Does opening a laundromat make sense for me?

[Jordan Berry]

My father is looking to open a laundromat business in place of a breakfast shop that he currently operates. He owns the building outright but the property needs to be retrofitted to accommodate the newly purchased equipment. All said and done, this will be a $450K investment with the majority of the expenditures being the new Huesbch washers/dryers. The laundry equipment company offers their own financing and has made us an offer to repay $320K in equipment over 9 years. The first 90 days will be free, then the next 16 months will be interest only. After that, the principal payments of $5,000 a month will start to kick in. This will be a small location of 1,400 sq. feet with 20 washers and 24 dryers. There will be no wash and fold business as we do not want to have employees.

With all of the other added expenses, mainly utilities, I don’t believe this business can turn a profit. We would have to earn $20,000/month just to break even over the next 9 years and that includes revenue to recoup the retrofitting expenses. Even if we do make a small profit over the life of the loan, it won’t be much. It appears that we will be managing this business just to pay bills and pay off the machines.

Can anyone please offer me some insight? Thank you.

[Author]

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