Laundromats make the best cash-flowing investments. With an average, unleveraged return of 20-30%, the average laundromat investment is far superior to the average real estate investment, which will cash flow between 7-10%. The average dividend yield for the financial sector is just 4.7%. The cash flow return from laundromats outperforms just about every other investment average.
Let's dig into why laundromats have high cash flow.
1. Laundromat Valuation
The way laundromats are valued dictates how much cash flow you can expect from your investment. Laundromat values are a function of how much net income they produce. The value is determined by applying a multiple to the net income. The average multiple applied to the net income is 3.5-5. This means, on the high end, if the multiple used on the net income is 5 times, your return on a cash investment would be 20%.
2. Laundromats can be improved
One of the great things about laundromats is that they can be improved. By adding new equipment, raising prices, implementing better marketing, and managing the business better, laundromats can increase their cash flow output to the wise investor. One of the biggest reasons that laundromats fail is they are mismanaged, or worse, neglected. By implementing a laundromat management software like Cents, you can stabilize a failing business, increase cash flow, or even scale your business much bigger. Cents gives you the tools you need to free your time from your income with your laundromat business.
3. Laundromats can utilize the power of leverage
Laundromats are powerful cash-flowing assets, but that power is compounded through the use of leverage. You can leverage your money by taking out loans for the acquisition of your laundromat or the purchase of new equipment.
Laundromats are the best cash-flowing investment
Laundromats provide investors with high cash-on-cash returns when acquired un-leveraged with cash, but the ability to increase that cash flow through proper business management with Cents and through the power of leverage makes laundromats far-and-away the best cash-flowing asset available to most investors.