10 Reasons to Invest in a Laundromat as Your Next Side Hustle

      Side Hustle Nation is focused on enhancing your financial profitability. To achieve this, we frequently collaborate with companies that share this objective. If you sign up or make a purchase through one of our partners' links, we may receive compensation at no extra cost to you. Learn more. Are laundromats truly “the ultimate side hustle,” as my guest Jordan Berry has claimed?

      These straightforward, local, cash-generating businesses have existed for ages, but it's surprising that this is the first time we are discussing them in depth on the show. Jordan, who transitioned from being a pastor to a laundromat entrepreneur, has become an advocate for the industry through his website and podcast at LaundromatResource.com.

      His interest in buying a laundromat was sparked when his wife mentioned a family friend who left his tech job after purchasing one. Jordan was drawn not only by the income potential but also by the desire for a business that would yield passive income and better returns than real estate. Through his laundromat purchases, he has successfully achieved both.

      Tune in to discover:

      - why laundromats are an excellent side hustle and investment option

      - some costly mistakes to avoid

      - where to find financing and some innovative marketing and monetization strategies

      Here are the 10 most compelling reasons why, according to Jordan, owning a laundromat is the “best investment you can make.”

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      1. High ROI

      Jordan highlighted that laundromats provide a high return on investment (ROI), comparing their potential to real estate investments. In real estate, you might expect an ROI or cash-on-cash return of roughly 6-12% after taking out a loan. Laundromats, conversely, are valued differently, typically based on a multiple of their net income, usually between 3.5 and 4.5. This means that if you purchase one outright with cash, you could see an immediate return of 20-30%. Laundromats generate cash flow, allowing you to take over immediately and start collecting revenue.

      2. Inefficient Market

      “Most laundromats are operated by small business owners,” Jordan stated. This implies that the majority of laundromat owners have only a few locations and that few large chains dominate the market. He pointed out that this results in a “very inefficient” market with varied operational practices among owners, often revealing excellent opportunities.

      3. Equity Build-Up

      Laundromats are valued at approximately 3.5 to 4.5 times their net operating income, which is calculated by subtracting operating expenses from income. For instance, if a laundromat brings in $1,000 monthly, that equates to $12,000 annually, translating to about $50,000 in equity. Additionally, every extra dollar earned in net income can increase equity by $3.50-$4.50.

      4. Tax Advantages

      Jordan is quick to clarify that he is not a licensed CPA or lawyer, and individual situations may vary. However, based on his experience, he considers laundromats to be a “tax advantageous business.” There are a few tax-saving opportunities related to operating a laundromat: Business tax differs from employee tax, with employees having tax deducted from their salaries beforehand. Operating a business, like a laundromat, allows you to deduct expenses before taxes are calculated. Furthermore, you can capitalize on asset depreciation each year, effectively writing off that depreciated amount from taxes.

      5. Cash Business

      Laundromats operate primarily as cash businesses, a concept Jordan describes as “simple businesses.” Anyone who has had to pursue clients for payment knows how challenging that can be. In laundromats, customers pay upfront with quarters before using the machines.

      6. Self-Service Business

      Laundromats function as self-service operations, allowing customers to pay for their own work! When managed properly, the machines and facility can become a source of income without requiring constant oversight. While some laundromats may offer services like folding, the primary service involves providing machines for customers to wash and dry their clothes independently. Jordan's decision to purchase his first laundromat was driven by his desire for a business that wouldn’t require his constant presence, enabling him to spend more time with family.

      7. Financing Availability

      For those seeking to finance a laundromat, Jordan noted several options for raising funds:

      - Engaging with Machine Distributors: Many equipment suppliers are willing to offer financing since it benefits them for you to purchase both a laundromat and their machines, sometimes providing up to 100% financing.

      - Seller Financing: Numerous