How to read your return on a laundromat
A laundromat is bought for the cash it puts in your pocket, so the number that matters most is cash-on-cash return: what your invested dollars earn each year after the loan is paid. Two buyers can pay the same price for the same store and earn very different returns depending on how much they borrow, what rate they get, and how much cash they hold in reserve. This tool separates the store's earnings from your financing so you can see both.
Key takeaways
- Cash-on-cash return = after-debt cash flow ÷ total cash invested.
- Judge the return against risk, not on its own.
- Leverage lifts the return but the fixed payment can also sink it.
- Budget cash beyond the down payment: closing costs and a reserve.
What is a good cash-on-cash return?
There is no single right number, but the bands below are how most buyers read a laundromat deal. A safer store, with a long lease and newer equipment, can justify sitting lower in the range; a riskier one should pay you more to compensate.
Why leverage cuts both ways
Because you invest less of your own cash when you borrow, a smaller down payment can lift your cash-on-cash return, as long as the store's cash flow comfortably covers the payment. The catch is that the payment is fixed. In a slow stretch, the same leverage that boosted your return can turn cash flow negative. Model a lower-revenue case before you rely on the headline number.
Payback period and break-even
Payback period is the plain-English version of return: how many years of after-debt cash flow it takes to earn back everything you put in. A payback under about five years is strong for a small business; much longer and you are tying up cash for a thin reward. The break-even year simply projects that forward from today.
The cash you need beyond the down payment
Buyers routinely under-budget the cash side of a deal. The down payment is only part of it. You also need closing costs, and a working-capital reserve to cover payroll, rent, and a surprise repair while you learn the store. Counting all of it is what makes the return honest, and it is why the calculator asks for each piece separately.
Common mistakes to avoid
- Measuring the return against the price instead of the cash you actually invested.
- Using an unverified cash flow figure, which inflates every result on the page.
- Ignoring the reserve, then having no cushion for a slow month or a broken boiler.
- Chasing a high return on a store with a short lease or worn-out machines.