Is Buying a Laundromat Really Passive Income?

Why the "absentee owner" dream rarely matches reality, and what to consider before you invest.

The Call I Keep Getting

I get a version of this phone call a few times a year. Someone with a stable career, some savings set aside, watches a YouTube video and decides: "I want to buy a laundromat. Something that basically runs itself."

I guess I can imagine why. Buying a laundromat as passive income seems to be one of the most popular ideas in small business right now. Coin-operated machines, no employees, no inventory. Just collect the quarters.

As a certified business broker in the Sacramento area, I've had enough of these conversations to see a pattern. What buyers expect and what they actually get are usually two very different things.

Why the Pitch Sounds So Good

On paper, laundromats seem great. No specialized skills. The service sells itself. No accounts receivable, no supply chain, no perishable inventory.

Browse any business-for-sale site and you'll see the same language on every laundromat listing: "absentee run," "turnkey," "steady cash flow." Some of those descriptions might even be accurate. On the seller's best month.

But the term "absentee" is used loosely. And the numbers behind a lot of these listings deserve a harder look than most buyers give them.

What "Absentee" Actually Looks Like

Somebody Has to Deal With It

No employees doesn't mean no problems. Machines break. Drains clog. Vandalism happens. Someone stuffs something into a washer that doesn't belong there.

I know a business owner who ran three laundromats on the side while operating his main business. Every time a machine went down, he had to drive out and fix it himself. He couldn't find a reliable technician who would show up fast enough, and every hour that machine sat broken was lost revenue.

The commute alone was painful. Two hours to the location, several hours on the repair, two hours back. For a business that was supposed to be a side income, it was taking over his schedule. He eventually sold all three just to get back to his core business.

The "absentee investment" had turned into a second job he didn't want.

Can't You Just Hire Someone?

That's usually the next question. And it's where the math doesn't work.

A lot of laundromats generate enough cash flow to look attractive as a side investment, but not enough to cover a manager's salary and still leave a worthwhile return. Once you add a reliable operator who handles maintenance, customer issues, and daily oversight, the profit can shrink to almost nothing. Sometimes it turns a marginally profitable business into a break-even one.

I see this across many types of small businesses, not just laundromats. The ones that are truly absentee-run are rare. And they're priced like it. If a listing promises passive income at a low asking price, that should raise questions.

When the Numbers Don't Add Up

I worked with a group of buyers evaluating a laundromat that required about $200,000 total. $100,000 to buy and another $100,000 for equipment upgrades and a buildout.

The P&L told a rough story. The business was barely making money. The seller's broker tried to bridge the gap with a calculation based on water usage. The argument: the machines were all coin-operated, so the owner was probably underreporting income. The water bill, they claimed, proved the machines were running far more than the reported revenue suggested.

This is the calculation that the business broker supplied to try to show that the business was worth more than the financials demonstrated.

Consider what that actually means. The entire justification for the asking price was an assumption that the seller wasn't reporting all their revenue.

Even if that were true, there's no reliable way to verify it. Water usage can be inflated by leaky pipes, running faucets, or a dozen other explanations that have nothing to do with paying customers. You don't build a $200,000 investment on guesses about unreported income.

The buyers did their homework, asked the right questions, and walked away. Good call.

The SBA has useful guidance on evaluating a business before you buy. Worth reading before you commit to any acquisition.

The Opportunity Cost Nobody Talks About

Before putting capital into any business, I wish more buyers would ask: what else could this money be doing?

If you're looking at $200,000 into a laundromat with slim returns, real operational headaches, and regular hands-on involvement, compare that against simpler options. A broad market index fund, a commercial real estate investment, or even a high-yield savings account will produce a return without requiring you to fix a broken dryer at 9 PM on a Saturday.

I'm not arguing against owning a business. I'm saying your time and capital have a cost, and that cost belongs in the analysis.

When Business Ownership Actually Works

I don't want this to read like a warning against buying a business. I'm a business owner. I've started and sold a business. I think ownership is one of the best things a person can do.

But the owners I've watched succeed all have one thing in common: they enjoy the work the business actually requires.

They're not chasing passive income. They got into something they care about, something that fits their skills and their interests. They're engaged in the day-to-day, not trying to escape it. They want to build, improve, and put their name on something.

That attitude produces better outcomes than any spreadsheet. When you care about the work, you make better decisions, invest in the right upgrades, and build real customer relationships.

If you're weighing the choice between buying an existing business and a franchise, this comparison can help you sort through what fits.

Five Questions to Ask Before You Buy

Before you put money into a laundromat or any other small business, be honest with yourself:

1. Am I excited about this business, or just the idea of not working? If your main reason for buying is to avoid being involved, you're going to be disappointed. Every business requires decisions, even the ones marketed as hands-off.

2. Can I verify the financials? If the revenue numbers depend on assumptions instead of documented records, be very careful. You need clean books. Period. If you're not sure how to evaluate a business's financials on your own, SCORE offers free mentoring from experienced business professionals.

3. What's my true all-in cost? The purchase price is just the start. Equipment, buildout, working capital, your own time. Add it all up and compare that total against other ways to invest the same money.

4. Who handles problems? If the answer is "me," make sure you're ready for that. If the answer is "a manager," make sure the cash flow can actually support one.

5. Would I still want this business if it required real work? If the answer is no, that tells you everything you need to know.

   
   

The Bottom Line

Buying a business can be great. But you have to go in with your eyes open and a genuine interest in the work. The laundromat-as-passive-income idea is appealing. It just rarely holds up once you look closely.

If you're thinking about buying a business in the Sacramento area and want to talk through whether a deal makes sense, request a consultation and we'll figure out the right next step.