Are Laundromats The Real Cash Flow King? with Jordan Berry

Mike DeHaan: [0:00] Real quick, guys. If you want to take your real estate investing business from 6 to 7 figures in the next twelve months, and you wanna do without being a slave to your business, then you have to check out our scale community. You can get the full details at collectingkeys.com/scale. But very basically, it is a community of like minded investors who are working to become the absolute top tier investors in their market. Along with three coaching calls per week led by Dan and myself, we also have a whole bunch of videos and materials that go into all the different SOPs that we use to run our business on a daily basis. This includes how we manage our sales team, how we hire, how we do our marketing systems, how we get the best assignment fees possible, how we do renovations, how we do all the different kinds of creative financing. And if you are serious about taking your real estate business to the next level, it is absolutely something that you should check out. So go to collectingkeys.com/scale, see all the details and see if you're a good fit.

Jordan Berry: [0:59] There is a $100,000,000 laundromat business coming down the pipeline because it's doable now. And I was like, well, why am I not doing it? If it's gonna happen, I should just do it. So that's the direction I'm moving towards right now.

Mike DeHaan: [1:16] What is going on, guys? Welcome to today's episode of the collecting key to real estate investing podcast. Today, we have a very interesting guest who is Jordan Berry, and we're going to do a deep dive into his niche real estate investment, which is in laundromats. And so this is a little bit of a different style of show than some of our traditional real estate stuff we normally talk about, Because laundromats are kind of like a combination of real estate investment in business, and it is something that is becoming more and more popular sort of as time goes by in real estate markets get a little bit thinner. As you get to the end of the show, he not only tells one of the craziest stories we've ever had on the show where like, I mean, you'll you'll sort of hear about it. It involves a fight, involves the police getting involved, involves a whole bunch of different things at one of these laundromats. But he also talks about his plan to do this large scale laundromat acquisition because he has been shown interest from hedge fund acquisition. In high level investors and big money that are looking at buying these laundromats in high volume. And so that really kinda shows you the direction these things are going. And even though laundromats are something that most of us probably don't even think about or know exists since let's say, they show you're probably in a place where you don't frequent laundromats, you probably have laundry in your house.

Mike DeHaan: [2:27] There is a lot of big money that is interested in this asset class. So, you know, something that you're interested in, don't be afraid to reach out to Jordan. He has a wealth of knowledge. He has a whole podcast and community specifically around laundromats. So if you wanna explore it, I recommend you hit him up. And besides that, guys, this is a really, really great episode. Our producers said they thought we had good chemistry, so hopefully you feel the same because I felt like it was really fun conversation we go to. So anyways, guys, we appreciate you all listening and enjoy the show with Jordan Berry. Alright. Jordan Berry, the laundromat king. As I was trying to think of something witty about like how that could be a fancy title, but we'll scroll with that. But dude, super excited to have you on this show today. So your specialty is in laundromats, and you have a whole like brand and podcast and your agency built around that. But I guess for people who haven't heard of you before or haven't necessarily heard your story or or know anything about specifically what you do, give us a little bit of context about what your business currently looks like. I mean

Jordan Berry: [3:25] are there a lot of people listening to this that live under a rock who don't know who I am? I'm just kidding. Probably. Half

Mike DeHaan: [3:31] the people listening don't even know who we are. Yeah. So yeah. Yeah. Exactly.

Jordan Berry: [3:35] Well, I can tell you Mike is a subpar Frisbee golf player compared to me.

Mike DeHaan: [3:39] Definitely. Yeah.

Jordan Berry: [3:40] That's Just kidding. Disc golf, man, is that was fun. We did that. Yeah. And probably more fun for you than me, but

Mike DeHaan: [3:48] Yeah, came up to Spokane and we went and played some disc golf with a few other guys. It's a good activity to just like

Dan Austin: [3:53] Still not as good as I will be.

Mike DeHaan: [3:54] Yeah, Dan's terrible. It's a good activity to just go out and kill like two hours with like a mixed audience of people when you don't really know what people like or are good at. Because it's low consequence, it's low effort and you get a little bit of exercise. You gotta be outside, good time.

Jordan Berry: [4:09] Yeah. He's saying that but he was ridiculing me the entire time for hitting pretty much every tree on the course. Yeah. Yeah.

Dan Austin: [4:16] Yeah. Mike's having a lot of fun at your expense.

Jordan Berry: [4:19] Yeah. No. Know. That's the only way to do it. Anyways, back to who I am for the living under the rock people. No. I'm Jordan Berry and I am in the Laundromat space. It's actually funny that we're doing this right now. I'm at a funny place in my kinda laundromat journey personally. I currently only own one laundromat at the moment. I have had three in the past, but I'm down to one I've been selling for a couple reasons. I'm sure we can talk about that. But one of the big reasons is I'm also currently looking for portfolios of laundromats. So I'm actually divesting from my original smaller laundromats and trying to go out and buy some portfolios. So that's where I'm at in the journey right now. And then also, run Laundromat Resource, which is a community education platform, resources tools hub for anybody interested in laundromats.

Mike DeHaan: [5:13] Yeah. I mean, said you owned three as far as I'm concerned. That's all the laundromats that still exist. Yeah. Especially in the North.

Jordan Berry: [5:19] Yeah. You'd be surprised.

Mike DeHaan: [5:21] In the Northwest, we don't see a ton of them.

Dan Austin: [5:23] It's honestly funny, like, since I've met you, Jordan, like, now in Spokane, I see them everywhere. Like there are quite a few, right? You're like, oh, it's like the red car thing, Now I see, at least on my normal like path, I see three laundromats.

Jordan Berry: [5:35] Yeah. Yeah. I've got a good buddy, Kent Wales, who's up in Spokane doing pickup and delivery. Actually shut down his laundromat because he's doing pickup and delivery only now because he's just doing so much business. You guys should never do laundry again. Just outsource it to Kent.

Dan Austin: [5:48] Seriously.

Mike DeHaan: [5:49] Dude, if I wasn't married, I would absolutely do that. But my Absolutely.

Dan Austin: [5:53] What does that mean?

Mike DeHaan: [5:54] It gives her purpose. She likes like like her thing is that she does like the cleaning, I do the the cooking and if I outsourced all that, I would probably, I would get in trouble.

Dan Austin: [6:04] I'm sure she would find a new purpose.

Mike DeHaan: [6:06] But So how did you get into this laundromat game though? Because, unless you live in like Newport Beach, I'm assuming it's not a common sort of thing down there. It's not like you live in like a big city where there's laundromats everywhere and you like grew up going to a laundromat, least I'm assuming that you didn't, but I don't know.

Jordan Berry: [6:22] No. I'm in Orange County. I did not grow up going to a laundromat. Laundromats never crossed my mind at any point in time, until they did actually. So yeah, so I actually was a pastor and a youth pastor for like fifteen years, and got to a point where I was ready. I had young kids and my wife, and just got to a point where I was ready to do something else vocationally. And so I was trying to figure out what to do, and I had this little bit of identity crisis because I was like, man, I've been doing pastoral ministry for almost fifteen years, what do you transition to from that? There's no hard skill sets that you develop as a pastor, really. No offense to any other pastors out there.

Mike DeHaan: [7:05] You got a lot of great people skills, a lot of Totally. Relationship skills,

Jordan Berry: [7:09] Soft skills, yes. Hard skills, marketable skills, and it's tough. But I genuinely did have a little bit of an identity crisis trying to figure out what to do, and we had a little bit of money in the bank, I had this great idea and I was like, why don't we rent out our house here in Southern California, take the chunk of change we have in the bank and go and buy a condo on the beach in Hawaii and go live there? This was before our kids were school aged and I was like, we go do whatever and we sell jewelry on the beach for all I care in Hawaii. And my wife said, we could do that or we could buy a laundromat and so we ended up buying a laundromat and to this day, I do not own

Dan Austin: [7:52] Wait, wait, your wife gave up a condo on the beach in Hawaii and talked you into buying a laundromat.

Mike DeHaan: [7:58] Yeah. Is your wife a dude in GoBundance? It certainly sounds like

Dan Austin: [8:02] I like your wife. Yeah.

Jordan Berry: [8:06] No. This is funny, right? But it's like way more funny if you know my wife. It's like very out of character for her. But the way that she kinda came about this, and this was not on my radar, I knew nothing about business ownership, I knew nothing about investing, which is gonna become very important here in a second. But the way that it came about was a friend of her family's was working a tech job up in the San Francisco Bay Area, and making big money but working big hours and ended up buying a laundromat. Placed that tech income with one laundromat and was working five to ten hours a week, not seventy to eighty hours a week.

Dan Austin: [8:41] That's pretty incredible.

Jordan Berry: [8:42] Low time commitment, low work and big cash flow. I was like, yeah, okay. I guess I'll give up the Hawaii dream for now because we're about to be mega rich in no time flat. Yeah.

Mike DeHaan: [8:54] And then

Jordan Berry: [8:54] we can buy as many houses in Hawaii as we want to. So that's what we did, we bought a whole island there.

Dan Austin: [8:59] They got bunches of them, that's exactly how it is.

Jordan Berry: [9:01] Yeah dude, I I've had my eye on Kauai for a while, so let's see.

Dan Austin: [9:06] All I'm thinking about is like that commercial that's like, who are you talking to? Is Jake or State Farm? I was like, Jake sounds like a dude. It's like, well, because he is.

Mike DeHaan: [9:14] Yeah. Right. But your wife

Dan Austin: [9:15] is not a dude in Go Bundits, she's just smart. I wanna ask you a question about this, because we kinda brought it up I think earlier before the pre shows, like cash flow. So it sounds like this person that you guys knew bought a business at cash flow really well and had a low time commitment. When you talk about that cash flow and and maybe this person was super unique, but like what are you expecting out of an investment from like a cash by cash return? Because that's what else all us real estate guys think of.

Jordan Berry: [9:41] Yeah. I almost hesitate to tell you because Okay. How big is this pie? I just don't want everybody flooding into the laundromat space but Yeah.

Dan Austin: [9:49] All We're gonna steal your idea.

Mike DeHaan: [9:50] Dude, you can talk about whatever, no one's gonna do it anyway. We give actionable advice every single week and people still ask us the same questions that we've been talking about for two years.

Jordan Berry: [10:00] So your podcast is like my podcast. You got the same listeners probably.

Mike DeHaan: [10:03] Exactly. Probably. Honestly

Jordan Berry: [10:05] though. We love you guys. Listen, the one thing I've learned as a podcaster over here is that you don't insult the people listening to your podcast, which is what we're doing right now. So I'm sure they're good looking though. So they've got that going Now for to answer your question, so the so the average kind of base hit laundromat, and let me preface this by saying like, I'm a real estate investor, I have commercial and residential real estate, not a ton, but I have both, and I love real estate investing, and it's probably my So first with that said, the average real estate deal can't touch the average laundromat deal when it comes to cash flow at And your average sort of base hit laundromat is looking at a 20 to 25% cash on cash return, that's unleveraged. So once you throw a loan on that, that number just kinda goes up from there. And again, I wanna also just say upfront, this is not a passive, it's sort of billed as a passive income, it's not a passive income, but you can set it up. I see passivity as like a scale. Right. And you can set it up to where it's pretty heavily weighted on the passive side, but it's not totally passive. It is a business and you need to treat it like that. But pretty good return on your investment for the time commitment there and it's tough to beat that with any other business really.

Dan Austin: [11:26] Yeah. Yeah, that seems like super good and I like what you're saying about passive because what I hear a lot of people talk about, what it's like small business ownership is like, can you be an absentee owner? Meaning, can you be the owner and not have to be there? You could be in your condo in Hawaii while it still prints money and usually in a lot of small businesses, if that's what you want, you can set it up that way, granted you'll have less return because you need people and staff. Mhmm. But I would, and I would assume a laundromat as you put managers in place and those sorts of things, it becomes more passive for you as the owner.

Jordan Berry: [11:54] Yep. Yeah. Yeah. That's exactly exactly true and you can get that right away, you're just gonna you're gonna pay for it. Right? You've gotta buy a higher performing laundromat and you're gonna get a little bit less return because you're gonna have to have that, just a higher tier, that next tier up of employee that's gonna command a higher salary or wage.

Mike DeHaan: [12:14] Sure. Totally. Yeah. Like what sort of things do you even look for when you're looking at laundromats, right? Like where do even find them if you're gonna buy? Do you end up approaching people directly? Are you just looking on like biz buy sell? Are you looking at, I don't know, like a conventional whatever else? Like brokers or I guess I don't know, doing marketing?

Jordan Berry: [12:34] Yeah. So I do a ton of consulting and coaching in this space and all over kind of the country and actually other countries as well, but you know, predominantly The US. And so I actually had this benefit of being able to see the market kinda all over. So right now there's, thank you Cody Sanchez and Brandon Flickter from Investment Joy, but there's more interest in laundromats than ever before, and there's less inventory than there is demand for laundromats right now. So, it can be tough to find them actually right now. So you can't find them on like, biz buy sell, stuff like that. But what I'm seeing a lot of success with with my consulting clients is three kind of main avenues that people are finding these deals predominantly. So one is going to those biz buy sell, biz bin, biz quest, biz, they're all biz something, right? Like biz happy place or whatever. Checking out the deals there, yes, and sometimes you can find deals or make deals out of those, but the sort of secret sauce of that is actually reaching out to the brokers. So usually if you're in a bigger city, there's laundromat specific brokers and or small business brokers. And actually reaching out to them and letting them know what you're looking for, where, what your criteria, price point, that kind of thing is, and really trying to build relationships with as many brokers in your market as possible. Because still by and large the majority of businesses in general, real estate in general, but Laudermat specifically are sold through brokers, so they tend to be the gatekeepers. Yeah. And a lot of times those sell before they end up on those biz whatever sites.

Jordan Berry: [14:11] So you wanna be on the inside with as many brokers as possible to find those deals. Yeah. So that's one. Two and three are similar to real estate, so that'd be like direct mail marketing and door knocking or just showing up at the laundromat trying to find the owner and have a conversation with them.

Dan Austin: [14:26] I I'll second that broker relationship. I've talked to just recently, the last six months, probably made contact with a couple brokers here, just random like acquaintances basically, just through the grapevine of like, oh, and I end up like, yeah, I'd love to talk to an actual business broker. Because there are people, what they tend to do is they'll go value a property for somebody, they'll do a run an analysis, like we think your property's worth this much, and it's usually a little bit high because they want those people to sell their business with them, which is fine, all know that, they all tell each other, they always say like, the other one always tells you that the other guy's always high on his valuation.

Jordan Berry: [14:58] Oh, sure.

Dan Austin: [14:59] But you would be so stinking surprised about the amount of businesses for sale in your market that aren't on biz buy sell, because like the one guy I talked to recently, he's like, yeah, honestly I stopped using biz buy sell because I just kept getting spammed. So he's like, just now just listed directly and obviously doesn't have any problems selling businesses, but you know, maintaining those relationships and continuously, you can't just call these people once, but if you can maintain that relationship over a long period of time, you'll find probably, if you're very specific on your laundromat search, you'll probably find whatever business that is.

Jordan Berry: [15:31] Yeah. That's totally true.

Mike DeHaan: [15:32] When you're looking at these deals, is it normally just a business or are you ever buying it like with the building? Because I I mean, these ones I've always seen are always in like strip malls and different stuff.

Jordan Berry: [15:41] Yeah. Both. Yeah. There there's people out there that own laundromats that are like, I will never buy a laundromat unless I also can buy the real estate, which is great. Some markets, that's just not feasible and sometimes it just doesn't make sense to do that. But I always say anytime it does make sense and you have that opportunity, buy that real estate. Because number one, a lot of times you can get better financing terms if you're buying the real estate. Banks are way more happy to lend on a piece of real estate than they are on a cash business where the taxes don't match up with the bank statements and the P and Ls and nothing matches. So that is helpful, but also you can build a lot of equity and gain a lot of tax advantages from having the real estate along with the business. Sure. But I always say, kinda my opinion on it and my perspective on it is Laundromat's are a cash flow business. They do have really good tax advantages also. A lot of equipment to depreciate and stuff like that. And you can build equity in them, although the equity builds slower in laundromats than it does in real estate. But they're predominantly a cash flow business, right? So for me, it's not a big deal if I'm leasing the space if I don't own the real estate, as long as the cash flow numbers make sense.

Mike DeHaan: [16:54] Yeah. So like when you're going into these, what are the main things I guess that you're looking for? Is there like a certain size that's a sweet spot? I'm assuming you don't wanna buy one that has like four stackable washers and dryers. In fact, that'd be a giant waste of time. But also, I mean, if there's one that has like a 100, does that even exist? Like, I have no context for what's a little or what's a lot or anything with this stuff.

Jordan Berry: [17:17] Know it's funny, just interviewed a guy on my podcast, his episode didn't even come out while we're talking at least, who's in Brazil and there's this huge influx of tiny laundromats that have like three washers, three dryers. A hotel. And they put them in like shopping centers, like shopping malls or grocery stores and stuff like that, so people can go throw their stuff in and go do their shopping and stuff. So it's kinda interesting.

Dan Austin: [17:43] That is interesting.

Jordan Berry: [17:44] There is a business plan where that works. But you know, in The US, that's not super common. So you know, the average sort of size of a laundromat's probably somewhere between two thousand five hundred and three thousand five hundred square feet, but there's laundromats, there's one down the street from me, I was just at, an awesome laundromat, but it's 11,000 square feet, it's gigantic, it's got over a 100 machines in it. But probably averages 2,500 to 3,500 square feet. Right. But also the size only matters so much. I've got a buddy who was on the podcast a long time ago. He's got a 600 square foot laundromat and he does over 6 figures worth of net income out of that 600 square foot laundromat. But he's doing more active, he's on the service side, pickup and delivery laundry also in addition to self serve.

Dan Austin: [18:34] It's really not about the size of your laundromat, what you do with it.

Mike DeHaan: [18:37] So there you go. You're just waiting for that one, Dan. You're sitting there, you're so proud of yourself.

Jordan Berry: [18:41] I've been telling my wife that for a long time and she's I don't know.

Mike DeHaan: [18:45] But she keeps saying, I I want the bigger one though. Yeah. Want the bigger one. Has an accent. Oh, wait. I want something different?

Dan Austin: [18:51] So this actually, the way you say this, not about the size thing, but the comments about the strip center because you're talking about these micro I

Jordan Berry: [18:57] don't even know what we're talking about anymore.

Dan Austin: [19:00] It's rattles. But I just have this, Mike knows, I have this fascination, it's probably because of where we live, where I'm like, I need to buy like an e cigarette vape store and like, but now that you're like, they're always in like strip malls next to like the fingernail place and it's starting to make sense now though, like you can put a laundromat in a strip mall because there's other things they can do, so they do their shopping Mhmm. Right next door to it. Maybe you do get a vape store to move in next door because then they can go get their vapes or whatever and I'm totally stereotyping you and I shouldn't do that, but I just feel like that's a common thing where we're at, like laundromats and vapes seem to be super common in weed stores because we're in Washington. So you can stack some of those in there, plus like a grocery store, and so then the people are more likely to come to your location, increase your profits.

Jordan Berry: [19:44] Yeah, and the good thing about the vape store or the weed store is that, similar to laundromats, it's a very habitual thing, You gotta do laundry. You gotta come every week. Every week and you gotta go kinda refill that stuff. Yeah, if you can associate them together. No. Yeah. I mean, I think there is a lot to say with these businesses that there's synergies with them, they cater to similar demographics. Same with like a Dollar Tree or Dollar General, whatever the dollar stores are now. Sure. Fast food restaurants, a lot of that serves similar demographics. That's kind of a shortcut to finding out if this is a good spot to put a laundromat or not. Or at least a self serve laundromat.

Mike DeHaan: [20:24] It's also a good idea too, right? Because if you have like the weed store and the vape store, and you have the fast food joint, they all both make your clothes fricking stink, so you're gonna have to keep coming back to do more laundry.

Dan Austin: [20:34] Go and doing laundry, gosh dang.

Jordan Berry: [20:35] And you're gonna get the munchies, you got the grocery store there, it's all Taste

Mike DeHaan: [20:38] it right.

Jordan Berry: [20:39] It all ties together. This is full circle. I never thought I would go here.

Mike DeHaan: [20:42] Yeah, that's interesting. So when people are looking at these places, I imagine traditional financing was like SBA loans or seller financing. I guess let's say you're in a scenario where you're able to get a killer financing terms. You're gonna have a seller that's going to care 100% you don't have come any money out of pocket.

Jordan Berry: [21:01] Mhmm.

Mike DeHaan: [21:02] You're still gonna need money to operate this thing, reserves. What should people expect to even have liquid available? Like how much are these machines? Because I imagine they're more expensive than just like the ones that you get at Lowe's for a rental property.

Jordan Berry: [21:15] Oh yeah. So your machines are probably ranging from 2 to $25,000 a piece depending on

Mike DeHaan: [21:21] 25,000 a piece?

Jordan Berry: [21:24] Yeah, so you've got machines that do like 125 pounds of laundry, they're massive machines they're gonna be that 20 to $25,000 range, but you're charging $18.20, sometimes more than that per wash, dollars per wash out of that machine it's getting people in and out quickly because they're just throwing everything all in one big washer. They're doing all of it in one washing machine in an hour, they're in, they're out, everything's dry, maybe it takes longer to fold but No one's doing a 125

Mike DeHaan: [21:58] pounds of laundry. They're doing like an entire like little league team?

Jordan Berry: [22:01] You'd be surprised. Bodies. Yeah. You don't have kids yet. That's why. Kids are filthy disgusting creatures. Disaster. And they just make a mess of everything. That's Yeah. That's what it is.

Mike DeHaan: [22:12] That's a ton though. So and like with that, can you are there ways to get financing for the machines? Or do you need besides like a credit card or like a business line of credit? Like if you went and you have this as a again, I don't know what the options even are for that. Like do you Yeah. Those large like laundry machine companies, will they like finance that to you so that you can actually use additional leverage?

Jordan Berry: [22:34] Yeah. And a lot of times you can do, so the manufacturers will offer financing, a lot of times you can do a 100% financing on the machines too.

Mike DeHaan: [22:41] Wow. So there's acquisition financing and then there's That means it's free.

Jordan Berry: [22:45] Yeah, and you just let the business, I mean obviously the business has to be able to support that, you've gotta have game plan on how

Mike DeHaan: [22:52] you can make it support that if it's not there yet. That could be part of your plan to increase business and increase revenues, So you wanna be smart about that, obviously. But, yeah, a 100% financing terms are available for equipment purchases. Hey. We really appreciate you being a listener of the Collecting Keys podcast. Did you know that we also are on social media and on YouTube? Should go and shoot us a follow on those as well. You can find both Dan and I on Instagram. I am at Mike underscore invests. Dan is at investor man Dan. You can also find short clips from the show at collecting keys podcast on Instagram. And if you wanna see our faces talking when you're listening to this show or you wanna check out some of our crazy animated adventures we've been putting together into some funny little web cartoons that sort of show the crazy stories that guests tell on the show, then you should go over to YouTube and check out the collecting keys channel. Shoot us a subscribe over there. It really helps continue to grow our audience. We really, really appreciate it. Well, anyways, enjoy the rest of show you guys. We appreciate you all.

Dan Austin: [23:51] So is the better play then because because like you're saying like the to me, it seems like a capital intensive business to start because but now that you're saying you can get financing potential for the manufacturers, you get a 3,000 square foot building and you wanna retrofit it, is it a better play to do that or just find one that's for sale and buy it? Because you know, I don't know which one would be better. It seems like it'd cost more if it already has cash flow.

Jordan Berry: [24:14] Yes and no. So the downside, you can actually retrofit, obviously, white box, you know, and turn it into a laundromat. The downsides to that is that, you know, laundromats require a lot of infrastructure, so you got a lot of plumbing, gotta have larger water lines, you gotta have larger sewer lines, you gotta have more electrical capacity. So typically you're having to increase or install a larger water meter, install another one or two electrical panels, and then you're running all that stuff. So there's a lot of build out

Mike DeHaan: [24:48] costs Okay.

Jordan Berry: [24:49] That go along with that. And then one thing that can be cost prohibitive depending on the areas, this varies wildly depending on the area. So if you're thinking about building one out in a white box, this is definitely something to look at before you get too far down that road. Is something called impact fees. And impact fees are You know, there's a lot of ridiculous government fees out there. Impact fees have gotta be towards the top of the most ridiculous. It's basically like a thumbs up, like an A Okay. We're gonna allow you to connect to the sewer lines. It's not a permit to do that. It's not the actual connecting it up. It's just an okey dokey fee. It's super ridiculous. Some places don't have them at all, but I was looking to build out a 3,000 square foot white box space here. Awesome location here in Southern California with a couple partners and we got down the line and we finally discovered that those impact fees were charged per machine. Cool. And in that 3,000 square foot space, it was gonna be $390,000 just for the impact fee alone.

Mike DeHaan: [25:55] That's crazy.

Dan Austin: [25:56] That makes sense. So, you know,

Jordan Berry: [25:57] in that case, I mean, that killed that deal, because that's not any of the permits, that's not any of the build outs, that's not any of the machines. So that took our $1,200,000 build out to a $1,600,000 build out, and it just didn't make sense anymore. Yeah. Yeah. What are some of like the

Mike DeHaan: [26:13] I guess on top of those fees, like the biggest operational things that people probably don't think about when it comes to like these laundromats?

Jordan Berry: [26:21] Yeah. So, I mean, when you first acquire, actually If anybody is out there who searched how to buy a laundromat or something like that on YouTube specifically, there's a lot of content out there about quote unquote free laundromats, which is kind of an interesting The essentials on the free laundromat is you find one that's closed down and you negotiate a new lease, then you 100% finance equipment, and you get the landlord to pay TI to do tenant improvements, to fix it all up, and all that, which is technically possible. It's much, much more difficult to do now, and it's the riskiest way to get in this business, but it's technically possible. But what a lot of people don't understand is that there's actually a lot of money that goes down in front. So you've got, a lot of times you have utility down payment deposits, you've got rent deposits, you've got a whole lot of these sort of upfront costs, and especially if it's not up and running when you take over, you've got carrying costs until you can get up to profitability. I've seen that mistake happen multiple times where people didn't factor in how long it was gonna take to get to profitability. And so that can kill your deal right out of the water if you're not capitalized well enough. Right. Yeah. That makes sense.

Jordan Berry: [27:36] And

Mike DeHaan: [27:37] then operationally, what are like the things that you do besides being next to a fast food joint and vape store that like make it so that yours, your lodger map's the one that they come to. I imagine proximity is a huge part of it to the target demographic, but like let's say you have another one across the street.

Jordan Berry: [27:53] It

Mike DeHaan: [27:53] is. How do you make it so that yours is the best one?

Jordan Berry: [27:56] Well, I mean you wanna take care of the basics. This seems really obvious, but if you've ever gone into a laundry mat, you've probably seen what we call a zombie mat, which is, you know, dingy, half the machines are out, half the lights are out, maybe homeless people are sleeping in there, and there's just a lot of those around there. So take care of the basics, number one. Keep the place clean, keep it safe, you know, make sure all your machines are up and running, make sure there's change in the change machines if you're running with coins or your card readers are working. You know, just the basic stuff, number one. Number two is it's like any other business, right? The customer experience and that feeling they get when they come to your business, it matters, right? It's gonna determine, you know, really the people that are right here around your laundromat, most likely they're gonna come to yours unless you're really screwing things up, right? And really only kind of competing with other laundromats for a relatively small number who kind of go either way, right? So you wanna make sure they have a good experience. So that's if you have attendance there, it's making sure that they are trained to be friendly and greet people and help people and answer questions. If there's a problem, you as the owner or your attendants take care of it quickly. It's all that customer service, that unreasonable hospitality sort of mentality is gonna set you apart. And then obviously you can add other things in there like having an ATM machine to make it more convenient in there, having vending that has detergents and stuff so if they forget something you've got it, snacks and stuff like that. So there's a lot of little things that you can do to kinda enhance that customer experience but that's a huge a huge part of it for sure.

Mike DeHaan: [29:41] Sure. Nice. And then I guess if somebody wanted to get into this space, what are like the first sort of steps they should do aside from just like contacting brokers? Like for them, personally, to be fully prepared for it. I mean, that was just the educational piece. Is it like more about is there like technical stuff they should be learning? Is it just like you understand business, you can kind of piece it out? Is there a lot of financial sort of preparation they should do?

Jordan Berry: [30:08] Yeah. I have a not to kind of promote this, but there's a I have a free course. It's it's free. It's three lessons. It tells you how to find it, how to analyze it so you can value it, and then how to do due diligence. That due diligence piece is the most technical part of the process because, listen, this is a cash business, right? And one huge benefit of the cash business is that seller financing is actually fairly common in this industry, which is sort of like the mythical unicorn of real estate. Everybody's looking for seller financing deals, It's pretty common in our industry. But the downside to that, sort of the flip side of seller financing being available, is that it's available because a lot of times the income doesn't match up with what's on their taxes and what's on the banking, so you can't actually get traditional financing for it a lot of times. And it's hard to verify how much money's actually coming into this place and how much money's actually going out and how much is left over. Right? So that due diligence process is probably the most technical part of it. So researching there, but also just kinda getting to know some other people in the community. You can do that through, you know, listening to the podcast or getting in a Facebook group or going on forums or something like that. Yeah.

Jordan Berry: [31:24] But those two things, sort of the education and the getting to know some owners and getting the real scoop. I'd recommend.

Mike DeHaan: [31:30] Yeah. Yeah. And then, so when you say like the finances tend to be kind of weird, is that because they're depreciating so much because of the equipment's involved or because they're skimming money off the top because most of what they get is in coins and cash?

Jordan Berry: [31:45] Yeah. I like to say this. Laundromat owners are either really really bad at keeping the books. Yeah. I've literally gotten, I watched, one time I was actually the broker in the deal and we were trying to get a P and L from the seller and I literally watched as they grabbed a napkin off the center console, it on the hood of their car, and started writing out the P and L on the napkin in front of me.

Dan Austin: [32:11] Tell you,

Jordan Berry: [32:11] And seen those things. Memory, you so they're either really bad at keeping books or they don't keep books or they're really good at keeping books. Hey. Like maybe they have more than one book even. I don't know. Yeah. You know what I mean? Yeah. The

Dan Austin: [32:25] real one and the fake one.

Jordan Berry: [32:26] Yeah. Obviously there's a lot of depreciation, but you can see the depreciation. Right? And banks can look at that depreciation and see, okay, that's depreciation, so we'll add that back in. But it's just, it's been sort of this long, and I actually don't recommend skimming off the top. I think you actually lose more than you gain from skimming off the top, and I don't think you need to because there's so many good tax advantages of owning a laundromat. Yeah, either. But, really common in this industry especially from a lot of like the old school laundromat owners.

Mike DeHaan: [32:55] Yeah. But the tax advantages are even better if you're making less money.

Jordan Berry: [32:59] Yeah. Right? True. That's true. Yeah.

Dan Austin: [33:02] So. I do have one more question along that lines because you say self financing and everybody talks about SBA financing which is really not like an incredibly good product, you know, from an interest rate standpoint all the time. It's not always the best product.

Jordan Berry: [33:15] Just down payment, I think.

Dan Austin: [33:17] Yeah. Right, exactly. That's the major advantage, right? No, like low down and they will put a lien on your house for some of the equity, which could be a good or bad thing. But like, they are an asset intensive business, is it when you're buying these? And I say that because on an SBA loan, if it's goodwill value, meaning like you're basically just saying you make this much money, I wanna pay you three times that, SBA sees that as like, I don't care, you still have no assets that we can take if you don't pay us. So they care about assets and they will loan against the assets and everything else, like I said, you either have to come to the table with cash or you have to they'll put a second position lien on your on your mortgage for some of the up to the whatever the equity you have. So is it because these laundromats likely have depreciated a lot of those assets so that there's already no value there anyways or is it more of a the seller finance more just a product of that's just the the name of the game because of the cash flow situations?

Jordan Berry: [34:09] Yeah, it's more because of the name of the game because of the cash flow people kinda, books not matching up skimming That's off the a huge part of it for sure. I have actually a guy in GoBundance, Bo Eckstein, he actually does a lot of SBA loans with laundromat guys and he just finished getting one with the person that had no collateral whatsoever and so, but he was able to get an SBA loan. Oh wow. And the way they did it, I don't know all the technicalities of it, but essentially the way they did it was they create, they essentially said, okay, this laundromat's here, but it's gonna be a start up. We're essentially starting it over. And SBA lended money on it based on it being a startup as opposed to an acquisition. Oh, interesting. Yeah. So there's some things that you can do with SBA. The other side of it is even with, even if an owner does have good books, which does happen, even if they do have good books, a lot of times they don't wanna jump through all the hoops SBA throws at them because it's a lot of work, a lot of time too. SBA loans usually take longer to go through too.

Mike DeHaan: [35:18] Yeah. They do. Awesome. Right on. Well, just as we wrap up here, I wanted to go into really quickly your roll up strategy you're planning to do with buying these portfolios. I know we talked about that with you, Rashford. I think it's really interesting. Yeah. So you mind touching on that really quick?

Jordan Berry: [35:32] Yeah, so I was doing a podcast interview with a guy one time, and I've been saying for a long time, look, I think we saw this happen with storage, we saw this happen with car washes, I think it's coming for laundromats. We finally are starting to get our act together over here in adopting technology that allows you to ditch the quarters, that allows you to manage multiple locations, and I think that there's gonna be more and more, and we're already seeing it, more and more sophisticated business owners and investors coming into this industry and running it like a legit business, not like a mom and pop. And this guy on my podcast was saying, yeah, there's a $100,000,000 laundromat business coming within the next five to ten years. And after that, started thinking about it. Was like, there is a $100,000,000 laundromat business coming down the pipeline because it's doable now. And then I was like, well, why am I not doing it? If it's gonna happen, I should just do it. So that's the direction I'm moving towards right now. We're gonna partner with investors and go out and try to buy a few 100 laundromats and roll them up and either sell them as a portfolio to private equity or hedge fund or something or take it public. Those are some of the exit strategies we're looking at, and what's interesting about it is that because they're cash flowing businesses with great tax advantages, we can get a lot for even paying like a regular sort of base hit average deal, and then with sort of our operational knowledge, we think we can increase obviously cash flow and equity there.

Jordan Berry: [37:09] But also we think that there's an equity premium to be had just by putting them all in a portfolio. I think there's a lot of upside from a lot of different angles and we're already seeing a lot of interest from investors in being a part of that. The trick now is just finding those deals to buy. It's one thing to say you wanna go get a few 100 laundromats, but this is a very fragmented industry, and so having to do a lot of onesie twosies, and it's just hard to hard to get them quickly that way. Yeah. Yep. Could you do

Dan Austin: [37:43] like a massive Google search for laundromats and then like have it be a scrape off, skip trace all those people or scrape their numbers off of them?

Jordan Berry: [37:50] I have all of them, yeah.

Dan Austin: [37:51] You do? Okay. So you've done it. Now you just gotta get ahold of them?

Jordan Berry: [37:54] Yeah. I have every laundromat that's online at least. Yeah. Oh, that's it. I've got a list. Good for you.

Mike DeHaan: [37:59] Well, definitely wasn't online. You gotta get out there and start winning the payment. What you what you should do, have you ever seen on they'll have like those competitions, they're like basically Google Maps competitions where they'll be like Yeah. You gotta find like this place in Russia. You should hire some of those guys, find you laundromats all around The United States.

Jordan Berry: [38:17] I know, that's true.

Dan Austin: [38:18] Right on. Yeah, insane.

Mike DeHaan: [38:20] They're insane. Yeah. They know like everything.

Jordan Berry: [38:22] Yeah. It's like a picture, they see it for three seconds, they're like, oh yeah, this is in middle of nowhere Brazil, and you're like, what?

Dan Austin: [38:29] Is that? Such a cool, but also wasted skill.

Jordan Berry: [38:33] Yeah. I mean, like

Mike DeHaan: [38:34] Yeah. You should hit up those guys on on Twitch or their OnlyFans or whatever they do and see if they'll help you out find some

Jordan Berry: [38:42] laundry. I'm too busy making my own OnlyFans. I don't have time to go on this. Come on.

Dan Austin: [38:47] Only laundry.

Mike DeHaan: [38:49] Only laundry. Yeah, right. Cool. Well, good stuff Jordan. Very interesting what you've been putting together. So we have our typical end of show questions that we normally ask. We'll change them a little bit for you because you're not strictly a real estate guy. Alright. Let's do it. But the the number one question that we have is, normally what is your craziest real estate investing story? But on yours, you have laundromats. I'm sure you've had some weird laundromat stories. What is your craziest laundromat story that you've had?

Jordan Berry: [39:15] Gosh, there's so many. Well, so we didn't really even get into my first laundromat, but I bought that one. It did not work out like the friend of the family's who scored. We ended up losing a ton of money for a lot of years to you figure know, what in the world's happening. There's a stat that floats around that says laundromats are 95% success rate. And I was like, how in the world am I in the 5% that can't figure out this easy business? Right? But one of the problems was I bought a zombie mat, which ended up being gang turf, gang territory. Really? And so I ended up literally having to fight for my laundromat. So I did, lucky for me, I had never used it before, but I had taken Krav Maga for fifteen years, which is like Israeli hand to hand close quarters combat. Oh, yeah. Never used it before in my life and I put three people in the hospital. Krav Maga'am? Yeah. Krav Maga'am. That first like six months of owning that first laundromat. And I'm literally like, dude I've got two young kids. I should be on a fricking beach in Hawaii and I'm over here fighting. This is like, and losing money at the same time. This is not what I signed up for. Like this is miserable.

Mike DeHaan: [40:30] So what is the scenario that's even happened? Is this like you just went and decided to open up a can of whoop ass on these guys? Or were they like

Jordan Berry: [40:37] They're happening. Come

Mike DeHaan: [40:38] on. 9PM. You're fighting

Dan Austin: [40:41] You're for your wearing the wrong colors man.

Jordan Berry: [40:43] I'll tell you my favorite one because it is kinda funny. So I walked in one day and this guy was just out cold sitting on the bench. He was just like slumped over, chin to chest, out cold. He had all his stuff. It might have been everything he owned was all laying out on one of the folding tables. There was like drug paraphernalia and stuff. So I'm like dude, what the heck? So I go to wake him up. I'm shaking the guy. I'm like, hey, hey, hey. I'm shaking him like non responsive whatsoever. Not responding at all. And I was like, dude, is this guy and I didn't wanna get too close because I didn't wanna come to you and I don't know, dude. There's a ton of crazy stories. You know, so I called an ambulance, and I was like, hey, I don't know if this guy is dead or what, but he's here in my laundromat. He's non responsive. So the ambulance came, and right before they got there, he actually came to you, he woke up. And I was like, you okay dude? Are you alright? And he's like, hey, yeah, fine, fine, fine. Alright, well I was like, just to let you know, I was trying to wake you up, weren't responding, so I called the ambulance, they're coming. The ambulance came and he was very combative with them. They were like, are you okay, what's going on? Can you answer? They said, you need to answer three questions so we can determine if you're with it, if you're good or not.

Jordan Berry: [42:03] And he was not answering, so this one real big EMT got in the guy's face and was like, look, I'm gonna throw you in the ambulance. I'm gonna strap you to the bed and throw you in the ambulance if you don't answer these three questions. What's your name? What's the date? Yada yada yada, whatever they were. So finally the guy, he was intimidated because this guy was huge, and he answered the questions. So the ambulance left, and then meanwhile I'm in the back, and I'm just doing whatever I'm doing. Cleaning or stocking the vending machines or whatever and he is like yelling just obscenities. He's like I'm gonna f you up blah blah blah. He had an earbud in so I thought he was on the phone. And eventually I was like, are you talking to me? Like, have you been talking to me this whole time? I thought you were on the phone. He's like, yeah, I'm talking to you. You effing narc'd on me. And I was like, didn't narc on you. Thought you were dying, man. I thought you were dead. I called the ambulance. And he And I was like, he's starting to get combative and in my face. I'm like, look, I don't have any pride with these guys. Dude, you live on the street. You've got nothing to lose. Call me whatever you want. Call my mom whatever you want.

Jordan Berry: [43:04] I don't even care. Your opinion means nothing to me. So I'm like, look dude, I'm gonna go. So I was gonna leave and then just call the police to have him come escort him out. But he stepped between me and the door and he wouldn't let me pass. And he shoved me and I was like, listen, I don't have any problems with you. I'm just gonna go. And so I tried to go around him again and he threw a swing at me and he missed. But as soon as he threw a swing at me, I'm like, look, I'm not gonna get caught by a sucker punch or a lucky punch or whatever, hit my head on the folding table, and go out cold, because then who knows what's gonna happen to me. And so as soon as he threw that punch at me, I reared back and I hit him hard three times in the face, and as he was falling backwards, I sorta like cradled him down to the ground, and while I was cradling him, I actually hit him with three hard elbows on the way down, and he was out cold.

Dan Austin: [43:56] You're like, I'm helping you so you don't fall and hit hard.

Jordan Berry: [43:57] Yeah. Then, I called the ambulance again because he's out. He's down. The same ambulance comes back, and they put him on the stretcher and they haul him out and then the big dude who was there before, he came back in and he's like, dude, I wanted to do that so bad. I'm glad you got a chance to do it and fist bump me and left. That same ambulance came back and grabbed him. That's crazy That's wild. Yeah. That's crazy. Krab Maga. He got Krab Maga.

Mike DeHaan: [44:25] Yeah. He

Jordan Berry: [44:26] did. Krab Maga. He got Yeah. No Krab massage happening over here. Only Krab Maga.

Mike DeHaan: [44:32] That's awesome. Alright. Next question. What is the number one tip you can give to a small business owner to really take their business to the next level?

Jordan Berry: [44:40] Dude, genuinely, the best thing that you can do is find somebody who knows what they're doing in your space and cozy up to them. If you gotta pay them, pay them. You're lucky enough to know somebody. Just ride those coattails with the standing on the shoulders of giants. I learned a lot of hard and expensive lessons that I didn't have to learn by myself. Coulda got those from someone else. I like to say, if me, when I first bought my first laundromat, coulda had a fifteen minute conversation with me now, woulda saved me over 6 figures. Easy. So find somebody in your space and learn from them, whether you gotta pay them or or whatever. Do what you gotta do.

Mike DeHaan: [45:18] Exactly. That was huge for us and I think that people get this weird aversion to doing that. But paying for help. Yeah, or they feel like, I don't there's a lot people that feel like it should come for free.

Jordan Berry: [45:29] Just

Mike DeHaan: [45:29] because they're like, oh well you're already successful. Or if you're really that good you wouldn't be getting money for it. I'm like, no, it's because my time's actually worth something and I don't know if you're worth my time yet.

Jordan Berry: [45:39] Yep, that's exactly right.

Mike DeHaan: [45:40] So cool. Last question, where can people find you, follow you and reach out to you?

Jordan Berry: [45:44] Yeah, so laudermaresource.com is the platform. It's Lingeromat Resource. A lot of people put a Y in there, but it's no. Laudermatresource.com. I mean, can just Google anything laundromat related on. Laundromat Resource will probably pop up. Laundromat Resource Podcast, if you're a podcast listener and interested in that, I interview long form interviews of laundromat owners and other industry professionals. Super popular, weirdly popular podcast for a laundromat podcast. And then my email is jordan, j o r d a n, laundromatresource dot com.

Mike DeHaan: [46:14] Cool. Well, Nice right on guys. You guys should definitely go and give Jordan a follow, check out his podcast. And if you have any interest in launch mats at all, shoot him a DM. If you case you guys missed it, he's trying to do a big roll up right now of all these different launch mats. So if you have any near you that you might be wanting to purse, you're trying to figure out, I would have a bet he might be interested in partnering with you on it and making you a part of that endeavor.

Jordan Berry: [46:38] So That's right.

Mike DeHaan: [46:39] Don't be afraid to reach out to him. I know there's a bunch of you guys out there that are kind of like suckers for deals, and you're always looking for your next opportunity. If you happen to have your laundromat, hit up Jordan because he will definitely be able to help you out there. So Jordan, man, thanks so much for coming on the show. We really, really appreciate the time. And everybody, thanks so much for listening. And we'll talk to you guys next week.

Dan Austin: [46:58] Thanks, Jordan.

Jordan Berry: [46:58] Appreciate it, guys.