Is buying a laundromat a good investment?

What are you paying for in a laundromat?

A laundromat's value sits in three things: the location, the lease that secures it, and the machines. The 3.65x average multiple is a multiple of SDE, meaning profit before one owner's salary and benefits, interest, depreciation and amortization.

Before you compare a listing to the average, find out what it includes:

• The equipment. Get the make, model and age of every washer and dryer. Older machines mean replacement spending soon after you buy.
• The payment system. Card and app systems produce records. Coin-only stores do not, which matters for verification.
• Service lines. Wash-dry-fold, pickup and delivery, and commercial accounts add revenue but also add labor. Price them like a service business, not a self-service store.
• The real estate. Most listings are leased locations. If the building is for sale too, it is usually priced separately.

Buyers are drawn to laundromats because they need fewer staff than most retail businesses. That demand shows up in the price. A higher multiple means less cash left after debt service, which is the problem the worked example below shows.

Does a laundromat cover its debt after you pay yourself?

Often not, at average prices. Data on leased laundromats shows only a minority clear 1.25x debt service coverage after paying a $60,000 owner salary.

The 1.25x test is the SBA rule for an Initial Acquisition under SOP 50 10 8.1. Lenders measure it on historical cash flow, using the last fiscal year or the average of the last two. Projections cannot be used to meet it. So a plan to raise prices or add machines does not help you qualify.

Many laundromat buyers plan to be absentee owners. The coverage test does not care. If you will not work in the store, you still need to pay someone to manage it, and that cost comes out of SDE.

Worked example: a leased laundromat at the average multiple

Illustrative numbers, using a simplified version of the lender's coverage test:

1. SDE: $150,000. Price at 3.65x: $547,500.
2. Add $20,000 of working capital and $25,000 of fees and closing costs. Total project cost: $592,500.
3. Minimum equity injection at 10%: $59,250. SBA loan: $533,250.
4. Annual debt service over 10 years at an assumed 10% rate: about $84,600.
5. Subtract a $60,000 owner salary. Cash available for debt service: $90,000.
6. Coverage: $90,000 divided by $84,600 is about 1.06x. That fails the 1.25x test.

What would work? At 1.25x, $90,000 supports about $72,000 of annual debt service. That is a loan of about $454,000. You have three ways to get there:

• Pay less. Holding costs and working capital fixed, a price near $459,500, or about 3.06x SDE, passes.
• Put in more cash. At the full $547,500 price, you would need about $138,500 of equity instead of $59,250.
• Ask the seller to carry part on full standby. A note with no principal or interest paid while the SBA loan is outstanding stays out of the coverage test. Sellers often resist it. See why sellers resist a full-standby note.

What kills laundromat deals?

• Revenue you cannot verify. Coin revenue leaves no record. Compare reported sales against water and utility bills over 24 months, and against card system reports where they exist. If the seller says actual revenue is higher than reported, read how to value a business with unreported cash income.
• A short lease. If the lease runs out before your loan does, the lender and you both carry the risk that the landlord raises rent or does not renew.
• Old machines. A store with aging equipment needs capital soon. Price the replacement into your offer.
• Utility costs. Water, sewer, gas and electricity are large costs. Get two years of bills and check for recent rate changes.
• A new competitor nearby. Drive the trade area. Check for permits or construction at nearby sites.

What should you check in the lease and the licenses?

In a leased laundromat, the lease is most of what you are buying. Read it before you sign a letter of intent. Check:

• Remaining term plus renewal options. Lenders generally want the term, with options, to cover the loan. Confirm with your lender.
• Whether the landlord must consent to assignment, and on what conditions. Our article on what happens to the lease when you buy a business covers the mechanics.
• Rent increases, who pays utilities and common-area charges, and any relocation or demolition clause.
• Whether you will have to sign a personal guarantee on the lease.

Licensing is usually lighter than in other industries. Expect a local business license and possibly sewer or wastewater requirements. Rules vary by state and city. Ask the city which permits are in the seller's name and whether they transfer or must be reissued.

Where these numbers come from: The 3.65x laundromat multiple and the 2.57x all-sector average are BizBuySell data for 2021 to Q1 2026 as summarized by Beancount. The coverage finding on leased laundromats is from BigIdeasDB. SBA rules on the 10% injection, the 1.25x coverage test and full standby are from SOP 50 10 8.1, summarized by Beancount. The 10% rate is the SBA maximum variable rate for loans over $350,000 with prime at 7% in September 2026, per NerdWallet. Check current prime. SOP 50 10 8.1 applies to loans that receive an SBA loan number on or after October 1, 2026 (SBA Information Notice 5000-880695).

Related questions

Is a laundromat really passive income?

Less than the pitch suggests. Machines break, customers call, and cash needs collecting. If you will not do that work, budget for someone who will, and run the coverage test with that cost included.

Should I buy the building with the laundromat?

Owning the building removes lease risk, and under SBA rules real estate can amortize over up to 25 years. It also adds cost and debt. Run the numbers both ways with your lender.

Laundromat or car wash?

Car washes averaged 4.99x SDE in the same BizBuySell data, higher than laundromats. Both depend on location, equipment and utilities. A higher multiple makes the debt test harder to pass.

What comes next

If you are weighing a laundromat, you are probably also looking at car washes. Read what you should know before buying a car wash next. The buyers who end up with the most valuable companies decide what the business goes into before they buy it.

Related articles

• What should you know before buying a car wash?
• Which "boring" businesses are worth buying?
• How much will a bank lend to buy a business?
• What happens to the lease when you buy a business?
• How do you build a holding company for acquisitions?

Meraki Dealmakers is a service of Meraki Partners, LLC, an advisory firm. It is not a broker-dealer, investment adviser, business broker, law firm or accounting firm. This article is general information, not legal, tax or investment advice.