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Experiencing the "Wealth Tripod" Through Laundromat Investing

buying a laundromat investing in a laundromat laundromat investing laundromats Jan 22, 2025

Investing in laundromats offers a unique and lucrative opportunity for those seeking to build wealth through passive income. During our recent podcast episode with Jordan Berry, we discussed the pros, cons, and lessons learned from diving into this niche business. Here are some of the key highlights to consider if you're thinking about laundromats as a way to build your financial freedom.

For the full episode with Jordan Berry on laundromat investing, check it out here:

https://www.relfreedom.com/blog/jordan-berry-laundromat-investing

1. Exceptional Cash Flow Potential

One of the standout benefits of owning a laundromat is the impressive cash flow, when fully operational. Unlike real estate investments, where cash flow can be moderate, laundromats often deliver unleveraged returns of 20–25% annually. Adding a loan to the mix, with a smaller initial investment of cash, can amplify these returns further. When done right, laundromats disassociate time from money, making them a powerful vehicle for financial freedom.

2. The Wealth Tripod

Laundromats align well with what Jordan Berry calls the "Wealth Tripod," which consists of:

Cash Flow: The core strength of laundromats.
Equity: Grows steadily, especially if paired with real estate.
Tax Advantages: Owners can enjoy significant tax deductions.

Combining laundromats with real estate investment enhances wealth-building opportunities, creating a synergistic relationship between cash flow and long-term equity growth.

3. Challenges and Lessons Learned

While laundromats have high success rates, Jordan started out struggling quite a bit in the beginning. There are pitfalls for first-time owners. Here are some common challenges that you can face:

Inaccurate Pro Formas: Many brokers provide overly optimistic projections. Always conduct due diligence, such as verifying machine utilization rates (e.g., "turns per day").
Operational Knowledge Gap: Managing machines, handling customer concerns, and marketing require hands-on learning.
Underestimating Costs: Maintenance, marketing, and renovations can be higher than expected.

Seek advice from experienced mentors or consultants to avoid costly mistakes.

4. Fix-and-Flip vs. Turnkey Opportunities

Laundromats come in various conditions, from "zombie mats" (fixer-uppers) to fully operational and profitable businesses. Your approach depends on your goals:

Fix-and-Flip: Renovate underperforming laundromats for significant growth potential.
Turnkey Investments: Purchase thriving laundromats for immediate cash flow with minimal effort.

Both strategies can work, but require different levels of time, money, and expertise.

5. Scaling Through Services

Laundromat owners can scale their businesses by adding services like:

Drop-Off Laundry: Attracts higher-income customers.
Pickup and Delivery: Expands reach to residential and commercial clients.
Commercial Partnerships: Serve small hotels, salons, and short-term rental owners.

These services diversify income streams and extend your market reach beyond traditional self-serve laundry customers.

6. Location and Demographics Matter

Success in the laundromat business often hinges on location. Key factors include:

Proximity to Renters: Areas with a higher percentage of renters and below-median income levels are ideal.
Competitor Analysis: Assess nearby laundromats' performance and amenities.
Foot Traffic: Urban and suburban areas offer more opportunities to attract regular customers.

In addition to location, creative marketing and consistent customer service can help boost foot traffic and revenue.

For investors seeking high cash flow and scalability, laundromats present a compelling opportunity. They can pair nicely with owning and operating real estate investments as well. Jordan created the Laundromat Resource as a way to help provide tools and education for those looking to invest in laundromats.

You can check out the Laundromat Resource here: https://www.laundromatresource.com/