I bought a laundromat off Craigslist that makes up to $32,000 a month in side revenue. Here's how I set up this mostly passive 2nd income stream. (2024)

It brings me about $100,000 a year, but it's mostly hands-off, so I had a lot of time on my hands. I'd racked up a ton of savings after my stocks hit a record high, and I really liked the passive quality of owning a laundromat — it was a perfect opportunity.

Now, I own the Bubbles and Bleach laundromat in Visalia, California, and it brings in about $24,000 in revenue every month on average. Here's how I found and set up my own laundromat.

There are a few red flags anyone who's looking to purchase a laundromat should look out for

When I started my search, I found one listed on Craigslist for $125,000. But the owner couldn't prove anything. He wouldn't show me bank statements, tax returns, or any substantial numbers. So I walked away. About eight months later, in March 2021, he reached out to me saying that he would sell it to me for $65,000. Because of the low price, I took a huge risk by buying the laundromat without seeing the numbers first, which I would never recommend to anyone, even though it ended up working out for me.

"A good price" for a laundromat entirely depends on its cash flow — or the yearly gross revenue, minus all expenses.

Anywhere from 3 to 3.5 times the yearly profit is a reasonable offer. (The biggest factor that determines that number is the machines. If they're old and run down, offer the lower end of that spectrum, but if they're new, offer on the higher end.)

Any prospective buyer needs to ask for documentation that proves the owner's numbers, their profit and loss, and how many hours they work. You want to buy a business, not a job.

Next, you want to take a good look at the washers. Make sure there aren't any leaks, especially if it has a drain valve. You should also check the water heater to make sure that there are no leaks in any of the lines going to or from it and that it's working properly. And if you're not buying the actual building, you need to make sure that you're not taking over a lease that ends in two or three years. (Then, the landlord can squeeze you for more money after the lease is over.) The minimum should be five years, but ideally you'd still have 10 years left.

A lot of laundromats are mom and pop, so they might have a good number of friends and family working there. When you buy the business, are the employees going to stay on, or will you need to find new ones? Only two employees stayed on after I took over the laundromat, so I had to hire a new staff. These are all huge factors to look into.

Craigslist is the last place that you should look for a laundromat — it's full of scammers.

I recommend looking at BizBen.com and LoopNet and filtering for laundromats in your area. They're reliable websites where people can sell any type of business.

The best way to find a laundromat to buy, in my opinion, is to physically visit laundromats in your area that look run down and then offer to purchase them. That way, you don't have to deal with brokers but the owners themselves. If the owners aren't making much money, they've most likely been wanting to sell but haven't gotten around to listing it.

If you can offer them a good deal and convince them to sell it to you, you're set.

Factor in that you might have to make substantial renovations

My laundromat needed a huge face-lift. In the three or four months after purchasing my laundromat, I spent about $30,000 on renovating the space. It was scary, but I had the savings for it and knew that this business had great potential — it was in a prime location, right in the middle of town and just needed major fixing up.

I had to put in new flooring, fix the machines, paint the walls, install TVs and new fans, switch the fluorescent lighting for LED, and add vending machines. I also had to set up new software (we used one called Curbside Laundry) for the wash-and-fold service and revamp the website.

My goal was to turn it into a laundromat that I would visit. From what I've noticed, people will travel further and pay more to go to a better laundromat. Cleanliness, safety, and modernization are the key factors in making that happen.

We also never closed while the renovations were going on and didn't lose any customers. I lowered the price to compensate for the inconvenience, and people were excited that the space was getting a revamp.

After renovations, running my laundromat was like turning a boat — it was slow, but little by little, we started getting somewhere. After the renovations were done, we took professional photos of the new space, replaced the old photos that were online, and paid for advertising on Google, Facebook, and Instagram. I also asked my regulars to leave reviews on Google, and I think this had the biggest influence.

More customers trickled in, people left us positive reviews on Google, and around the six-month mark, we'd tripled our revenue.

There are two sides to my laundromat: self-service machines and a wash-and-fold service. On average, each side brings in about $12,000 a month in gross revenue, which comes out to about $24,000. In May, we had our best month yet, with $32,000 in gross revenue.

Employee costs will vary depending on the type of laundromat

If your laundromat offers self-service machines only, it will be largely self-run. There needs to be someone there only once a day for about three hours to clean and check up on the place. I highly recommend learning how to fix the machines yourself so you don't have to pay thousands of dollars on a technician. I learned by searching how to fix my model on YouTube.

But if you're going to run a full laundry service like me, just know that it will not be passive until you can afford to hire employees to be there at all times, including a manager. Until then, you'll have to fix the machines, collect the quarters, order supplies, etc., while you scale the business. When I bought the place, I was able to put in about 50 to 60 hours a week since my other job is mostly remote. Now, I average four to 15 hours a week, depending on whether I need to help out with anything or fix the machines.

I pay about $6,000 a month, and this includes rent, utilities, cable and internet, money to buy extra parts to fix the machines, employee compensation, supplies (detergent, softener, bleach, dryer sheets), gas costs for delivery, software to track orders (this ranges from about $300 to $400 a month), credit-card fees (which come out to about $500 a month), and merchant fees (I use Authorize.net, which costs $40 a month).

Choose the location of your laundromat wisely

One of my biggest pieces of advice is don't buy a laundromat more than an hour away from where you live. If it's any farther, it'll be too much of a headache to go and check up on it when you need to, especially in the beginning, when you'll have to visit more frequently.

You should also check how many laundromats are within a 2-mile radius of yours. If there are too many nearby, it'll be harder to attract customers. It should also have sufficient visibility — mine is on a main street in my town, so people know we're there if they need us.

We're open and fully attended 24/7, but you should always install surveillance, no matter what. Trust me: Invest in a good system, and it'll pay you back in dividends. You'll be able to check in on the business whenever you need to, and if anything happens, like a flood or other emergency, you can send someone out there right away. You should also clearly list a phone number inside the laundromat so that people can call and let you know if there's an issue with the machines.

A lot of people think that if they buy a laundromat, it will immediately be a cash cow — most of the time, that's not true

To purchase it alone, you'll have to put 20 to 30% down and should ideally have another $10,000 in reserves, just in case anything happens. If you don't have at least that much money to invest and still have enough to live off until it's profitable, it's not a smart move. And like I've explained, it's not just collecting quarters. Especially if it has a wash-and-fold component, it's only partly passive income.

After the first few months, when you get the hang of it, you'll be able to lay off a bit and enjoy the rewards. For me, it was a risk that turned out to be worth it.

If you've successfully created a secondary or passive income stream and want to share your story, email Dorothy Cucci at [email protected].