing laundromats and leasing it to someone else to manage.
Local laundromats are often looking for places to set up their franchises; you could lease out to them. They have both personnel and funding to keep the business afloat.
Leasing or renting out your space will save you from the hassle of actively running your business; looking after inventories, invoices, machinery maintenance, etc. You will only have to collect the rentals and enjoy that income.
Make sure to avoid the expense traps while renting out.
#4 Consult a Real Estate Agent
If you decide on buying a building or renting it out, you need to consult a smart and knowledgeable real estate agent who can get you a good deal.
The kind of real estate agent you should look for will depend on your decision with the business. If you want to invest in a building to set up your laundromat, then look for an agent with a specialization in land acquisition.
Contrarily, if you decide to lease out a building, then go for an agent who specializes in leasing.
Make sure you approach the right agent, they can make or break a deal for you.
#5 Speak with Various Lenders for Loan
Study the market and consult different lenders for mortgage loans because you may need one to get your business up and running. Don’t settle for the first offer — you may find a better bargain, later.
Make sure to go back to your real estate agent and ask them for the best steal amongst all the offers, they will be able to guide you best.
Get the agreement in writing and go through all the points before signing a deal.
#6 Assess If You are Ready to Run a Business
Did you think of owning a laundromat business during one of your daydreaming sessions or have you done extensive research, and are willing to put in the time, money, and energy?
If you answered yes to the latter, then this may be the right choice for you.
Owning and running a laundromat business (or any other business) is not easy at all. It may look like a lucrative option from the outside, but it takes years of effort to reap the fruits of your hard work.
Ensure that you are passionate about the business and that you want to pursue it. If you’re only thinking of owning a laundromat to make money, keep in mind that there are plenty of other, less dangerous investment options available.
Now that we have covered the basics of investing in a laundromat, let’s look at the advantages of owning one.
Is Buying a Laundromat a Good Investment?
The average cash-on-cash ROI for laundromats in the U.S. is 20-35%, which is substantially higher than the average for alternative investments. So buying a laundromat is certainly a sound investment.
Following are some of the many advantages of owning a laundromat business.
#1 Recession Proof
Even if a calamity hits the world, people will still need clean clothes every month of the year. So the chances of you going out of business are minimal.
With a strategic approach, you can keep your business running all year long.
#2 High ROI
The ROI for laundromats is 20-35% in the US, which is huge from a business standpoint. Before placing your bets on a business, you need to look at the profitability to assess if the business is worth the effort. There’s no point in going for a business that will not bring monetary benefits.
Not many businesses can boast these figures, so a laundromat is worth all the effort.
#3 Minimal Physical Inventory
Unlike retails, laundromats require minimal physical inventory, which is why this venture is one of the best passive income methods. You do not have to actively refill, rotate, and discard the stock to keep the business thriving.
When I say minimal inventory, this also means you do not have to look for storage space to keep all the stock items. All of this means lesser management and more ROI.
#4 Work-Life Balance
Not many businesses offer flexibility like a laundromat.
Most of the business owners run it like a part-time gig and get to enjoy their free time doing things they like.
#5 Easy to Run
Customers often do the bulk of the washing and drying of their clothing in a laundromat themselves.
In contrast to many businesses, this means that your staff will need relatively less training, onboarding, and labor. The best part is consumers who pay in advance make the accounting and tracking simpler.
Laundromats are almost like businesses that run themselves.
» I have covered more on this subject in this blog post: How Much Work It Is Owning a Laundromat?
#6 All-Weather Business
Laundromats are in season all year long. Be it winter, autumn, summer, or spring, people will need clean clothes, and they will pay to get your services.
With that, there’s little seasonal variation in the business profits.
As a result of the country’s sharply rising real estate prices, many families are unable to afford to reside in apartment buildings with laundry facilities.
For washing and drying, those families require a nearby laundromat that is both practical and welcoming.
If you open a laundromat in your neighborhood, your neighbors won’t have to travel far or use outdated services; they’ll have a spotless, secure location to do their laundry close by.
#8 Additional Revenue
To supplement your part- or full-time career, your laundromat will bring in extra money each month.
You can use the extra to meet other financial objectives, such as paying off your mortgage, taking the trip of a lifetime, or putting money down for your child’s school.
Now, isn’t that an amazing side hustle?
#9 Growth Opportunities
Laundry businesses typically have a lot of room to grow because of their adaptability, desirability, and necessity.
The opportunities could entail establishing a second presence in the city, growing your current facility, or providing new services like dry cleaning or full wash-dry-fold service, or pick-and-drop services.
#10 Low Risk of Failure
It might be difficult and risky to learn how to launch a business. You can learn a ton about running a business via real-world experience without getting an MBA degree.
Running a laundromat will teach you the ropes of a business that a degree possibly won’t.
The failure rate of laundromats is just 5%.
The likelihood of a fall through when operating a laundromat is low, especially if you buy a successful operation.
» This could also be something for you: Can You Lose All Your Invested Money?
Running a laundromat is not completely passive, but with a high ROI, it is a great option worth investing in.
Given that you have the funds, knowledge, and time, a laundromat can turn out to be a good side hustle that can supplement your existing income.