ARE LAUNDROMATS PASSIVE INCOME?
Are Laundromats Passive Income?
The reason I got into the laundromat business, and probably one of the main reasons you’re interested in it, is that it is a simple business that doesn’t require you to be present to operate. This is a huge draw of laundromat ownership. But are laundromats passive income, really?
The answer to that question, per usual, is a resounding, “It depends.” There are two basic approaches to laundromat ownership, both of which are utilized by laundromat owners to successfully build wealth. Neither is right or wrong. The option you choose will depend on what you’re looking for out of you laundromat owner experience.
Two Mindsets on Laundromat Ownership
There are two basic mindsets on laundromat ownership, and within each mindset there is a spectrum. The first mindset is that of an owner-operator. Laundromat owners with an owner-operator mindset include the owners who work full time in their laundromat. It is their job. They are there daily taking care of the business, engaging with customers, and earning their money. An owner-operator is essentially self-employed. Awesome!
This is a great way to run a laundromat if you’re interested in, for example, getting out of your current job, love chatting with people, have an insatiable desire to clean (bleh!), or just want something to do all day that is slow paced. There are a lot of benefits to running a laundromat this way.
However, the reason I got into the business is because I wanted to be making money whether I was present at my laundromat or not. This leads us to the second mindset. It is the mindset of the business owner/investor.
Operating your laundromat as a business owner/investor means you will structure and treat your business a little differently. This way of running your laundromat will force you to create systems that allow you give control of at least some responsibilities over to someone else. This will cost money. However, the money invested in allowing someone else to handle some of the responsibilities of the business yields a high return of time back to you!
This is a great way to run a laundromat if your goal is to build wealth quickly, to leverage other people’s time to free you up to accomplish high value tasks, to scale up your investments in laundromats, real estate, other businesses, etc. It will free up your time to use how you want to use it.
If you’re someone who is looking for financial freedom, the latter mindset is the way that you want to approach your laundromat purchases. This will require you to build in the costs associated with freeing you from the day-to-day tasks of keeping the business running smoothly.
Even if you approach your laundromat with a business owner/investor mindset, there will be tasks that you are required to do to ensure your business is performing well. This means that laundromats are not an entirely passive income. However, owning laundromats does produce an income stream that is independent of the amount of time that you spend on the business when structured as an investment.
An option to put your laundromat almost entirely on cruise control and to make it nearly passive is to hire a laundromat management company. Similar to a property management company, a laundromat management company will do a wide range of tasks for you if you hire them to do that. These tasks might include collecting coins, scheduling repairs, managing staff, accounting, advertising, and much more.
This route will cost you (usually around 8-10% of your gross monthly income) a little bit, but if you hire a quality laundromat management company they will save you a significant amount of time and turn your laundromat into a nearly passive income stream for you!
If you’re located in Southern California, Laundromat Resource may be able to fulfill this laundromat management role for you to make your investment nearly passive. If you are interested in finding out more about this service, let us know and we will discuss your needs and our services to see if they fit!
Despite not being a completely passive income stream, laundromats can be time independent. Coupled with their high income potential, their time independence makes laundromats a very compelling investment!
If you would like to get the first look at laundromats we or our network are listing, sign up to be placed on the Laundromat Resource Buyer’s Email List (BEL). You will be sent pro formas of laundromats for sale in your area (or the area you’re looking to invest in).
Here’s to you finding financial freedom through laundromat ownership!