How to Start a Laundromat Business: Costs and Risks

To start a laundromat business, you either buy an existing store or build a new one, sign a long lease in a dense, renter-heavy area, finance commercial washers and dryers, and then run the store day to day. Knowing how to start a laundromat business is mostly about knowing the costs and risks before you sign: the machines are the easy part, while the lease, utilities and repairs decide whether there is any profit.

Laundromats are often sold as "passive" cash businesses. They do have advantages, such as no inventory to buy, but they also have leaking pipes, broken machines and customers who need help at 9 p.m. This guide walks through the decisions in order. It's general education, not financial, legal or tax advice, and results depend on your market, effort and costs.

What does it take to start a laundromat business?

Capital, a location with enough demand, a lease long enough to pay off the equipment, and time to manage the store. Here is the usual order of decisions:

1. Study the market. Count nearby laundromats and apartment buildings, and check how many homes rent rather than own.
2. Decide to buy or build. An existing store has a track record; a new one has none.
3. Secure the space and lease. Long leases matter because equipment takes years to pay back.
4. Arrange financing. Lenders usually ask for a business plan and a down payment, and requirements vary by lender.
5. Get permits and set up the business. Business registration, building and plumbing permits for a buildout, insurance and payment systems.
6. Choose how you'll run it. Attended with staff, unattended with cameras and remote monitoring, or a mix.

Each step costs money before the first wash. If you're comparing this kind of capital-heavy business with options that start with time instead of cash, our step-by-step guide to building passive income lays out both routes.

Should you buy an existing laundromat or build a new one?

Buy if you want a sales history you can verify; build if you've found an underserved area and can survive a slow ramp-up. Both cost a lot, in different ways.

According to the Coin Laundry Association, new laundromats are valued on construction and equipment costs, while existing ones are valued mainly on net revenues, typically at three to five times net cash flow (CLA industry overview).

Example (hypothetical): a store reports $60,000 a year in net cash flow. At three to five times, an asking price of $180,000 to $300,000 would fall in the range the CLA describes. If you later find the seller's own unpaid labor wasn't counted, the real cash flow, and the fair price, are lower.

Due diligence for a laundromat follows the same principles as for any business you buy, from matching profit to bank records to checking contracts. Our guide to buying a passive income business covers that checklist. For a laundromat, add two items: compare the reported revenue with water and gas bills, since machines that ran must have used utilities, and check the exact age of every machine.

How much does it cost to start a laundromat?

The CLA says laundromats range in market value from $50,000 to more than $1 million. Where you land depends on store size, equipment, location and whether you buy or build.

The main cost categories:

• Equipment. Commercial washers, dryers, payment systems, water heaters and sometimes a coin changer.
• Buildout. Plumbing, venting, gas lines, electrical, flooring and drainage. For a new store, this can rival the equipment bill.
• Lease costs. Deposit, first months' rent and any landlord requirements.
• Purchase price if you buy, plus legal, accounting and inspection fees.
• Working capital. Cash to cover utilities, repairs and slow months while customers find you.

Equipment wears out on a schedule, and replacing it is a cost you'll face during a long lease. The CLA lists these typical life expectancies:

When you buy a store, the age of its machines matters as much as its revenue. Washers near the end of their life mean a large bill soon after you take over.

How do you choose a laundromat location and lease?

Look for dense, renter-heavy neighborhoods with limited in-unit laundry, then sign a lease long enough to pay off your equipment. The CLA says stores tend to perform best in predominantly renter-occupied, densely populated areas.

Location checks:

• Who lives nearby. Apartment buildings without laundry rooms are your core market.
• Competition. A newer, larger store nearby can take your customers.
• Parking and visibility. Customers carry heavy bags, so easy parking matters.
• Utilities. Confirm the building can handle the water, gas, sewer and electrical load, and ask what local utility rates are.

Lease checks: the CLA says laundromats usually occupy retail space on long-term leases of 10 to 25 years. Before signing, make sure the lease (including renewal options) covers your loan term and equipment life, that it can be assigned if you sell, and that rent increases are spelled out. A short lease can make a store almost impossible to sell. Our guide to rental properties for passive income explains the landlord side of that relationship.

How does a laundromat make money?

Mostly from self-service washes and drys, plus extras like wash-and-fold service, pickup and delivery, and vending. Revenue depends on how often each machine is used.

The industry measure is turns per day (TPD): how many cycles each washer runs on average each day. The CLA says washers generally run from three TPD to eight or more, and that dryer income typically equals 40 to 60 percent of washer income.

Example (hypothetical): a store has 20 washers averaging $4 per cycle, and dryers bring in 50 percent of washer income.

The same store loses money at one level of use and earns a reasonable return at another. That's why verifying real TPD, not the seller's estimate, matters so much. None of these figures are typical or promised; use your own quotes and local rates.

How do you finance a laundromat?

Most buyers combine their own cash with a bank loan, often an SBA-backed one. The SBA doesn't lend directly; it guarantees loans made by approved lenders, who set their own credit and down payment requirements.

• SBA 7(a) loans can be used for machinery and equipment, working capital, and changes of ownership, with a maximum of $5 million as of 2026 (SBA 7(a)).
• SBA 504 loans fund buildings, land and long-term machinery with a useful life of at least 10 years, up to $5.5 million, but can't be used for working capital or inventory (SBA 504).
• Equipment financing from manufacturers or distributors is another route, with its own terms to compare.

Debt raises your break-even point. In the hypothetical table above, the loan payment is the difference between a small profit and a loss. Keep a cash reserve for repairs and slow months, and don't borrow against your home for a store you haven't verified. Our guide on how much money you need for passive income explains why capital-based income takes far more money than people expect.

What are the biggest risks of owning a laundromat?

Utility costs, equipment failures, lease problems, new competition and overpaying for a store with inflated numbers. None of them are unusual, and most owners face several.

• Utilities. Water, sewer, gas and electricity are a major ongoing expense, and you can't control the rates.
• Breakdowns. Every out-of-order machine is lost revenue and an annoyed customer.
• The lease. A landlord who won't renew, or a big rent increase, can erase the value of the business.
• Competition. A new, modern store nearby can pull customers away.
• Security. Unattended stores face vandalism, theft and break-ins, and attended stores face payroll costs.
• Franchise terms. If you buy into a laundromat franchise, the FTC says you must receive the Franchise Disclosure Document at least 14 days before you sign or pay (FTC franchise guide). Read it with an attorney, and call former franchisees listed in it.

The SBA's guidance on buying an existing business or franchise recommends hiring an attorney and an accountant and checking licensing, zoning and, if you buy property, environmental rules.

How passive is a laundromat, really?

A laundromat is a business you operate, not a passive investment. The CLA notes that stores commonly run from 6 a.m. to 10 p.m., and someone has to open, close, clean, collect, handle refunds and fix or call about machines.

You can reduce your hours by hiring attendants or a manager and adding remote monitoring and card payments. Each of those costs money that comes out of the owner's share. Laundromats also share the same location and equipment logic as smaller coin businesses; our guide to the real costs and margins of a vending machine business shows the same trade-offs at a much smaller scale.

Next steps

• Visit several laundromats in your target area at busy and quiet hours, and count machines in use.
• Talk to an SBA lender early to learn what down payment and experience they expect.
• Compare a laundromat with lower-capital options in our guide to how to make passive income.
• Explore every realistic path in our guide to making money online.