How to Buy a Coin Laundry Business: Two Investment Methods

Two Methods for Investing in a Coin Laundry Business

The two main methods of investing in a coin laundry business are operating it yourself or designing a scalable investment model. The second method yields higher long-term ROI and growth potential.

When investing in a laundry business, there are two methods. One is preferred, but the other is far more common. Suppose you are considering buying a coin laundry business and entering a new industry, like most now entering the laundry industry. In that case, you want to have a good understanding of both the opportunity and the pitfalls of the business before investing in it. Keep in mind that while the rewards of doing it right, as well as the costs of the mistakes, are high, most are in the tens of thousands and often in six figures. That means a wrong move or a lack of due diligence can cause significant damage, while smart planning can yield life-changing profits.

Why the Right Laundry Investment Model Matters

The laundry business, for those who do know it well, understands that when the laundry investment model is set up correctly, the benefits are far better than what you may hear or ever realize. The real rewards are for those who understand the difference between the operating model and the business investment model. Here is where you either enter the world as a laundry investor or make the decision for the more common path, a laundry operator. Understandably, this revelation may cause you to be confused, but it is a fact that not all laundry circumstances will allow for the greater opportunity. This discovery is best worked out when doing diligence.

• Laundry investors build systems to scale and optimize ROI

• Laundry operators often manage daily activities with limited scalability

• Not all laundromats can be turned into scalable investments—but many can with proper evaluation

Expected ROI: Understanding the Numbers

This is not to say that the laundry will not perform as expected. If your due diligence is well done, the laundry should perform, and you should be able to expect a cash flow or return of 17% – 22% (base +/- add backs) of your cash investment. We are rather discussing its sustainability and what to do with it from here: how to both increase the cash flow proportionately and increase long-term value and expand the investment. As an investor, you want everything to line up with your investment model so that you can take advantage of larger opportunities and expand for the larger investment.

• Coin laundry ROI is important, but scalability is key

• Investors seek ways to expand and retool laundromats

• Sustainability of your laundry investment model affects long-term returns

Operator vs Investor: A Model-Based Difference

The difference between a laundromat operator and an investor is established by design within a model. The varying results of these two models are most apparent in the endgame. One laundry, which I will use as an example, was developed by a client of mine back in the 80s. The laundry was sold at age 11 to someone who did not understand the business, for a high-normal evaluation level. It was a very good laundry. The family that purchased and operated the laundry did everything the same as the original owner, except everything was now older and required more maintenance, which was a growing issue. In the next couple of years, all went along with little change in revenues, but soon after, everything started falling apart.

What Went Wrong for the Operator?

• The equipment was aged but wasn’t upgraded

• Rent increased while utilities spiked

• They feared raising prices due to local competition

• Promotions failed to sustain long-term customer growth

The Turnaround: What an Investor Did Differently

This laundry was bought back by the original owner after about 4 years for a very low price. The laundry investor then rebranded the laundry and replaced the needed equipment. The laundry model was also upgraded, as was the operating model, and the business grew. It grew beyond and soon exceeded the original numbers of when the laundry was sold only 5 or so years earlier. To further the story, this laundry was sold again after operating for another 6–7 years, and boy, with old equipment, it is way past time to be retooled and rebranded.

What the Investor Did Right?

• Rebranded and retooled the laundry

• Updated the investment and operational model

• Outperformed the original revenue within a few years

• Sold again at a much higher value

Why Many New Entrants Struggle in the Laundry Business

There is a lot to understand about any business. Unfortunately, for many who want to buy a coin laundry business, it is just too easy to get by for quite some time with very little understanding of the business. The difference between a laundry operator and a laundry investor lies in one’s decision to create an investment model. Many enter without strategic foresight, making decisions reactively rather than proactively. They manage problems as they come but do not position the business to grow, absorb cost increases, or pivot during competitive shifts.

Tips to Avoid Common Mistakes:

• Conduct thorough financial and operational due diligence. Get help from due diligence advisors at BizBen. 

• Understand competitive pricing and utility impact

• Develop a plan to retool your laundromat before it becomes necessary

• Design your laundry with an investor mindset from Day One

FAQs:

Q1: How profitable is a coin laundry business in the USA?

A coin laundry business typically returns 17% to 22% ROI annually when properly operated or managed under an investment model.

Q2: What is the difference between a laundromat operator and an investor?

An operator handles daily tasks. An investor designs a scalable laundromat business with automation, growth systems, and passive income potential.

Q3: How much does it cost to buy a coin laundry business in California?

Most coin laundromats in California range from $100,000 to $500,000+, depending on size, lease terms, equipment, and location.

Q4: Can a laundromat be a passive investment?

Yes, many laundromat investment opportunities allow for semi-passive income when systems and staffing are properly set up.

Q5: What are common mistakes when buying a laundromat?

Common laundromat investment mistakes include skipping due diligence, delaying retooling, mispricing services, and lacking a clear investment plan.