Jordan Berry is a former pastor who made a bold decision to step away from his vocation after 15 years to seek a different path. Unsure of what to do next, Jordan and his family had the idea to rent out their house in Southern California and use the money to buy a condo in Hawaii. However, Jordan's wife had a different proposition – buying a laundromat instead. Intrigued by the concept of generating income that wasn't tied to their time, Jordan and his wife took the plunge and became laundromat owners. Although not entirely passive, the business offered a level of flexibility and potential returns that intrigued them. This unexpected leap into the laundromat business would mark a significant turning point in Jordan's professional journey.

Connect with Jordan Berry: https://www.laundromatresource.com/

Key Topics and Bullets:

Financing options for laundromats

• Manufacturers and independent lenders offer financing options
• Equipment financing may offer 100% financing with down payment requirements
• Traditional financing for real estate requires higher down payments
• SBA options available, but qualifying can be challenging
• Seller financing is common due to difficulty in securing traditional financing
• Limited or inaccurate financial records can affect securing financing

Different business models for laundromats

• Self-serve, service-side, and pickup and delivery models
• Pickup and delivery services gaining popularity during COVID
• Location important for self-serve laundromats
• Self-serve targets renters with below median income
• Service-side caters to customers with above median income

Debate on replacing machines in the industry

• Some see keeping old machines as a badge of honor
• Others believe in replacing for efficiency and customer satisfaction
• Speaker suggests replacing around the 15-year mark
• Benefits of replacing include decreased repair costs, lower utility costs, and increased efficiency
• Shiny new machines attract more customers and allow for higher prices

Rehabbing and marketing a rundown laundromat

• Speaker chose not to sell but invested in new machines and rehabbed space
• Rehabbing reputation proved more challenging than renovating the physical space
• Marketing strategies used include flyers, Google ads, and Facebook ads
• Suggestion of organizing a wow event or grand opening to draw attention

Importance of location, lease, and deal analysis

• Location crucial and difficult to move once established
• Good lease necessary to avoid business failure
• Analyzing the deal and knowing what you're buying is key

Tracking income and expenses in cash-based business

• Laundromats mainly cash-based, making tracking challenging
• Knowledge of tips and tricks necessary for accurate assessment

LA's competitive laundromat market

• Laundromat industry historically lacked advertising
• More owners realizing the importance of customer care and promotion
• Negative industry image due to frequent breakdowns and poor experiences

Focusing on customer satisfaction and profitability

• Convenience crucial for customers, but potential for expansion in competitive areas
• Opportunities for profitability by filling gaps and providing better experiences
• Basics of cleanliness, working machines, friendly attendants, and full coin changers important
• Loyalty incentives, promotions, and positive atmosphere enhance the experience

The misconception of laundromats as passive businesses

• Disagreement with belief that laundromats require little effort from the owner
• Acknowledgment of high returns and cash flow with relatively less work
• Dealing with customers and maintaining machines can be demanding
• Proper management can make the business more passive as it scales

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"You can invest 10,000 hours and become an expert or learn from those who have already made that investment." - Jack

We have Jordan Barry with me here today. Jordan, I appreciate you giving me a moment. We're gonna dive into something that I have a particular interest in. So this is gonna be a bit selfish as I'm trying to understand this asset class, but Jordan has expertise around laundromat Investing. And if you want more information, Jordan can help you with a free download regarding how to buy your first laundromat by going to laundromat resource dotcom/reimastermind. So you don't even have to sign up for anything. Jordan's gonna have a link there for you. So hit up over to laundromatresource.com/reimastermind for that, but really appreciate you giving me a moment here today, Jordan.

Hey. Thanks for having me on. I'm excited to chat. Water mats. So exciting.

We won't dive too deep into your backstory because I'm sure you've told story a million times, but before we hit record, we mentioned a couple things, and I think we're gonna delve a little bit into it is First of all, how did you find your way to laundromat investing?

Yeah. random little story. I always interested in how people get into this weird little business, but I sent you, so I was a pastor for 15 years and had small kids and was ready to just a break from doing that vocationally. Didn't really know what to do. Had a little bit of money. My thought was, hey. Let's take our money. can rent out our house. They live in Southern California. We can rent out our house here and go buy a condo in Hawaii on the beach somewhere and live there until the kids are school age, and we can come back and my wife thought, or we could buy a laundromat. And so we bought a laundromat. And the idea behind it was to have some income coming in that isn't tied to your time necessarily. I wouldn't say that it's passive in the traditional sense of passive, but I don't know too many businesses that require less time for the kinds of returns you can get.

Yeah. I mentioned to you that that this kind of on my radar for a couple of reasons. First of all, I had recently read an article regarding some of the top businesses that fail. And Restaurants are typically high on the list. Bar ownership is really high on the list. On the other side of things, one of the least failed is typically laundromats. So that's one of the reasons that it seemed to marry a couple things, business ownership, and real estate since that's The name of this podcast is Real Estate Investing, but you had you started off a little rocky. at first.

95%

of people succeed? And it was just it was not a great feeling, and it took me a really long time to dig my way out of that hole that I put myself in.

That sounds like some pretty big lessons learned in that situation. What changed now that you've been acquiring additional laundromats? How do you find that laundromat that's a goodbye?

Yeah. Expensive and painful lessons. Yeah. For sure. Yeah. So, really, it's what you're looking at and what you're are. Right? And location, obviously, is key. Similar to real estate. Right? Location is key. And maybe even more so with laundromats, like, you can't really move a laundromat all that infrastructure is in there. And so you gotta have a good location. Lease is crucial. one of the biggest reasons that the laundromats that do fail is having a bad lease when that's either too expensive or not long enough, or there's terms in there that basically can take your business away from Like I said, you can't move it. So if your lease gets canceled or it runs out and the landlord decides not to renew, then you're out of business. Look into that. And then going through a process of analyzing the deal and having clarity on what you're buying when you're buying it. And that really is the key, and that really is easier said than done, especially when you're buying your first one and you don't know a lot because it is a cash business by and large. There's more and more adding card payment systems and app payment systems, but the majority of laundromats still are coin coin operated cash based systems, and so it can be really hard to pinpoint exactly how much money is coming into the business and exactly how much money is going out of the business. So there's tips and tricks that you need to know to really figure that out.

You mentioned that it seems like technology is catching up with this industry bit have you found? It it goes back to the location again. Are you putting in more modern stuff depending on the neighborhood?

Yeah. Absolutely. This industry, it's kind of a joke in the industry. I laugh about it at least, but we've been basically no almost no technological advances for decades until semi recently when different payment systems started coming in. Just the first touch screen washers and dryers just came out within the last couple of years. I've literally I've literally gotten, like, P and L written, handwritten on a napkin, literally, not like a joke, but actually before, and new ways to collect and analyze and utilize data are coming in. So finally, we're starting to catch up, but we got a ways to go still.

Now you mentioned location earlier. What type of locations are you typically looking for and what's you would be something, especially somebody who's looking to do this for the first time, what should they be looking for regarding location?

Yeah. And now things have changed since I bought my first too. So now I think you need to back up before you think about location, and you need to think about what business model you wanna go to. So when people think a laundromat people think of self serve laundromats. They think of maybe there's not even anybody working there. Maybe just somebody who comes and cleans up. but, you know, and or maybe somebody's there just helping customers and stuff. but there's a few different kind of business models now. So there's that self serve laundromat unattended relatively passive. And then there's also the service side of the industry too that you can operate out of your laundromat. So you can have the self serve plus a service side where You have a drop off laundry service where, you know, customers bring their laundry to you and you do it for them. And now and especially since COVID, but now pickup and delivery has really been booming. And I think really we've only scratched the surface there. I think pickup and delivery laundry will probably be, if not, almost ubiquitous. I think it's gonna be a lot a lot more popular in as we continue on just because laundry, nobody likes to do laundry. So if somebody comes and picks it up for you, watches it, folds it and brings it back to you. Who doesn't want that? Right? And so you need to determine your business model first. Are you looking just for self serve? Are you trying to have service side of your business because those are gonna be different demographics of people. So if you're looking for self serve side, of things and you wanna build that business. The locations that you're looking for, number 1, and you wanna have good visibility from the street. You wanna have good parking, those kinds of things. And then you wanna be in neighborhoods where the kinds of people who wanna do self serve laundry or need to do self serve laundry are gonna do it. So typically, that's gonna be a renter population, so apartment buildings, rental housing even. And then generally speaking, we're looking at below median income in terms of how much income is coming into a household. We're looking for below median income because that's typically the demographic we serve. And so those are some of the things that you wanna be looking for. I mean, you're looking for a good self serve laundry. And then on the flip side, on the service side, it's gonna be above median income. It may be renters. It may not be renters, but I'd say probably the majority is not a renter. in that scenario. So it's a higher income, maybe a dual income family, or or a younger 20 something, in a white collar profession, those type Thanks.

You mentioned that picking your business plan is one of those business plans partnering with somebody that has an apartment building, and you're providing the the vending machines or I'm I'm running into a lot more and more, at least in our part of the world, mixed use properties where there's a ton of apartments above. and commercial on the main floor.

Yeah. For sure. Yeah. And there's different ways to do that too. Like, you could have a you could have a laundromat on a main floor of an apartment building or A lot of apartment buildings or multifamily housing have wash washers and dryers on premises. And so there are companies and people who have routes where they they purchase and install and service the machines in those complexes and then go around and collect and share some of the profits with the the landlord of the property owner.

And with that particular project, you mentioned that you relied a little bit too heavily on the broker. Did they provide you a pro form a a or something that kinda painted the rosy picture.

Yeah. Yeah. It was a pie in the sky pro form a and I do a lot of consulting calls now with people looking to buy a lot because there's still not a lot of resources out there. There's more in some bigger names now who are touting laundromats as being a good investment, which say are in a good business, which say are but are a little lighter on the practical, hey. How do I not get fleeced when I buy my first laundry? And so I do a lot of consulting calls with people and we go through all deals, we'll go through, and I'll just say, hey. Look. Here's a more realistic sure of what this laundromat actually is like. And, yeah, the numbers the broker gave me, I now know are we're never ever gonna be realistic numbers. but I didn't know that at the time.

It's interesting you brought up that you have to select your business model. I this is how naive I am. I just the concept of you buy a laundromat and people just show up. That was the that was the business model, but it's what I -- Yeah. -- because I was very naive on that part.

And it's true. That is true to an extent, and it's becoming it's becoming a and it depends on where you are. partially too. I'm in LA and the LA market. It's probably the biggest laundromat market. Maybe New York is there too. but it's becoming more competitive, and our industry has never advertised. Like, by and large, like, we've never done any advertising. We've never done any of that stuff. But more and more owners are finding actually, we need to take care of our customers a little more, and we need to let people know what we have to offer. And so that's why I think in our industry, a lot of the image of what people think of when they think of a laundromat is It's not a good image. Right? Our industry does not have a great image because so many owners for so long It was a badge of honor. Hey. I've had my machine for 30 years or 40 years. Yeah. The experience hasn't been all that great for your customers and all that time because for 20 years, your machines have been breaking down, and it's playing a slot machine when you go do the laundry. I'm gonna put my quarters in and, hopefully, the machine will work in my clothes will end up clean, but it just hasn't been a great experience. To your point, it there's a little bit of a if you build it, they will come because customers are gonna come to the most convenient laundromat barring anything else. Right? Whatever is closest to them as long as they can stomach the conditions there or the experience there, they're probably gonna go to that one because it can be the most convenient. Where you wanna try to expand your business a little bit is maybe there's another one where there's a gray area and they could choose which one they go to, or they're slightly in the other convenience area for another laundromat, but your experience is so much better that they're gonna come to yours. And there's a lot of money to be made in laundromats right now in that gray area and slightly on the other side of the gray area into other laundromat territories. if they're not taking care of their customers. So those are opportunities, I would say.

So what type of other ways are you taking care of your customers that attract people?

surprisingly, the main thing you need to do is just take care of the basics. Right? Keep the place clean. have if somebody's gonna be there, like an attendant or something, just make sure they're friendly, and they're helping people keep the place clean, and keep the machines working. If you have coin changers, make sure those are full because if people come and there's no coins, they can't do their laundry and they leave and they go to another one and then they come back. So if you take care of the basics, you're gonna be in pretty good shape. Make sure everything's working. Make sure everything's clean. You know, make sure people are happy. and you're golden. Right? Make sure the people who should be there, feel comfortable there, and the people who shouldn't be there don't feel comfortable there. And those are the basics. So if you do that, you're gonna be in great shape. Now you can enhance that experience by adding things like If you have a a card or an app payment system, you can incentivize loyalty by offering by 10 washes, get one free, or or different types of promotions, those kinds of things. Paying attention to the atmosphere of your laundromat can be important too. So what do you have on the TVs? Is it used and depressing and infomercials and that kind of stuff? Or you have something that's a little bit more uplifting, a little more positive, or you're playing music. Those types of things that you can be paying attention to, just to make sure customers have a good experience. All they need to do is have positive feelings when they come to your laundromat, and then they're gonna keep coming to your laundromat.

Sure. That makes a lot of sense, especially you mentioned earlier that you're talking you're dealing with typically moms and kids. So you probably want an environment that provides a a a little distraction at least for the kids while mom is doing some things.

Yeah. And that that's where if you can get into your typical customer shoes and you think about the mom who's trying to load up the washing machine and the kids are riding around in the laundry carts and climbing on the folding tables. And if you can help that mom, have an easier experience. I know for a fact, a mom will drive a long way to go to a laundromat that is thinking through that for her that will help her. Like, I know if I take my kids to the closest laundromat, they're gonna be running around everywhere bored out of their minds, fighting, complaining, whatever. If I go to this other one down the road a little more, they've got whatever. They've got an iPad station or they've gotta play a place or they've got books or they've got something I know my kids can watch on TV for those types of things.

Yeah. Having a subscription to Disney plus

Yeah. Exactly. Yeah.

Yeah. Something like that. Yeah. This makes a lot of sense. So just to remind everybody, head over to laundromat resource dot com slash rei mastermind and to take advantage of what Jordan has offered there regarding that free download. I'd be curious about you coach people on this now, and you have a lot of students, I'm sure, regarding this. Have you found anybody some success in rural areas in small communities.

Yeah. For sure. And it is a different a little bit different ballgame there, right, as as opposed to an urban area in LA, New York, Chicago, Dallas, those kinds of things are a little bit different. in the rural areas. Typically, they're gonna be a little bit smaller, laundromats. People tend to be a little bit more spread out. there. So there's gonna be fewer competitors around, but also fewer people. So, yeah, the the interesting thing about the rural areas is that I had a guy on my podcast on the lawn of my resource podcast that he was just eating up these small laundromats in these rural areas, and you have ten 12 of them or has. I think he has more than that now, but he was just eating them up. And none of them were doing crazy numbers. If you get 10, 12 longer mats that are making 3 to

a month net each and you get them for 100, a

$150,000.

That adds up real quick there. And, yeah, you can definitely do well in the rural areas as well.

So what's been the biggest surprise regarding this that you've run across so far?

Regarding longer mats?

Yeah. Like, something some something that you didn't expect that made a big difference?

Yeah. That's a good question. Something surprising that I didn't expect that made a big difference. in in a lot of meds. I think on the negative side, I was surprised at how little technology you had in the industry. And so I think adding technology has just been a big boost in our industry. And I think one of the ripple effects of that is that you can now manage more laundromats than you used to be able to do because instead of going and go into 10, 12 stores and trying to collect all these quarters and all that stuff, all this stuff is happening digitally now and automatically. And so now management of bigger stores, management of more stores is becoming more and more feasible. And I think actually one of the biggest surprises over the last couple of years has been the peak in interest in longer mats, and I think it's only gonna grow here.

We've talked about the technology a couple times. I'd like to talk a little bit more about the machines themselves. You would make a very valid point. One of the reasons that this interests me as well is that We've had a couple properties where we've had we have the same speed queen, coin operated machines, from the seventies and they still are running. Yeah. Like, how often should somebody prepare to change and service these machines.

Yeah. The that is a debated topic. And I think the perspective on this is shifting a lot. I can tell you which camp I fall in, but I there so like I said, there is a camp of people who are, like, Hey, badge of honor. I've had them for 30, 40 years, kept them running. They're still that pea green color or that off white color, whatever. they used to be, and it's a badge of honor. And, you know, that that's fine. There's nothing wrong with that necessarily, but I think there's a new wave and I wanna say this is probably biased, and this is not meant to be an insult to anybody, but a little bit more savvy business owner investor that is coming into our industry who are recognizing, hey. If I keep my machines that long, my repair costs go up, I lose efficiency in the machine. So my utility costs are going up and utilities are one of your main costs. Right? And and I lose customers when they don't know if the machines are gonna work. They're gonna go somewhere where they feel like the machines are gonna work. So I'm losing out on revenue by not replacing them. So there's a the camp I would probably fall in is probably at around that 15 year ish mark you should start thinking about replacing machines. Now can they last longer than that? Absolutely. And if you ask like a manufacturer, they'll probably say 20 to 25 years. I just think at that 15 year mark, you still have a little value left in it. So if you wanna sell it, somebody who wants some used equipment, you can do that and get some recoup some of your value. But then when you replace it with the new equipment, you get some benefits from that, like increased efficiency. So your utility costs are going to go down. You can typically, when you replace your machines, you can raise the prices because people like shiny new things, and you can just charge better. And they're gonna get a better wash anyways. Right? And so your margins go up from that too. And because people like shiny new things, you're probably gonna attract some new customers. And so your revenue can and tends to go up when you replace machines at around that 15 ish year mark. Give or take a couple years.

What does the depreciation schedule look like on that?

Changing. I know that this year or, I guess, last year,

2020.

is a problem. -- writing it out for the depreciation schedule. And that that's probably a good indicator. Maybe you should put in some different machines.

Oh, totally. Yeah. Totally. It's one of the benefits of laundromats too, right, is that they're relatively low. And it's not talked about that much, but they're relatively low maintenance. They're pretty high cash flow, but they're also asset heavy. And so that depreciation, while it's not quite as good as real estate, it's still it's pretty good. And then when you pair it with real estate, even better.

Are there any other outside of the machines? I would imagine that you're also making money selling detergent and a few other things. Is there is that a pretty significant line item on you when it comes to the profits there?

Yeah. It can be. I I kinda joke sometimes that longer mats are the ultimate side hustle because they're you can run them on the side plenty of people have full time jobs and run them, but they also have side hustles within the side hustles. You can have ATM machines. You can sell soaps and detergents. You can have vending machines. You can there's sell purified water, there's a ton of different ways that you can make revenue from a laundromat. So, yeah, absolutely. Now granted the primary income stream is and should be the the washers and dryers. Right? And so I wouldn't say, hey. if you had to choose between a washer and an ATM machine or a vending machine, I think you should probably yeah, I mean, it depends, but you should probably default to adding washers and dryers because that's gonna be your primary income. However, most laundromats have other income streams also. So, yeah, there's lots of opportunity for that.

So when you acquire a laundromat, And it's typically gonna be some there's gonna be some distressed property there. You whether you're do you find it best to replace as many machines as you can or the problematic ones or a slow roll. How do you just define all that? It probably is depends. Right?

Yeah. So the answer to that is the answer to every question, which is it depends. And the and not only that, but there's different opinions on it. There's different camps on it. So some people love to replace machines with new machines. And some people would love to replace new machines with used machines, and some people prefer to do them all at once. and some people prefer to slow roll it. I will say that the pluses of slow rolling is that you spread out how much capital you have to spend because the machines aren't cheap. And so you spread it out that way. And so the it becomes a little more affordable to buy 1, 2, 5 machines than it does to buy 30 or 40 machines all at once. The the argument on the other side is to just replace them all is you do get that wow factor. And you do get a bump from replacing them all. Nobody's really gonna bat and I. Nobody's gonna change laundromats, I guess. If you swap out 5 machines. The current customers might be happy with it. They might be excited about it. It might reinforce for them to stay, maybe. But if you replace all your machines, you will get people changing and coming to your laundromat. Now the downside, obviously, is that there's a lot of cost to replace all the machines all at once. But there are a lot of financing options, even 100% financing options on equipment. So you got you can have options, but it does depend.

Yeah. I was gonna men ask you about financing. Is it very similar to just a standard real estate investing? You already mentioned, I'm guessing that there's promotions and financing whether through your appliance dealer. Is that

So, yeah, so the manufacturers do have financing. and then there's also some independent laundromat specific lenders. out there also. So, yeah, so for equipment financing, it really depends on the situation. You can get a 100% financing on equipment sometimes and sometimes they require a down payment. I will say that the financing options for real estate are typically better in terms of traditional financing. So where you could buy a property for 20 or 25 percent down for real estate, you're probably looking at 30 to 35 percent down for a laundromat from a traditional route, but there are SBA options too where you put down less However, only certain laundromats are going to qualify for SBA. So that's downside of SBA with a laundromat specifically. And again, because they're cash businesses and, you know, those SBA loans, they really like to know how the business is really doing and if it can really support that loan, and it can be difficult to pinpoint that in a lot of laundromats where there's not very accurate books, or they don't have any books, or they're intentionally misleading books, which happen sometimes. But I also will say because of that, it gets talked about in real estate circles a lot. The holy grail of seller financing, right, like everybody's looking seller financing deals, but they're actually fairly common in the laundromat industry. And a big part of the reason why is because a lot of laundromats can't get traditional financing. because they don't have books or because they've been cooking their books, and so nobody will finance them. So that is, I guess, that's one upside to laundromats and financing.

That probably explains why they require typically a larger down payment.

Yeah. Absolutely. Absolutely. Just the higher risk there.

Okay. So you I'd like to hear from you too now that You're going through the process. You're trying to find your first laundromat. What are some of those obvious red flags that somebody should be aware of?

Yeah. So when I go through, like, a a p and l or a pro form a or something like that with a client, we're looking for a few things. Number 1, we're looking for just any kind of weird anomaly. Right? Any number that just doesn't seem to fit with the story of this launderer map. And the I always say there's 4 pillars of due diligence for match. Right? We we need to determine the income, how much money's coming in, determine the expenses, how much money's going out. And then the big one that I think a lot of people miss that can really cost you, but it's where a lot of the anomalies are gonna pop up. It's determined the trajectory of the laundromat is business going up, down, the flat and why. And then the fourth one is look for value add opportunities, ways to improve the business. What we're looking for is something like that they say the income is going up, but we look at the water bill and the water bill is flat where it's been going down. That's weird because you would expect if income was going up, the water bill would also go up because you're using more water. And probably the water company has not reduced prices because they don't tend to do that very often, if ever. Uh-huh. We're looking for anomalies like that. Some of the I wouldn't call So the red flags, but some of the yellow flags that you're looking for are round numbers, which

you're

gonna get a lot of round numbers. And the way that it works, just to give you an overview, the way that it works is usually you're not you're gonna get very general round average numbers from the owner, and you're gonna have to make your offer based on that And then you just might wanna make sure you have good contingencies in place so that when you go in and find out a more accurate story, of what the numbers actually look like that you have some wiggle room to either renegotiate or pull out of that deal if you need to pull out of the deal. So, yeah, so we're looking for, like, round numbers. We're looking for in income that just doesn't seem to fit with the laundromat, and it's hard to know what that means exactly until you've looked at a lot of deals. So you can go through and look through a lot of deals. You can shortcut that process and talk to somebody who's done it. where I see a lot of people go wrong is actually on the expense side, and it's not that people falsify expenses because those are harder to falsify. You can verify the expenses easier than you can verify the income, but it's that expenses get left out. And, for example, I had client to we were buying a laundromat and was not intentional. It was actually unintentional. It was unfortunate, but It turned out that there was a sewer bill that the seller didn't know about. It was going to the landlord, and the landlord never passed it over, but it was $700 a month. And so our offer dropped dramatically based on that information. Unfortunately, for the seller who got hit with a huge sewer bill and decrease in the equity in their business. So that was a unfortunate situation. But for my clients, it literally would have cost them probably

$75,000

in equity from day 1 if we had gone through with that original purchase price with that extra bill. So missing even a 500 dollar a month expense can be a big deal.

Sure. So with all of that being said, I'd be curious as to What is your I'm sure this is gonna be. It depends on the buyer as well, but what type of returns are you trying to achieve? through laundromats?

Yeah. So the average unleveraged return on your money for a laundromat is usually around 20 to

25%. 20

is and and the way that loaner mats are valued is similar to how a commercial real estate is valued. So commercial real estate uses a cap rate. Larger Mets use a multiple, which is just the inverse of the cap rate. Maybe because we're less sophisticated. I don't know. We like to multiply rather than divide a percentage. But so we do a multiple. So a typical a typical multiple that you apply to the net income of the laundromat to determine the value is 3a half to 5 ish. And we're seeing a little bit of float right now where those multiples are kinda coming up because there's increasing demand and for various reasons, there's not as much supply on the market right now. And so they're creeping up a little bit, but three and a half to five is an average, and a five times pull laundromat. It's gonna be a probably a decent sized laundromat that has relatively new equipment that has stable cash flow, and it's just it's not gonna be super risky, but because of that, you're gonna pay, you know, quote, unquote, a premium for it. But at a five times multiple, that's still a 20% return on your money. So it's still not bad for for a good investment there. Right.

-- situations that people need to be aware of regarding, like, city ordinances or that type of thing. I'm sure some people are thinking, like, where can I put a new laundromat versus acquiring an old.

$390,000.

So that's without actually breaking ground. That's without any materials, any construction, no machines, no permits, none of that stuff. It's just the a okay 390 dollars, and that killed that deal right away. And I don't say that to scare people because I think that was pretty uncommon even we didn't expect that. But it is something to factor in and something that a lot of people don't know to look for early on, but it can kill a deal.

So if you could go back into time, and give your younger laundromat investor one piece of advice. What would that be?

Yeah. I think so so when I bought my laundromat, my fixer upper zombie mat. I paid all cash for it and then retooled it with a 100% financing on the back end. nothing wrong with that at all, and I wouldn't be afraid to do that anymore. But one of the things I found, which seems a little counterintuitive at first, is the cheaper the laundromat is and cheap is relative, but the cheaper the laundromat is, actually, the more risky that laundromat tends to be there's a cutoff that I put somewhere around a 100 to a

$150,000

anything below that, you basically need to assume it's really not making much money or maybe not any money at all. And a fixer upper. It's something you're gonna come have to do a value add to and fix it up and improve and increase the business. And so a lot of people are looking to get in at that price point, which, again, there's nothing wrong with that, but it is a on the riskier side of things, I would say probably even though laundromats don't fail very often, probably the vast majority of the ones that do are in that price range, most likely. And so I actually would probably advise myself to, hey. Use that money instead of buying all cash. Use that money as a down payment for one that's a little bit more stable that has a little bit more margin there. You can get a little bit more information about if that's possible. So, you know, it's the whole sweat equity versus equity equity money equity. Right? They're inversely related there. Sometimes you just gotta do what you gotta do, and can only get your foot in the door by getting fixer upper laundromat. And so you do what you gotta do if that's the route you wanna go. the laundromat route, that's the route you wanna go. Same with real estate. Right? But for me, if if I was to go back and do it again, I would tell myself, hey. Use that money as a down payment for a little bit better performing laundromat.

You mentioned When we first started this, that you're seeing quite a few people with more and more interest regarding acquiring laundromats. What are some of the misconceptions that they've they're carrying when they come into this that you have to correct them on?

Yeah. The kind of the big draw, right, of laundromats is that they're passive. Right? You come in, you collect corn quarters once, twice a week, and that's all you have to do. And that was a case for a long time. It's still the case in a lot of places now, but that is changing. And I will say that I don't believe laundromats are I did when I got into it, and that was part of my problem. I don't believe anymore that loaner mats are passive, but I also I do believe that there aren't too many businesses out there where you can get the kind of returns or the kind of cash flow that you can get with laundromats with as little work as laundromats. So that's one correction. If somebody's coming in and they just wanna have a passive business, you're dealing with a lot of people. Right? A lot of people come through laundromats every single day, every single week, and you have a lot of machines. Right? And so whenever you have people and you have machines, you're gonna have problems, and you're gonna have to deal with those problems. And even if you hire, like, a manager to deal with those problems, you're gonna have to manage that manager. And they can become more and more passive as you scale, actually, if you scale the right way. But that, I think, by and by by far, that's the number one way that people come in with a misconception is that they're just gonna have to come in and collect quarters once you try us a week.

Outside of hiring somebody, you mentioned with the people and the machines, there's gonna be problems. How have you been handling some of those things remotely if you don't have somebody there?

It depends on how your store is set up. Right? Some of the issues can be resolved remotely through some of the new technology. that's out there. And, like, you can remote start machines, like, from your phone at home, camera systems where you can communicate back and forth. with somebody, even at, like, the cat shop or Venmo or something like that, if you need to issue a refund instead of having to hop in the car and driving or whatever. So utilizing technology and automation can really help that. You're gonna have problems sometimes. Like, I've my longer mats have flooded where I've had 2, 3 inches of water on the floor, and I just had to deal with that. And really, if you're trying to be truly remote, you gotta have somebody that you trust on the ground that can help handle the issues. And and kinda what I tell people who are interested in running a laundromat remotely is, look, you just wanna make sure don't wanna leave your business in the hands of a minimum wage employee. Right? They're just not gonna care. Even if they're the best person, they're just not either not gonna have the skill set or they're it's not worth it to them to care the same way a, like a manager would, and definitely not the same way that you would as the owner?

yeah, thanks for having me on, and you ping me anytime. And, man, super excited to be a part of your network now. And feel free to connect me up with anybody who's got Lautermak questions. and I'll be probably pinging you to connect up with some other investors also to learn a real estate stuff.

Anytime. Happy to help and make those connections. So thank you again, Jordan. I hope to talk again sometime really soon.

Alright. Appreciate it.