Buying a laundromat: test the revenue against the water bills before the deposit
By Grig Kochedykov · . Laws, official guides, a court decision and SBA loan data read on 29 October 2026.
Nobody outside a laundromat counts its coins. So before you pay a deposit, test the seller's revenue against the water bills. In Texas, a buyer who does not hold back part of the price for the seller's unpaid state taxes may have to pay those taxes, up to the price paid.
General information, not legal or tax advice. Rules differ by state, city and utility. We read every source below on 29 October 2026.
In short: six checks before the deposit
- Rebuild the revenue from the water bills.
- Find out who has a claim on the machines.
- Read the whole lease, and find out who owns the building.
- Ask the sewer utility what a new owner needs.
- In Texas, hold back part of the price for the seller's state taxes.
- In New York City, count the wage of a night attendant.
First ask the seller for the company's legal name, the address, and the name of the building's owner.
Step 1. Rebuild the revenue from the water bills
The seller writes the listing; the utility writes the water bill. IRS rules for examiners say revenue may be worked out from the volume of business, and name coin-operated laundromats among the businesses where the method "has been effectively applied" (IRM 4.10.4.5.6).
First, ask whose name is on the water bill. If the meter is shared, or the landlord pays for the water, this test fails.
- Ask the seller to authorise the utility, in writing, to send you 12 to 24 months of billing history. Compare it with the seller's copies.
- Before the laundromat opens for the day, with the seller present, read the meter. Run one full wash on a washer of each size, and read it again.
- Divide the water used in a month by the water per wash, and multiply by the price of a wash. If the washers differ in size, do it twice, with the smallest and with the largest washer: the revenue from washing lies roughly between the two results.
- Compare the result with the seller's revenue and the tax returns for the same months. If the machines take cashless payments, the payment processor's reports are a second outside source.
An example with made-up numbers: 60,000 gallons a month at 30 gallons a wash is 2,000 washes; at $5 a wash, about $10,000.
Dryers and vending earn without water; restrooms and leaks use water without earning. So the result is a rough range, and a large gap is a written question for the seller.
Step 2. Find out who has a claim on the machines
The washers and dryers may be leased, or pledged to a lender. Lenders record their claims in UCC records, state files of claims on business equipment. Search the state where the company was formed (UCC §9-307(e)): for a Texas laundromat owned by a Delaware LLC, that is Delaware. For machines fixed to the building, a lender can also file where mortgages on the land are recorded (UCC §9-501(a)(1)(B)). How to search is in our note on UCC lien searches.
Ask the seller for a list of every loan and lease on the machines, and for a letter from the service company stating what the business owes it today. The New York case below shows why.
Step 3. Check the lease and the building
- Get the whole lease, with every change. Count the years left, with renewal options.
- Ask the landlord in writing whether you can take the lease over, and on what terms.
- Ask who owns the building, and ask your attorney to search for a foreclosure case or an unpaid mortgage against it.
Step 4. Ask what the sewer utility requires
Sewer rules for laundromats are local. Philadelphia requires an approved lint interceptor in all laundromats: a tank that catches lint before the water reaches the sewer (Water Department guidelines). In Rhode Island, the Narragansett Bay Commission warns that discharging before its permit is issued "can subject the violator to an administrative penalty of up to $25,000 per violation per day" (NBC application).
Ask the seller for the utility's permit or written approval and the lint trap service records. Ask the utility whether a new owner must apply again.
Step 5. In Texas: hold back part of the price for the seller's taxes
- The rule. The buyer "shall withhold an amount of the purchase price sufficient to pay the amount due" until the seller shows a receipt from the Comptroller, the state tax office, or a certificate that no amount is due. A buyer who does not may have to pay that amount, up to the value of the price (Tax Code §111.020(a), (b)).
- The certificate. Ask the Comptroller for it early: the law allows up to 90 days. If none is mailed in time, you are released from the duty to hold back or pay (§111.020(c), (d)).
- The limit. Holding back does not protect you if the amount was too small to cover the seller's tax and the price did not reasonably match the value of the business (§111.020(f)).
- The permit. The seller's sales tax permit "cannot be transferred from one owner to another" (Comptroller FAQ). Apply for your own before you open.
Other states have their own rules: see our US guide.
Step 6. In New York City: someone on site after 8 p.m.
The city dropped its laundry licence at the end of 2021, but a laundromat with self-service machines must follow other rules: "an attendant must be on site from 8:00 P.M. until closing or 6:00 A.M. the following day, whichever is earlier" (DCWP). If it opens late, count that wage.
One New York sale: what the seller did not say
In April 2013 a trial court in Westchester County, New York, cancelled a $75,000 laundromat sale: $50,000 at closing and $25,000 in a note, a written promise to pay later (2013 NY Slip Op 50658(U)).
| What happened | The step that looks for it |
|---|---|
| The seller's marketing paper claimed a net profit of $44,000 a year. The buyer testified to gross receipts of about $10,000 in 2011, and losses in 2011 and 2012. | Step 1: the water bills |
| The seller left $4,126.34 in repair bills with the equipment vendor, who would not work for the buyer until the bills were paid. | Step 2: the letter from the service company |
| The building, part-owned by an owner of the seller's company, was sold at foreclosure five days after the closing. That owner testified to knowing for months before the closing that it "was in imminent danger of foreclosure." | Step 3: the building |
| The buyer paid $1,737.20 of bulk sales tax that the seller's company owed. | Your attorney, before closing |
The court found that the seller drew the buyer in with false statements (misrepresentation) and broke the contract. The seller was to take the business back and repay the $50,000 with 9% interest a year, plus the tax and the $2,000 promised for a hot water heater. The decision is unpublished: one example, not a rule for every court.
Our count: one SBA loan in five buys an existing laundromat
The SBA (U.S. Small Business Administration) backs bank loans to small firms. We counted its public 7(a) loan file, data as of 30 June 2026, for code 812310, "Coin-Operated Laundries and Drycleaners".
| SBA 7(a) loans, fiscal years 2020–2025, cancelled loans left out | Laundromats (812310) | All industries |
|---|---|---|
| Marked "Change of Ownership", that is, buying an existing business | 22% (194 of 869) | 10.8% (32,677 of 302,593) |
| Median amount of those loans | $500,000 | $675,000 |
Limits: cash deals and seller loans are not in the file; a loan is not the price; the code also covers coin-operated dry cleaners; some purchases may be filed under other values, so the real share may be higher.
What the extension shows
The PDF report from our free extension has lines for revenue, the papers behind the figures, and the lease. "The extension does not guess: when the page is not clear, the line says “not stated”." If revenue says "not stated", ask the seller for 12 months of water bills. More in our due diligence guide.
Your next three steps
- The extension. On a computer: Add to Chrome — free or Add to Edge — free. Reading on your phone? Open this page on your computer. "Open a business-for-sale listing and press “Download PDF”. You get a report on the 12 things a check of the business needs: what the listing says about each, and which ones it does not say."
- Your account. "Saving a listing takes a My list account. In it, the listings you save from different sites sit in one place." Create my account.
- The check. The €550 report reads the public records: "Debts on record; who is recorded as the owner; what is recorded about the equipment." Start for €550. The €950 report also reads the seller's own papers, and shows "Every claim about money the seller made and you passed to us, next to the document and the gap." Start for €950. "Within 12 weeks of receiving the €550 report, pay the price difference for the €950 report: what you paid counts in full." Both are on our pricing page. We do not contact the seller. "You pay only if we take it on."
Sources
- IRS, Internal Revenue Manual 4.10.4.5.6, Unit and Volume Method (page last reviewed or updated 30 April 2026) (retrieved 29 October 2026)
- Uniform Commercial Code §9-307 (location of debtor), Cornell Law School LII (retrieved 29 October 2026)
- Uniform Commercial Code §9-501 (filing office), Cornell Law School LII (retrieved 29 October 2026)
- Philadelphia Water Department, Industrial Waste Pretreatment Guidelines (revised 21 October 2013) (retrieved 29 October 2026)
- Narragansett Bay Commission (Rhode Island), Laundries/Laundromats/Dry Cleaners Permit Application (retrieved 29 October 2026)
- Texas Tax Code, Chapter 111, §111.020 (tax collection on termination of business) (retrieved 29 October 2026)
- Texas Comptroller, Sales and Use Tax Permit FAQs (retrieved 29 October 2026)
- Texas Comptroller, Sales Tax Permit Search (retrieved 29 October 2026)
- NYC Department of Consumer and Worker Protection, Repeal of Retail Laundry License (retrieved 29 October 2026)
- 11 S. Laundry, Inc. v MCD Assets, LLC, 2013 NY Slip Op 50658(U), Supreme Court, Westchester County, decided 18 April 2013 (unpublished) (retrieved 29 October 2026)
- SBA, 7(a) & 504 FOIA loan data (as of 30 June 2026) (retrieved 29 October 2026)