What this measures
A laundromat is valued on the cash it earns, not the revenue it rings up. Two stores with the same revenue can be worth very different amounts if one pays more rent, more for water and gas, or more staff. So the calculator starts with revenue from self-serve machines, wash-dry-fold and delivery, and vending, takes off every operating cost, and adds back owner perks and one-time costs to reach SDE.
SDE prices a store for an owner who works in it. If you will hire a manager instead, take that cost off: the calculator shows cash flow with a hired manager and uses that number, not SDE, to test the loan. That keeps the price you pay for an owner's earnings separate from the cash a lender sees.
Value is SDE times a multiple range you type, then minus the machines and repairs due in the next few years. The multiple assumes working equipment, so worn-out machines come off the value rather than adding to it. A building, if included, has its own value and is never multiplied by SDE.
Formula
Total revenue = self-serve + wash-dry-fold and delivery + vending and other. SDE = total revenue − rent − utilities − paid staff − repairs − insurance − supplies and payment fees − other expenses + add-backs. Leave the owner's pay, loan interest, and depreciation out of expenses.
Value = SDE × multiple, at your low, midpoint, and high multiples. Value after equipment = value − machines and repairs due soon. Asking SDE multiple = (asking price − building value) ÷ SDE. Revenue multiple = midpoint value ÷ revenue, a cross-check only.
Loan = asking price × (1 − down payment %), fully amortizing at your rate and term. Cash flow for debt = SDE − manager cost, plus the market rent when you also buy the building. DSCR = cash flow for debt ÷ yearly debt service. Highest supported price = the loan that cash flow covers at your minimum DSCR, divided by (1 − down payment %).
Example
Example
The sample store takes in $300,000 from self-serve machines, $45,000 from wash-dry-fold and delivery, and $5,000 from vending, for $350,000 of revenue. Rent is $66,000 (18.9% of revenue), water and sewer $30,000, gas and electric $36,000, paid staff $30,000, repairs $12,000, insurance $6,000, supplies and payment fees $10,000, and other costs $12,000, for $202,000 of expenses. With $2,000 of add-backs, SDE is $150,000, a 42.9% margin. At 3x to 4x SDE the store is worth $450,000 to $600,000, and after $40,000 of machines due soon, $410,000 to $560,000, with a $485,000 midpoint. The $520,000 ask is 3.47x SDE, inside that range. With 10% down and a $468,000 loan at 10.5% over 10 years, the payment is $6,314.96 a month, or $75,779.49 a year. A $40,000 manager leaves $110,000 of cash flow, a 1.45 DSCR. SDE is $150,000. Midpoint value after equipment is $485,000. Asking SDE multiple is 3.47x.
Illustrative example. Every input is a sample so the math is visible, not a real store, a market average, or a deal RE Underwrite Lab did, and the 3x and 4x multiples are example inputs. After debt the example keeps $34,220.51 a year on $102,000 of cash in (down payment, $10,000 of closing costs, and the $40,000 of equipment), a 33.5% cash-on-cash return. At a 1.25 minimum DSCR, the cash flow supports a price of about $603,857. The guide to valuing a laundromat walks the same numbers line by line.
What moves a laundromat's value
The lease. Washers and dryers are bolted to the floor and tied into water, gas, and venting, so moving a store is expensive. Years left with renewal options, rent increases, who pays for repairs, and whether the lease can be assigned all matter. Lenders commonly want the lease to run at least as long as the loan.
The machines. Age, brand, and condition decide how soon you write a big check. Price what needs replacing and enter it as equipment due soon instead of raising the multiple.
Proof of revenue. Card and app systems leave a record. Coin revenue should match the tax returns and the water bill. Unreported cash is very hard to finance and is usually worth little to a buyer.
The building. When the real estate is included, value it like real estate, on its own rent and cap rate, and add it to the business value. The calculator does that instead of applying an SDE multiple to the whole price.
Example
Second example
Illustrative example. A smaller coin store with no wash-dry-fold takes in $223,000 a year, and the seller is also selling the building. Expenses, with $40,000 of market rent for the building, are $113,000, so SDE is $110,000. At 3x to 4x SDE the business is worth $330,000 to $440,000, or $270,000 to $380,000 after $60,000 of machines due soon. The building, valued separately at $600,000, earns that $40,000 of market rent, about 6.67% of its value. Business midpoint plus building is $925,000. These figures are made up. They are not the sample in the form above.
When this ratio misleads
A multiple of SDE hides how the SDE was built. A seller's SDE may leave out repairs a buyer will pay, use a below-market rent the landlord will raise, or count cash that was never reported. SDE also assumes you work in the store; if you will hire help, the cash flow is lower. And a revenue multiple is only a cross-check, because rent, water, and gas take very different shares of revenue from store to store. Rebuild the SDE from the tax returns, the utility bills, and the payment system before you trust any multiple.
Common pitfalls
Adding machine value on top of the SDE multiple. The multiple already assumes working equipment. Subtract replacements due soon instead.
Applying an SDE multiple to the whole price when the building is included. Value the real estate on its own rent and cap rate.
Using a multiple quoted on EBITDA or revenue as if it were an SDE multiple. Ask how every multiple you see was measured.
Underwriting a loan on SDE when you plan to hire a manager. Test the payment on cash flow after the manager's pay.
Questions
How do you value a laundromat?
Most small laundromats are valued as SDE times a multiple, adjusted for the lease, the machines, and how well the revenue can be proven. Rebuild SDE from the tax returns and bills, apply a multiple range from recent comparable sales, and subtract machines that need replacing soon.
How much is a laundromat worth?
It depends on the cash it earns, not its revenue. In the example, $150,000 of SDE at 3x to 4x points to $450,000 to $600,000, or $410,000 to $560,000 after $40,000 of machines due soon. The multiples are example inputs, not market data.
What is SDE for a laundromat?
Seller's discretionary earnings: revenue minus operating expenses, before the owner's pay, loan interest, depreciation, and one-time or personal costs. It is what the store earns for one owner who works in it.
Is the building included in a laundromat's value?
Not in the SDE multiple. If the real estate is part of the sale, value it separately, on the market rent the store would pay and a cap rate, and add it to the business value. This calculator does that when you enter a building value.
Can I get a loan to buy a laundromat?
Many buyers use bank or SBA 7(a) loans, which the SBA generally limits to 10 years for a business purchase and up to 25 years for real estate. The lender sets the rate, down payment, and DSCR. This page shows whether the cash flow covers a payment you type.
Is this an appraisal or a business valuation?
No. It is arithmetic on the numbers you type. It does not know the market, the lease, the machines, or the books. Use a business broker, a CPA, a lender, and an attorney before you buy.