Are Laundromats Good Investments?
Often in conversations with intrigued investors I’m asked, “Are laundromats good investments?” I own multiple laundromats and can speak with experience to that question. My answer to the question might seem to be semantics. This is one instance where I think semantics are very important and will save you money and heartache.
Are laundromats good investments?
Buying a laundromat is NOT a good investment. At least, it is not a good investment in the way people are hoping they are. Let me explain.
Often when we think of investments we think of socking some of our money away in the stock market to earn some interest for us. We want our money to do a little work on our behalf. You may think of buying a rental property. Or, you may think about buying other hard assets, like gold, silver, or precious metals. Perhaps you put your money in an account with a bank that builds interest (which has been a sad, sad joke lately). Or, we do one of a dozen other things with our money. We hope to at least preserve its value against inflation and, ideally, create some arbitrage that increases our wealth.
Each of these investment vehicles has one thing in common. They are all relatively passive to one degree or another. Even landlording can be relatively passive, especially if you employ a property management company to manage your property for you.
The worst thing you could do
The worst thing you could do is enter into laundromat ownership with immediate passive income as the goal. Unless you’re hiring a laundromat management company, laundromats, despite my naive assumptions when I decided to take the plunge into the industry, are a business. And businesses are not passive, especially if you want them to thrive. Granted, on the scale from passive to consuming your life, laundromats have the ability to be toward the passive side. But don’t be fooled. They are still a business and they do still require time, some work, and even your presence, and each of those in greater quantity than you probably expect. Especially toward the beginning. It proved to be much more than I initially expected, for sure.
The right frame of mind
A better approach to entering the industry is to view it as a business venture. You may view it as a side business. It is not realistic to expect to plop down money on a laundromat, show up once a week to collect money, and receive a consistently high yield on your investment unless you’re outsourcing the management.
As a business, the laundromat industry is competitive, demanding, and requires all of the basic business fundamentals that any other business requires. You will still need to hire and train employees. You will have to do accounting, maintain your equipment, stock supplies and inventory, market your business, and more. From my experience and observations, the owners who enter the business with a set it and forget it mentality usually watch their business slowly decline in condition and profitability. They end up wanting to sell it to get rid of their headache when it is worthless and dilapidated.
So, in order to make your laundromat work as a sustainable business, it will require some elbow grease and some business know-how. That’s the bad news if you were looking for an easy way to consistent cash flow with good returns.
The good news is that Laundromat Resource is committed to showing you ways to run your business close to the passive end of the spectrum by developing systems, using best business practices, and learning from each others’ mistakes. We also provide management services to make your investment nearly passive.
Now that I have crushed your easy cash flow bubble and hopefully convinced you that laundromat ownership is a business that can provide good cash flow, let me bring some of you back around.
So, can laundromats be good investments?
Laundromats can definitely be a great investment! In fact, laundromats might possibly be the best investment that you can make.
You heard that right. And no, I didn’t lie to you before. It is a business. And if you plan on purchasing a laundromat you better have a business mindset getting into it. But as I said in the beginning, we’re playing a bit of a semantic game here. Of course laundromats are investments. They are investments that can yield great returns on your money through cash flow, equity gain, taxes, leveraged time and more.
I want you to be able to avoid the mistake many make that confuse the simplicity of laundromats with it being passive. It is a simple business, but it is not entirely passive. At least, it isn’t passive if you want to be the sole owner.
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If you’re looking for ways to diversify your current investments and perhaps want returns more consistent than your volatile stock market portfolio or more passive than your rental properties, laundromats can absolutely be the vehicle for you. If you haven’t read it yet, check out 15 irresistible reasons to buy a laundromat (and not another business). There are some compelling strengths of this industry that aren’t shared by many others. We also have a compelling YouTube video about why laundromats just might be the Best Investment Out There.
If you’re looking to laundromats to provide you with a consistent, high cash on cash returns, my recommendation is to look into partnering with current, veteran laundromat owners who know how to run the business and create that cash flow. If you buy right, each investor will receive plenty of cash flow to provide great returns on your investment, potential for forced equity, tax advantages, and more.
Here at LaundromatResource.com, we are working to be a community of laundromat owners and soon-to-be owners who find financial and personal freedom in laundromats. Join us to both benefit and contribute to the community so that we can all thrive!
You can do it, and we’re here to help!
Here at Laundromat Resource we’re not only going to answer all of your questions about the laundromat industry, we intend to help educated, veteran owners partner with investors looking to diversify their holdings with a consistent stream of income at a relatively high yield, leaving great profits for both the investors and the veteran laundromat owners.
Also, we’re not the only game in town and the more education you get the more successful you will be, whether you’re a store owner or a money partner. Don’t get into the business blind. Check out the Laundromat Resource Forum and their forum for some great information. And check out Ken Barrett at LaundromatHowTo.com. He has a blog with useful and insightful information, as well.
Are laundromats good investments? The answer is a resounding no. And yes. They are great investment vehicles that can accelerate your path to freedom. But, they are businesses and must be run as a business. Enter into the coin laundry industry with that mindset and you’ll be well ahead of much of the competition.