What I learned after buying my first laundromat

I bought two laundromats over the last year and I have learned so much after diving into the business headfirst. I am not an expert on laundromats but I have learned enough to point out some of the pros and cons for someone thinking about geting into the business. I bought one of the laundromats with the real estate and the other I am leasing. There are pros and cons to both of those structures as well. I love the business and people can make a lot of money but it is not as easy as it may appear.

Why did I want to get into the laundromat business?

My main career is real estate. I own commercial, multifamily, and single-family rentals. I flip houses and I also own a real estate brokerage and have an online presence with this blog and social media. I have a successful YouTube channel and love doing different things. I have always wanted a brick-and-mortar business to go along with my real estate and online businesses. In 2022 I bought a building that came with a liquor store and a mini-mart. That has been a fantastic experience and I loved every inch of it. I also bought a bar in 2022 which was a horrible experience I never want to experience again!

Being in the online real estate niche I have met many interesting investors and business people including Brandon from Investment Joy who owns laundromats. I loved watching him collect quarters and it appeared his laundromats had done very well. I decided that would be a business I wanted to get into at some point even before I bought the liquor store. I even tried to turn one of the bars I bought into a laundromat without any success. Then I ended up buying an 8 plex with coin-op laundry and I realized how much I love collecting quarters.

I knew I wanted a laundromat but I was not sure how to get one because starting a laundromat is so difficult and I had never seen one for sale in my area before.

How to get started investing in real estate

Why did my first attempts at starting a laundromat fail?

Since I could not find any laundromats for sale I tried to start one from scratch. I had bought a building in a small town that used to be a bar but the bar shut down during covid. I was thinking of opening it back up as a bar again but that did not go as planned. There were no laundromats in this town or any of the other towns within 10 miles so I thought the area would work well.

I will be the first to tell you I was naive and in way over my head. I did not realize how hard it would be to start a laundromat from scratch. Here are some of the issues I ran into.

• The city wanted me to bring 2 shares of water to get a laundromat approved in my building. I am in Northern Colorado and that would have cost me $70k for each share if I could find them.
• To buy all new equipment (for a fairly small building) was going to cost me more than $200,000. Commercial washers and dryers are expensive and most companies offer financing for that reason.
• Not only did I need new equipment but I needed to upgrade the electrical, gas, and plumbing. Many of the big washers require 3-phase electricity.
• To run big machines you usually need a concrete slab to handle the weight and torque they produce. My building had wood floors with a crawl space.

After looking at the numbers, I knew there was no way this laundromat was ever going to make money if I financed all of the equipment and repairs. It was going to cost me close to $500k to start this laundromat in a building I already owned and it was not going to be very big. I thought I was being clever starting a laundromat and could not figure out why no one else had done it yet. I realized there was a reason very few people start new laundromats!

How did I find a laundromat for sale?

I put my dreams on hold for a while but as I was still very active in the real estate world. I post videos of all of my deals on my YouTube channel including my effort to start a laundromat that did not work.

Because of my videos, someone reached on on YouTube and said their family might have a laundromat for sale soon. This was a very small laundromat with a very small car wash in a small town but it was better than nothing. I talked to the person who said it might be for sale but we could not get a deal done. They wanted to trade a house for the property and I did not have anything they wanted.

Then about 6 months later, they reached back out and said they really wanted to sell now. It took months but eventually, we made a deal I was able to buy an existing building with a laundromat, a small apartment, a 2-bay car wash, and a 600 sqft shop. I paid $310,000 for everything which is not bad considering I am in Colorado where real estate is very expensive.

This laundromat had only top-loading washers and very old dryers but it has taught me a ton about the business. I am working on getting better machines for it now which is not easy to do!

What have I learned from my first laundromat?

There were many things I did not know about owning a laundromat before I bought it. I tend to jump into things before I know everything which can be good and bad. The previous owners gave me almost no information on the utilities, income, or the property at all. However, I knew the apartment, shop, and space where the laundromat was were worth what I paid even if the laundromat was not there.

Here are some key points I have learned so far. I will be totally honest and admit the business is not making money yet but I think it will eventually.

• Finding big machines is very hard! I thought it would be easy to find some of the bigger machines the other YouTube laundromat guys mention are their big money makers and it is not. The big companies with new or used machines will not even return my calls or emails because I am so small. I have found some bigger machines but I had to search far and wide for used machines from individuals in my state.
• Finding people to work on the machines is hard! I have called every appliance person I know in the area and most of them don’t work on appliances anymore and those that do won’t work on laundromats. I have found some people but they are pretty far away, charge me trip fees, and take their time. I found that most laundromat owners work on the machines themselves.
• The big machines are not a simple installation. I have a couple of larger machines but they need a concrete pad, 3 phase-electric, and someone who knows what they are doing. I am not sure my small laundromat will ever be able to use the big machines because it also has a wood floor with a crawl space.
• Finding parts to repair machines is hard! After finding some people who can work on the machines I ordered parts or tried to order parts for some of the broken machines I have. I actually took over a second laundromat with bigger machines and some of the parts needed are not being manufactured and are out of stock everywhere.
• Used machines are so much cheaper than new ones. While it is hard to find used equipment it does come up for sale occasionally. Some companies and people will tell you, you must have all new but I have found others who swear by used equipment. Instead of spending $200k you could spend $40k for the same machines but realize you may need to repair the older machines more often.

Conclusion

It took me a long time to find a laundromat, to learn the ins and outs, and to network with people in the industry. However, it has been a ton of fun and I have just scratched the surface of the industry. I plan to improve my laundromats and document everything I learn along the way. I took over the lease on a newer bigger laundromat this summer as well and I can’t wait to see how it does when we open. I found that laundromat through networking and people knowing I was looking for machines from my YouTube videos.