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    PassiveMats
    Due Diligence Guide

    Complete Due Diligence Guide for Laundromat Acquisitions

    A systematic approach to investigating laundromat deals, verifying financials, and avoiding costly mistakes.

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    Due Diligence Process

    1

    Phase 1: Initial Screening

    1-2 days
    Review listing details and asking price
    Verify basic financials match listing claims
    Check location demographics and competition
    Assess whether deal meets your investment criteria
    Request additional information from seller/broker
    2

    Phase 2: Financial Deep Dive

    1-2 weeks
    Request 3 years of tax returns
    Obtain 12-24 months of bank statements
    Review utility bills (water, electric, gas)
    Cross-reference revenue with utility usage
    Analyze expense categories and trends
    Calculate true NOI and cash flow
    3

    Phase 3: Physical Inspection

    1-2 days
    Inspect every machine (age, condition, revenue)
    Check plumbing, electrical, HVAC systems
    Assess building condition and needed repairs
    Review parking lot and exterior
    Note deferred maintenance items
    Get repair estimates for major items
    4

    Phase 4: Lease & Legal Review

    1 week
    Review current lease terms and expiration
    Negotiate lease assignment or new lease
    Check for any liens or encumbrances
    Review any existing contracts (service, equipment)
    Verify business licenses and permits
    Have attorney review purchase agreement

    Documents to Request

    Document Importance Purpose
    Tax Returns (3 years) Essential Verify reported income matches tax filings
    Bank Statements (24 months) Essential Track actual deposits and cash flow patterns
    Utility Bills (24 months) Essential Cross-reference revenue claims with usage
    Lease Agreement Essential Understand terms, rent, and renewal options
    P&L Statements High Understand expense breakdown and trends
    Equipment List with Ages High Assess replacement timeline and costs
    Service Contracts Medium Know ongoing obligations and costs
    Insurance Policies Medium Understand coverage and premium costs

    Revenue Verification Methods

    Utility Bill Analysis

    Calculate expected revenue based on water usage. Each standard wash uses 30-40 gallons.

    Monthly gallons ÷ 35 × average price = estimated revenue

    Machine Turn Analysis

    Count machines, estimate turns per day, calculate expected revenue.

    Machines × turns/day × price × 30 days = monthly revenue

    Bank Deposit Verification

    Sum all deposits in bank statements. Should closely match reported revenue.

    Total deposits - non-revenue items = verified revenue

    Card Payment Data

    If card/app payments exist, request processor statements for exact figures.

    Card revenue is verifiable; focus verification on cash claims

    Red Flags to Watch For

    Seller Won't Provide Tax Returns

    Critical

    If they won't show tax returns, the reported income is likely inflated. Walk away.

    Revenue Doesn't Match Utilities

    Critical

    Each wash uses ~35 gallons. If water bills don't support claimed revenue, numbers are fake.

    High Cash Percentage

    High

    Cash-heavy operations are harder to verify. Push for card payment data if available.

    Lease Expiring Soon

    High

    Short lease remaining = major risk. Negotiate new lease before closing.

    Declining Revenue Trend

    High

    Understand why. Competition? Deferred maintenance? Neighborhood changes?

    Deferred Maintenance

    Medium

    Factor repair costs into your offer. Get professional estimates.

    Seller in a Rush

    Medium

    Why the urgency? Could indicate hidden problems or motivated seller (opportunity).

    No Clear Reason for Selling

    Medium

    Legitimate reasons: retirement, relocation, portfolio rebalancing. Vague answers are concerning.

    Ready to Evaluate a Deal?

    Use our interactive checklist to systematically evaluate any laundromat acquisition.