So, you’re thinking about starting a business and opening a laundromat. It’s easy to understand why: Laundromats are a stable, recession-resistant business that can generate passive income with a strong return on investment. But how much does it cost to open a laundromat?

Opening a laundromat typically requires an initial investment of $200,000 to $500,000, plus ongoing expenses. The exact cost depends on factors like whether you’re buying an existing business or building one from the ground up, as well as local property prices. In this guide, we’ll break down the key financial considerations, including projected expenses, insurance, loan options, budgeting tips, and more, to help you plan your new business effectively.

Breakdown of the Costs to Open a Laundromat

Opening a laundromat involves significant upfront costs for location, equipment, and utilities, with prime real estate, commercial machines, and monthly utility bills being some of the biggest expenses. Here’s how much you can expect to spend on each of the essential elements for opening a laundromat:

Location

The first major expense in opening a laundromat is securing a suitable location. The cost of leasing or purchasing this space varies significantly based on your city and neighborhood. In urban areas, particularly those with high foot traffic, costs can range from $200,000 to $500,000 and can exceed $1 million in prime locations.

If you opt to buy an existing laundromat, you may face a higher upfront cost, but this can offset expenses related to renovations and equipment purchases, allowing you to start operations more quickly.

Equipment and Supplies

Investing in commercial washers and dryers is one of the most significant costs associated with opening a laundromat. Prices for these machines typically range from $800 to $2,600 per unit. Most laundromats operate with 40 to 100 machines, leading to potential equipment costs of $32,000 to $260,000 for new units.

Maintenance and repair expenses are also essential to consider. Service calls for repairs generally cost between $120 and $500. To enhance customer convenience, many laundromats implement card reader systems that allow payments via laundry cards instead of cash. These systems generally cost between $40,000 and $80,000.

Other supplies and features to consider include:

  • Laundry carts for customer use
  • Cleaning equipment
  • Garbage bins for waste disposal
  • Clocks to help customers manage their time
  • Signage to promote services
  • Security cameras for safety and theft prevention
  • Soap dispensers and other laundry supplies
  • WiFi and possibly TVs for customer entertainment

The total cost for these additional supplies can range from $1,000 to $2,000.

Utilities

Utilities are a significant ongoing expense for laundromats. Since the business relies heavily on water, gas, and electricity, you can expect to pay between $4,000 and $8,500 monthly, depending on the size of your operation and local utility rates. 

Understanding these costs upfront is essential, and having a solid budgeting system can make managing these large recurring expenses much easier. With a North One business checking account, you can use their Envelopes feature to automatically set aside funds each month for major expenses, ensuring you’re always prepared. This automated system streamlines budgeting so you can focus on growing your business without financial surprises.

Insurance

Machines break, customers trip; you’ll want to make sure you have insurance to protect you in the event of unexpected costs. A general liability policy, which covers property damage and bodily injury, typically costs between $350 and $750 annually for $1 million in coverage. It’s wise to consult with an insurance agent to determine the best coverage for your specific needs.

Luxury Features

Many laundromats now include luxury features to enhance the customer experience. Adding amenities like comfortable seating, TVs, vending machines, or even play areas for children can make your laundromat more inviting and improve customer retention. These upgrades vary widely in cost but can add significant appeal to your business.

Other popular extras include:

  • Mobile app integration for remote payment and machine monitoring
  • Music or entertainment options like games or magazines
  • Refreshment stations with coffee or snacks

While these are optional, luxury features can set your laundromat apart from the competition and encourage customers to choose your business over others.

Legal and Licensing Fees

Opening a laundromat requires the necessary permits, licenses, and inspections. Fees vary by state and municipality, so check local regulations for specific requirements. Common expenses include a business license, health permits, and inspections to ensure compliance with water, electrical, and building codes. Initial licensing and legal fees can range from a few hundred to several thousand dollars, depending on the area.

Marketing

Marketing is crucial to attract and retain customers. Start by creating a strong online presence with a website, social media profiles, and listings on platforms like Google Maps. Consider investing in local advertising, flyers, or partnerships with nearby apartment complexes.

A modest initial budget should cover these affordable marketing ideas:

  • Signage and branding for curb appeal
  • Online advertising through Google or social media
  • Promotions or discounts for new customers
  • Loyalty programs or referral incentives

The Small Business Administration suggests that businesses with annual revenue under $5 million and a net profit margin of 10% to 12% should allocate 7% to 8% of their gross revenue to marketing and advertising.

Laundromat Costs Infographic

ROI of Opening a Laundromat

Now that you have a clearer idea of how much you’ll spend opening a laundromat, you’re probably wondering how much you’ll make on your investment.

Laundromats offer a strong return on investment, typically between 20% and 35%, and boast a high success rate of 94.8%. Depending on location, size, and services offered, annual gross income for laundromats can range widely from $30,000 to as much as $1 million, making them a resilient and profitable choice for new business owners.

How to Structure Your Laundromat Business for Maximum Profit

Choosing the right business structure affects your initial setup costs, tax burden, liability, and access to funding. While sole proprietorships and partnerships have the lowest startup costs, LLCs and corporations provide liability protection, making them safer but more costly options. 

Here’s an overview of all of your options for structuring your laundromat business and how they impact your overall cost:

Sole Proprietorship

A sole proprietorship is the simplest and least expensive structure to set up, often requiring only a business license and local permits. In this model, business income is reported on the owner’s personal tax return, which can simplify tax filings. However, sole proprietors are personally liable for any debts or legal claims against the business, making it essential to invest in comprehensive insurance coverage to mitigate risk.

Partnership

A partnership involves two or more individuals sharing ownership of the laundromat, with profits and liabilities divided among the partners. While this structure can be easy to establish and may require minimal setup costs, it necessitates a formal partnership agreement to outline each partner’s responsibilities and protect their interests. Importantly, partners share personal liability for business debts, which can increase their exposure to risk and might lead to higher insurance costs.

Limited Liability Company (LLC)

An LLC offers a more robust structure for laundromat owners, combining the benefits of pass-through taxation with limited liability protection. While establishing an LLC involves higher initial costs, including state filing fees and potential ongoing fees for annual reports, this structure protects personal assets by separating them from the business’s liabilities. Owners can also choose to be taxed as a pass-through entity or as a corporation, providing flexibility to minimize their overall tax burden.

Corporation (C-Corp or S-Corp)

Forming a corporation, whether a C-Corp or S-Corp, is the most complex and expensive option. This structure requires extensive paperwork, including registration and compliance with regulatory requirements, along with ongoing record-keeping. C-Corps face double taxation on profits—once at the corporate level and again on dividends distributed to shareholders—while S-Corps allow profits to pass through to owners without facing double taxation, though they come with specific restrictions. Corporations provide strong liability protection, safeguarding personal assets, and can enhance credibility with lenders, making it easier to secure funding.

Franchise Option

Buying a laundromat franchise can offer a proven business model along with brand recognition, but it typically comes with upfront franchise fees in addition to the standard startup costs. Franchise fees can range from $20,000 to $50,000 or more, depending on the brand. Operating as a franchisee may also involve complying with the franchisor’s operational guidelines, but many franchisors provide substantial support for legal, insurance, and setup processes, which can reduce risks and streamline the startup experience. Additionally, franchises often have better access to funding options, as lenders view them as more stable investments.

How to Get Funding for Your Business

You’ve got your concept, your business plan, and your location; now it’s time to get your start-up money. There are several options available to you:

  • Traditional Business Loan: A traditional business loan from a bank will lend you money in exchange for collateral (such as property/equipment), which the bank will confiscate in the event of bankruptcy. Usually, business loans have a fixed amount and are used for short-term funding – such as start-up costs.
  • Business Line of Credit: A business line of credit (LOC) offers you access to a fixed pool of money you can use anytime you need. It’s a little like a credit card. You can borrow from your line of credit to cover short-term business expenses (e.g., inventory, maintenance, supplies) and pay it back with interest on just the amount you’ve borrowed.
  • Small Business Loan: The Small Business Administration (SBA) can guarantee a large percentage of your bank loan, which will make banks more likely to lend to you. Note that the SBA has requirements on top of regular bank loan requirements, and the application process can take some time.
  • Investors: Many entrepreneurs seek out investors to help finance their small businesses. Often, in exchange for their funding, investors will own a portion of your company. You can find investors in your personal circles of friends and family.

How to Structure Your Finances

You’re running a business, so you’ll need a business bank account. Not only is it important to keep your personal and professional finances separate, but it also demonstrates your business’s credibility to investors and customers alike.

Having a business bank account will also help you manage your finances. With North One, for example, you can use the Envelopes feature to set aside funds for tax season, payroll, maintenance, and other expenses.

Set Up Your Accounting

With your business bank account up and running, it’s time to set up an accounting method to track your bills, expenses, and revenues. Your North One Account can integrate with accounting software like Quickbooks, Freshbooks, and Wave to keep all your numbers in one place.

Frequently Asked Questions (FAQs)

How much does a laundromat make a year?

The average gross income of a laundromat in the USA varies greatly, from $30,000 to over $1 million a year, according to the Coin Laundry Association. Once expenses are factored in, at the higher end, the net profits could be as high as $350,000 a year. 

Is owning a laundromat worth it?

The laundromat industry is highly stable, does not fluctuate with seasons or recessions, and enjoys quick payment turnarounds. If you keep the laundromat clean, the machines in good order, and offer good customer service, chances are you’ll see between 20-35% ROI (return on investment).

Can you get rich owning a laundromat?

Though the initial setup costs can be significant, a well-run laundromat can generate up to $350,000 annually, with much of that income being passive. This steady revenue stream, combined with low labor costs and high ROI, makes laundromats a strong choice for building long-term wealth.

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