Building a Laundromat vs. Buying: Pros and Cons

If you’re looking to invest in a laundromat, you'll need to decide whether you'll build a new facility or take over an existing business. Each has perks and downsides, adding to an already lengthy list of thing for investors to consider. That's where the experts at Martin-Ray Laundry can help. Generally, we recommend buying a laundromat for immediate cash flow and less startup efforts, and building new to gain full brand control and a custom setup.

While you don’t need decades of industry experience to buy or build a laundromat, you will need help from an expert team like Martin-Ray Laundry. We understand what it takes to make an acquisition or new construction work in today’s market. Read our thoughts on the major pros and cons of buying and building laundromats to find out which option is right for your venture.

Buying an Existing Laundromat

Purchasing an established laundromat can make certain aspects of startup easier, but you’ll need to consider the risks of inheriting operational challenges and legacy issues. You may need to invest in fixing machines, adding amenities, or other elements before reintroducing the brand to the community. Before you let potential risks change your mind, consider these pros and cons of buying an existing laundromat.

Pro: An existing laundromat is already generating cash flow.

Assuming you’ve done your research, you already know how to confirm you’re investing in a laundromat that’s already profitable. That means you won’t need to wait to generate cash flow, and you’ll also know what to expect in terms of finances. This reduces the risk and allows you freedom to grow and improve the laundromat, instead of starting from the ground up.

Pro: It's easier to get financing for a proven business.

You can finance a new build or a purchased laundry business, but you may find approval is easier to obtain for an existing brand thanks to its collateral, cash flow, and proven success. Having a trained staff and operational systems in place also provides stability that lenders and banks need to build confidence in your venture. Established creditworthiness also helps you secure loans for future expenses. If the washers and dryers show signs that it’s time to upgrade or amenities are lacking, you’re in a good position to finance profit-building updates.

Con: The established business may not be exactly what you want.

It’s unlikely that the existing laundromat will look and operate exactly how you want it to from day one. You may be looking at a “fixer-upper” facility with renovation needs or outdated equipment. You might also inherit some employees and customers who are disgruntled by the change in ownership and management style that you’ll have to work to win over. On the plus side, the advantages of replacing old equipment can give you an edge to retain existing customers and attract new ones.

Con: High inclusive purchase prices for laundromats.

While you won’t have to deal with as many unknowns when buying a laundromat, you’ll still likely face a high purchase price for an established business. That’s because in addition to the physical building and equipment, you’re also acquiring brand equity, customer loyalty, marketing design, and operational systems. You’ll need to weigh the value of the existing brand and reputation to determine whether the laundromat ownership is worth a higher purchase price.

 

 

Building a New Laundromat

It can take six months to a year or more to build a laundromat from scratch, making this choice a significant investment. A new building offers you full control over the concept and execution, which comes with pros and cons.

Pro: You can install the most up-to-date equipment.

Modern commercial washers and dryers are necessary elements of a profitable coin laundry. Building a laundromat means you’ll have opportunities to outfit it with equipment that not only looks great but is efficient too. New machines offer optimal performance, manufacturer warranties, limited unexpected downtime, and other benefits worth the cost. You’ll find flexible equipment financing on the industry’s best machines, allowing you to bring less cash upfront and invest in launching and promoting your business.

Pro: A new-build laundromat is all yours.

For many, the best part of starting a laundromat from scratch is the thrill and pride that comes with turning a dream into a reality. Choosing everything, from the location to the equipment, allows new owners to consider every aspect from the get-go. Unlike buying a laundromat and worrying about employees, customers, and processes tied to the old owner, you can start fresh with a new build and make profitability a priority.

Con: Starting a laundromat is hard work.

Unlike an existing business, your brand-new laundromat will have no customer base, marketing, employees, or cash flow to speak of. It’s up to you to put in the work to grow your customer base, without relying on an existing reputation or track record. You’ll also need to develop operational systems from scratch, adding to your workload and perhaps exceeding your expertise.

Con: New construction comes with logistical challenges.

While it’s a perk to be able to select a location for a new laundromat, it isn’t just about finding a convenient, high-visibility site. You’ll also have to take care of all the licensing, permits, and other legal requirements that come with starting a laundromat. Many logistics must be completed before you can break ground, and if you don’t have a partner to help you execute all of these steps, your opening could be delayed and add to your startup costs.

Buy vs. Build a Laundromat: A Decision Checklist

Ask yourself these questions to help you narrow your laundromat ownership plan. Our experts are also here to help you weigh the pitfalls against the potential to make an informed, confident decision. There’s no right answer for how to invest in a laundromat—building and buying can both be profitable. Ask yourself these questions to help clarify your goals and needs:

Laundromat ownership has pros and cons, whether you build it new or buy an established business. Ultimately, it’s up to you. Contact Martin-Ray Laundry Systems for help every step of the way, from planning to installing your coin-operated equipment, and get your investment off to a good start.