How Much Is Used Laundromat Equipment Worth?

Here is a little information for all the folks looking to enter the Laundromat business. A frequently mistaken idea is that the cost of a Laundromat is primarily based on the value of the existing equipment. This is a mistake.

An existing Laundromat value is not primarily based on the age or number of the installed equipment. Laundromats are primarily valued by their cash flow and the potential to continue that cash flow. Suppose you have a Laundromat with two-year-old equipment but the lease expires in two years and the landlord refuses to grant any lease extensions, compared to another store with twenty-year-old equipment with two years remaining but has three 5-year options with the same terms and conditions. What’s the value of each store?

If you think valuation can be estimated or determined by the limited information in the age and number of washers and dryers you are seriously mistaken. Establishing value is time consuming and involves a host of variables that need consideration.

The six-inch sewer line, the 600 AMP power source, the two-inch water line, the gas connection location and existing sewer connections can be valuable (based on sewer “impact fees” that many sewer districts charge for permission to connect to their service). The length, term and provisions of a lease can be worth virtually nothing to multiple thousands, in some cases hundreds of thousands of dollars. The right to exclusive parking is a valuable benefit available to some Laundromat owners. The cost of Common Area Maintenance or Net/Net/Net can also be a large positive or negative on value. The right to place your sign on a monument sign is often an additional ongoing charge by the landlord.

In general, used equipment installed in a laundromat has value as a generator of income but when removed to be sold as used equipment, the value can steeply decline. A ten-year-old dryer, installed and operating is a valuable asset, but the same dryer removed to the street to be sold is worth less than 25% of its original purchase price. Many people are surprised to learn that wholesale equipment buyers who refurbish used equipment pay dimes on the dollar for the equipment they remove, clean, repair and resell. Remember, in place and operating means value. Removed and sold, not so much. ?