Everyone repeats that a laughing Buddha should face the front door, and almost nobody explains why. The reasoning is worth knowing, partly because it makes the rule easier to apply sensibly and partly because it tells you which parts of the advice are traditional and which are invented.
Why the front door convention exists
The idea comes from Chinese practice and from feng shui, where the entrance of a building is understood as the point through which energy, opportunity and fortune enter.
Placing a figure of fortune at that point, facing inward, is a gesture of welcome and reception. The figure greets what arrives and, in the traditional framing, encourages it to stay.
It is a coherent idea rather than an arbitrary one, and it is the same logic behind placing lions, dragons and guardian figures at thresholds across a great many cultures, including Britain's own tradition of stone animals on gateposts.

Facing in, not out
A detail that gets lost. The figure should face into the home rather than looking out through the door.
The reasoning is that he is receiving rather than guarding. A guardian faces outward to deter; a figure of welcome faces inward to greet what has already come in. Placing a laughing Buddha facing out through the front door reverses the intention.
The elevation rule
The convention that recurs across almost every tradition dealing with religious or auspicious imagery: the figure should be raised rather than sitting on the floor.
Practically that means a console table, a shelf, a chest or a plinth, and ideally at or above the eye level of a seated person. Around a metre from the floor upward satisfies it comfortably.
Beyond the tradition there is a plain aesthetic reason. A figure at floor level is looked down upon and easily knocked, and neither reads as care.
Living rooms, offices and shops
If a hallway is impossible, and in a great many British flats it is, the convention adapts.
In a living room, place the figure where he faces the main entrance to the room rather than a wall, so the same welcoming logic applies at a smaller scale. In a study or office, facing the door works, and a desk placement facing into the room does the same job.
In shops and businesses the traditional placement is facing the entrance, often near the till, which is where you will see one in a great many Chinese restaurants and takeaways in Britain.

Where not to put one
The conventions here are fairly consistent across traditions. Not in a bathroom. Not in a kitchen, where the practical argument about steam and heat agrees with the traditional one. Not on the floor. Not facing directly into a bedroom, where some traditions prefer no figure faces the bed. And not somewhere he is used as a shelf for keys, post and coins, which is the fate of a great many hallway objects.
Small flats, where the rules bend
Honestly, most British flats do not have a hallway worth the name, and a front door often opens straight into a living space.
In that case the practical answer is a shelf or surface near the entrance, raised, facing into the room. That satisfies the spirit of the convention entirely, and nobody in any tradition expects a figure to be placed in a way that makes a home unworkable.
If space is genuinely tight, the smaller pieces suit better than a statue. The set of three happy Buddhas works on a narrow shelf, and the mini brass hands up figure takes almost no room at all.
The belly rubbing tradition
Widely practised and considerably more recent than the figure. Rubbing the belly of a laughing Buddha for luck is folk custom rather than doctrine, and it has no basis in the accounts of Budai's life.
That does not make it worthless. It is a pleasant daily habit attached to an object, and habits attached to objects are how people build small rituals into ordinary days. Just know it is custom rather than teaching.

Facing directions and compass points
You will find advice specifying that a laughing Buddha should face a particular compass direction, usually east or south east. These specifics come from particular feng shui schools and they vary considerably between them, which is itself worth knowing.
The convention that is genuinely consistent is the one about the entrance and about elevation. Everything more specific than that is one school's view rather than a settled rule.
Our laughing Buddha collection covers the pieces, and our guide to what the poses mean covers choosing one.
Questions people ask
Which way should a laughing Buddha face?
Into the home, positioned so he greets what comes through the front door. He is a figure of welcome rather than a guardian, so facing outward through the door reverses the intention.
Why the front door?
Because in Chinese practice and feng shui the entrance is where fortune and opportunity arrive. Placing a figure of fortune there facing inward is a gesture of reception.
How high should he sit?
Raised rather than on the floor, ideally at or above the eye level of a seated person, so roughly a metre from the floor upward. A console, shelf or chest satisfies it.
What if my flat has no hallway?
A shelf or surface near the entrance, raised, facing into the room. That satisfies the spirit of the convention entirely, and smaller pieces suit tight spaces better than a statue.
Is rubbing the belly traditional?
It is folk custom rather than doctrine, and considerably more recent than the figure himself. Enjoyable as a daily habit, but not a teaching.