How to Buy a Laundromat

Why Laundromats Make Great Small Business Acquisitions

Laundromats are one of the most recession-resistant businesses in America. People need clean clothes regardless of the economy. The business runs largely on coin or card payments — no receivables, no invoices, no waiting to get paid. Many can be run semi-absentee once systems are in place.

Average laundromat owner earns between $30,000 and $300,000 per year in SDE (Seller's Discretionary Earnings) depending on size, location, and how well the business is run. The best ones have been in business 10+ years, have loyal neighborhoods, and require minimal staff.

Step 1: Define What You're Looking For

Before you look at a single listing, answer these questions for yourself:

• Budget: How much can you put down? SBA loans typically require 10-15% down. A $400K laundromat requires ~$40-60K cash at minimum.
• Involvement: Do you want to be on-site daily, or invest in something that runs without you? Look for "absentee run" listings if the latter.
• Geography: Are you local or open to investing out of state? Out-of-state buyers typically hire a manager from day one.
• Income target: What SDE (annual owner earnings) do you need to make the investment worthwhile?

Step 2: Understand the Key Numbers

Every laundromat listing shows a few core metrics. Here's what they mean:

SDE — Seller's Discretionary Earnings

The most important number. SDE = net profit + owner's salary + any personal expenses run through the business. This is the true "cash in your pocket" number per year. Laundromats typically sell for 2.5–4× SDE.

Annual Revenue

Total gross revenue before expenses. Healthy laundromats run 30–45% SDE margins on revenue. A business with $300K revenue and $90K SDE (30% margin) is solid.

Asking Price / SDE Multiple

Divide the asking price by SDE to get the multiple. A 3× multiple is fair market. Under 2.5× is a deal. Over 4× needs strong justification (prime real estate, new equipment, above-average growth).

Step 3: Evaluate Listings

When you find a listing you like, here's what to look at before requesting more info:

• Is the revenue trending up, flat, or declining? (Ask for 3 years of tax returns)
• How old is the equipment? Equipment replacement can cost $200K–$500K for a full fleet.
• What's the lease situation? Month-to-month leases are a risk — you need a long-term or owned building.
• How many machines? More machines = more capacity = more revenue potential.
• Is the location in a dense residential area? Foot traffic is everything.

Step 4: Request the Information Memorandum

When you're serious about a listing, request the IM (Information Memorandum) — the full business summary the seller or broker prepares. It should include:

• 3 years of profit & loss statements or tax returns
• Lease agreement and remaining term
• Equipment list and ages
• Utility bills (water and electricity are the two biggest expenses)
• Revenue breakdown by machine type if available

Step 5: Do Your Due Diligence

Once you have the IM and are under LOI (Letter of Intent), you enter the due diligence period — typically 30-60 days. During this time:

• Verify revenue against bank statements and coin counts
• Have a laundromat equipment technician inspect all machines
• Review the lease with an attorney — check for assignability and renewal options
• Assess the neighborhood: foot traffic, parking, competition within 1 mile
• Talk to the current employees (if any) about operations
• Run the numbers yourself: projected SDE after your debt service at current asking price

Step 6: Finance the Purchase

Most laundromat buyers use one of three financing methods:

SBA 7(a) Loan

The most common. Government-backed, 10-year terms, typically 10-15% down. Requires the business to have at least 2 years of financials. Best for established laundromats with clean books.

Seller Financing

The seller carries part of the note — you pay them directly over 3-7 years. Common on smaller deals or motivated sellers. Usually combined with a bank loan.

Conventional Business Loan

From a bank or credit union without SBA backing. Higher down payment (20-30%) but faster closing.

Step 7: Make an Offer

Start with a Letter of Intent (LOI) — a non-binding document outlining your offer price, terms, down payment, and due diligence period. Most sellers expect some negotiation. Common points to negotiate:

• Purchase price (especially if equipment is older or lease is short-term)
• Seller training period (30-90 days is standard)
• Non-compete agreement (protect yourself from the seller opening nearby)
• Working capital to be left in the business at closing

Step 8: Close

Once due diligence is complete and financing is secured, you'll close through an escrow or title company. The seller signs over the business assets (or entity), lease is assigned to you, and you take possession. Most closings take 60-90 days from accepted LOI to keys in hand.