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Everything You Need to Know About Escrow with Justin Suh — Transcript

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0:00If you're a newcomer or somebody who's
0:02just trying to get into the business
0:03because, you know, on the internet you
0:05saw or whatever and you're just not
0:07sure, you're not even know what to look,
0:09>> [music]
0:09>> it's highly, highly, highly recommended
0:12to get with an experienced agent and a
0:14broker. It's definitely going to help
0:15you deal with less headaches down the
0:18road.
0:19People need to understand is that bulk
0:21sale and real estate are two separate
0:24thing. And any real estate agent [music]
0:26who's trying to get into these bulk sale
0:28transactions, please don't ever think
0:30it's the same thing.
0:32Hey, hey, what's up, guys? It's Jordan
0:34with The Laundromat Resource Podcast.
0:36This is show 241
0:38and I am pumped as always that you are
0:41here today. Today, this one's probably
0:44more for the newbies. So, if you're out
0:45there looking to buy your first
0:47laundromat, this is actually going to be
0:48super educational and helpful for you.
0:51We've got on the show a super special
0:53guest, a buddy of mine, Justin Sue, who
0:55is with New Century Escrow out of
0:57California and we're talking all things
0:59escrow. So, if you don't even know what
1:01I'm talking about right now or you're
1:02not sure what happens during escrow,
1:05this one's going to be super valuable.
1:06It's going to help you feel a lot more
1:08comfortable during that first
1:09transaction. And Justin is a rockstar.
1:12I can't think of anybody better to do a
1:16a podcast episode on laundromat escrows
1:20than Justin. And we also got a live Q&A
1:23in store for you. So, make sure you stay
1:25tuned for that. But, hey, before we jump
1:28into any of this with Justin, I just
1:30want to say that I'm in your corner. And
1:33I say this at the end of every single
1:35episode, but I'm going to say it at the
1:38beginning of this one because it's so
1:40important and I know some of you guys
1:42don't make it all the way to the very
1:43end. I start talk I start talking at the
1:45very end and you're tuning out already.
1:48Uh so, listen, this episode, every
1:50episode in the past, every episode to
1:52come, every other podcast that's on
1:55business or personal development, All of
1:57those are incredible resources. It's
2:00amazing that we can have the information
2:02that we have today, these days. Um
2:05however,
2:07however,
2:09listening to them, watching YouTube
2:11videos, scrolling on TikTok or whatever
2:15you're doing out there, all are wasting
2:17your time if you don't put stuff into
2:19action. So, every episode you listen to
2:21of the Laundromat Resource Podcast,
2:23every episode of any other business,
2:25personal development, etc. podcast you
2:27listen to, try to pick one thing to put
2:30into action.
2:32This is no exception. So, listen, we're
2:34going to jump into it Justin right now.
2:36Find one thing to put into action today
2:38if possible, but at the very least this
2:41week, and let's stack those actions week
2:43after week, and you'll hit those goals.
2:45All right? All right. Let's jump into it
2:46Justin talking all things escrow.
2:50Justin, thank you for coming on the
2:52show, man. How you doing? Good. Good,
2:54brother. I appreciate you having me on
2:56here. Yeah, uh dude, it's my my pleasure
2:59and an an honor to have you on here. I'm
3:01super excited actually. I think uh you
3:04know, some people might hear this topic
3:06and be like, "Oh, no.
3:08We're going to talk about what?" But,
3:10this is you know, we were just talking
3:12like this is a critical part of the
3:13transaction of buying a Laundromat or
3:16any business or even a house really. Uh
3:19uh and so, and and I think a lot of
3:21people don't understand what it is and
3:23what's happening, and I think
3:25uh a lot of people don't know how to set
3:27themselves up for success. So, I'm I
3:29think this would be really great uh to
3:30to kind of talk through. Before we jump
3:32into escrow and what all that is and and
3:34everything, why don't you just give us a
3:36quick background on you, and then we'll
3:37jump into it. Yeah. Um so, I've been
3:40escrow officer for about uh you know, 4
3:445 years, but I have about 9 years of
3:46experience. Um this has been kind of uh
3:49a family business, and we've been kind
3:51of running it, and uh Helen has been in
3:53the business for 25
3:56So she's been kind of like the the main
3:59focal point of
4:01all the coin laundries. I don't know how
4:02she hopped into it but you know, I guess
4:05she just knew what to do and then all
4:06these agents and brokers started just
4:08kind of calling at her and you know,
4:09just kind of
4:10getting the business going and so you
4:13know, here I am. So I figured she needed
4:15help and you know, I I I helped her a
4:18lot and you know, she's been helping me
4:19with learning everything too and so you
4:22know, we're here to just
4:24help people and just do honest work.
4:26That's all we're trying to do. We're
4:27trying to make sure everybody's
4:28protected and happy and you know, trying
4:31to do the best we can, you know.
4:33Yeah.
4:33>> And yeah,
4:35real real quick. You guys are why don't
4:36you tell us your company name and where
4:38you're operating out of? Oh yeah. So
4:41our company name is New Century Escrow.
4:44We're located in Brea. So if you're in
4:46Orange County, you know, feel free to
4:47stop by.
4:49You know, just give us a call ahead of
4:50time. Don't just walk in but just give
4:52us a heads up that you know, you're
4:53going to walk in you have some
4:54questions. I'm I'm happy to help any
4:56anybody who walks in that has questions.
4:59I've had a few people do that and you
5:01know, it's been really really great and
5:03I've met very very great people through
5:05that.
5:05Yeah, you got to be careful saying stuff
5:07like that on here though. I'm going to
5:08have to edit that out for you otherwise
5:10you're going to get bombarded but
5:12hey,
5:13go go make a friend with Justin and
5:16you know, let him know if you're in the
5:17SoCal area. Do you guys service what
5:19what areas do you guys service
5:21specifically? I know this is not for
5:22everybody. I just want to put it out
5:24there.
5:24>> Oh yeah. I mean we we service all over
5:26California.
5:27You know, as long as it's within
5:29California, it doesn't matter if it's
5:30NorCal or SoCal or wherever it is. It it
5:33could be anywhere. So as long as it's
5:35within California, we can handle any
5:37transaction.
5:38Yeah, awesome. And I'll just say, you
5:40know, up front before we really jump
5:42into it here. I've utilized you guys as
5:45an owner who was buying, as an owner who
5:47was selling, and as
5:49a broker,
5:50and also I've had a ton of consulting
5:52clients who've used you guys. So, you
5:53guys are all over the place, doing a
5:55lot. I'd say I don't I don't know
5:58this to be a fact, but I if I had to bet
6:01money on it, I'd feel pretty safe
6:03betting money that you guys do the
6:04lion's share of the transactions in at
6:06least in Southern California, if not all
6:07of California. So. I appreciate it. I
6:09mean, we're just, you know, just trying
6:11to work hard and just do the honest
6:13right thing and not screw people over
6:16cuz I know especially in
6:18you know, any kind of real estate
6:19industry, there's just a lot of
6:21just a lot of bad you know, bad people
6:23and just bad
6:25apples, but I mean, there's good people
6:27like us. You know, I'm not trying to say
6:29I'm a good guy, but you know, I just try
6:31to do the I'll say it. I'll say it.
6:33You're a good guy. You guys You guys do
6:35You guys do it right. And And I'll say
6:37it real quick up front, too. If you're
6:38not in California, this episode is still
6:40for you. This is all about This is not
6:42California. Some of this stuff might be
6:44a little bit California specific, but
6:46most of this is going to apply to
6:48anybody anywhere who's doing a
6:49transaction
6:51for a laundromat deal. So, I just wanted
6:52to put that out there so you don't just
6:54tune out right away if you're in you
6:56know, Timbuktu, which is what we call
6:58everywhere except California. I'm just
7:01kidding.
7:04That's right. That's right. All right,
7:05Justin. Uh
7:08Break down. What is escrow, you know,
7:11and what is that process like? And And
7:13then maybe we can jump into like what
7:15your company does or an escrow company
7:18does. But what is What is escrow? Can
7:21you just define that for us? Well,
7:22escrow is a non-biased independent
7:25company. Sometimes there's in-house
7:28companies also when it comes to real
7:30estate, but when it comes to bulk sales,
7:32I believe that they have to be
7:33independent escrow company. And you
7:36know, we we as an escrow company are a
7:38non-biased party that we're looking at
7:40the best interests of both the buyer and
7:42seller, you know? We can't favor more
7:44toward the buyer. We can't favor toward
7:46more of the seller and let him slide on
7:48certain things or let the buyer slide on
7:50certain things. We have to uphold what
7:53your agreement is stating and what you
7:56guys agreed upon and that you guys both
7:58countersigned and that you guys both
8:00initialed on. If it's not signed by both
8:03parties and not agreed upon, we cannot
8:05start escrow. We can't have an agreement
8:07that's just signed by the seller and
8:09then, you know, a broker comes to me and
8:11say, "Hey, uh I got this agreement, but
8:13it's only signed by the seller." I'm
8:14like, "Well, we can't really start
8:16because this is not mutually agreed, you
8:17know?" It's just like anything else.
8:19Like if it's not mutually agreed, we
8:20don't really have a agreement in place.
8:23So, that's important to also think,
8:25especially for for sale by owners, to
8:28have an agreement signed by all parties,
8:30you know? I can't work with just a draft
8:32of blank thing because, you know, we
8:33don't want to get caught up in any kind
8:35of fraudulent things or any kind of
8:36weird, wonky, you know, funky, you know,
8:39there's all sorts of weird things that
8:40we've seen. I mean, people send us
8:41fraudulent checks all the time. We're
8:43like, "Dude, what are you guys doing?"
8:44And so, us as an escrow company, we're
8:47making sure we're upholding the
8:48agreement for all parties, you know? If
8:51the buyer says I'm depositing this
8:52amount and I'm getting financing for
8:54this amount, then we're going to be
8:56following that.
8:57Um obviously that will change in the in
8:59the course of the
9:01um you know, the transaction, but mainly
9:03our job is to make sure that the buyer
9:05has the find the verified funds to
9:08purchase this business because as a
9:09seller, you want to make sure that the
9:11buyer has the money, right? That's the
9:12most important thing. And then us uh for
9:15the buyer, we have to make sure that
9:17we're cut we're paying off all the loans
9:20or any kind of tax liens or any kind of
9:23um taxes that's owed by the seller to
9:26make sure that it's not going to be
9:28falling on the buyer.
9:30Um meaning like for example, um you
9:32know, we get tax clearances from CDTFA,
9:35which is California Department of Tax
9:37and Fee.
9:38That's only applicable for coin
9:39laundries that may have vending machines
9:41that you're selling tangible goods,
9:42whether it's soap,
9:44you know, snacks, or anything of some
9:46sort that's a tangible individual good.
9:49They want you to make sure you're
9:50reporting that and also have a seller's
9:52permit. If you don't, sometimes they do
9:55look into it and they might possibly
9:57audit you depending on how many vending
9:59machines you have and how much you're
10:00generating, they might possibly audit
10:02you if you don't have a seller's permit.
10:03So, that's really, really important if
10:05you're planning to sell any tangible
10:07goods in your coin laundry and you own
10:10the vending machines, then you
10:11definitely want to get a seller's permit
10:12and register immediately and file your
10:14sales and everything else with it. If
10:17you're not sure, I would highly get with
10:18a CPA possibly can help you.
10:21We can't help you cuz we're not
10:23authorized or licensed to do any of that
10:24stuff, so highly get with a CPA on that
10:27one.
10:28And then we also
10:30request a tax clearance with Employment
10:31Development Department
10:33making sure that you don't have any
10:35employee wages or taxes that you that
10:37you might have not been filing or what
10:39not and stuff like that. And then also
10:42we also ask about Franchise Tax Board,
10:44you know, do they have any state taxes
10:45that they owe and stuff like that. So,
10:47we clear up all this stuff to make sure
10:50because
10:51not more not more so Franchise Tax Board
10:54but EDD and CDTFA, if any liability is
10:58not paid by the seller and let's say for
11:00example, if we if they transfer let's
11:03say you don't use escrow, you transfer
11:05over store, you buy it from a buddy or
11:06something like that and you find out the
11:09seller has extra mental a
11:12astronomical amount of employee taxes
11:15and sales tax. Oh, sorry.
11:18My office has to turn off.
11:20But
11:21what happens is they consider a
11:23successor's liability, meaning that if
11:25the seller has all these liabilities
11:27that they owe and the buyer takes over
11:29and that you don't use escrow, you're
11:31going to be liable for all those taxes
11:34that that person has not paid, also
11:36including unsecured property tax bills.
11:38And so, you as a buyer, that's why we
11:41recommend to use an escrow company is
11:42cuz we dig up all this
11:44dirt for you, so you don't have to
11:46worry. So, when you when you take over
11:48the business, it's a free clean slate of
11:50a business. You don't have to worry
11:51about, you know, the tax collector
11:53coming after you, you know, filing liens
11:55against your business and then possibly
11:56shutting you down, depending on what
11:59county you're in. So, I know Orange
12:01County is very very strict on that. So,
12:03if you don't pay your taxes and you have
12:04like four five tax liens, they're
12:06possibly going to come into your
12:07business and shut it down. LA County,
12:10I'm not too sure. Um,
12:12they say they do, but sometimes I feel
12:13like they don't cuz some businesses we
12:15have like six seven tax liens that
12:17haven't been paid and, you know, they're
12:18still operating. So, it just depends on
12:20the city and where you're in. Sometimes
12:22they have different codes and they have
12:24different, um, you know, regularities
12:26and all that stuff. So, it's just a fair
12:28warning to anybody, um, you know,
12:31that's looking into purchasing to
12:33definitely use, uh,
12:35an escrow company to kind of look up all
12:37that stuff for them, so they don't have
12:38to stress out and, you know, it's
12:41already stressful purchasing a business,
12:42you know, cuz you're looking at records,
12:44you're doing the coin counts with the
12:45seller, you're also, you know,
12:48negotiating with the landlord on a
12:51feasible lease that's going to make
12:52sense for you and, you know, making sure
12:55that you're going to have a profitable
12:56business cuz I mean, at the end day,
12:58you're buying a business to make money,
12:59right? And if you can't make money and
13:01you're already starting in the negative,
13:02I mean, nobody wants to buy a business
13:04like that. So, that's where we come in
13:06and we make sure everything is clean for
13:08you. So, when you start, you're starting
13:09off a fresh start, you know? So, that's
13:12kind of what we do and
13:14if there is a, um, lender involved, we
13:16do all the paperwork for you. We, you
13:18know, we provide everything that they
13:19need to kind of get the funding going to
13:21make sure that, hey, this is a
13:22legitimate sale. And most likely, if
13:25you're going to use a lender or get a
13:27lender for funding to purchase a
13:28business, most likely they're going to
13:30want you to go through escrow because
13:32there's all these different things that
13:33we do like publication and UCC. They
13:36want to make sure that okay, they're
13:39they're getting all the dirt out and
13:41making sure that hey, if we fund this
13:42business, we're not funding a business
13:44that's into the negative already, you
13:46know, cuz as a lender, you're also in
13:48the you're also in the money-making
13:50business cuz you want to make sure your
13:52client or your borrower is also
13:54successful so that they can pay off
13:55their loan, you know? Nobody wants to
13:58lend to a person that's not making
14:00money, right? Cuz then they're going to
14:01default and everything's going to fall
14:03apart then, you know, all your money's
14:04gone, you know? So, that's kind of what
14:07we do. So.
14:09Yeah, well, I mean, listen, if anybody's
14:11out there listening to this and being
14:12like, I don't even know what
14:15he's even talking about. I mean, and I
14:17think I think that's kind of the point,
14:18right? It's like there's a lot of
14:21there's a lot of risk in buying a
14:22business, right? There's a lot of risk.
14:24You know, and we talk about this a lot
14:27on the acquisition side
14:29from the like, hey, this is a cash
14:32business. It can be difficult to
14:34determine how much money you're actually
14:36making in the business, how much money's
14:38actually going out in the business. You
14:39kind of mentioned that. Yeah. Um and so
14:41there's, you know, there's risk there
14:43when you're buying a business or any
14:45asset really. Yeah.
14:47But in addition to that, there's these
14:49other risks that you're talking about,
14:50right? Where if the seller has these
14:52liabilities and they don't get paid off,
14:55you can inherit them.
14:57The other the other thing that you know,
15:00the thing I appreciate most about what
15:02you guys do, honestly, is
15:04all that stuff, but also
15:08listen, paperwork is like not my strong
15:10suit. It's not my strong suit over here.
15:14So, just having having you guys kind of
15:16go through all the paperwork, making
15:18sure everything's in line, making
15:20>> Make all the signatures are there for
15:22all the different forms that need to be
15:23filled out.
15:24>> Yeah. Yeah.
15:24>> All that is I mean, I think that's an
15:26underrated at least for me, that's an
15:28underrated service you guys provide.
15:31Make sure the paperwork's all in line.
15:33Yeah, I mean, there's always a lot of
15:34paperwork. I mean, there's not only
15:37there's a lot of paperwork in general, I
15:39mean, we have to make sure everything is
15:41countersigned, you know, cuz if nothing
15:43is signed mutually and we start moving
15:46forward, we're acting out of line in our
15:48realm, you know, and
15:50>> Yeah. You have to make sure that
15:51everybody mutually agrees even when it
15:53comes down to like credit for repairs,
15:56right? We have to make sure everybody
15:58agrees, you know, we can't have the
16:00buyer accusing seller, oh, well, this
16:02wasn't fixed and blah, blah, blah, and
16:04then but in if you have a clause in your
16:06agreement that says, well, I'm taking
16:08equipment as is, you don't really have
16:10any grounds to kind of claim that
16:12credit, but I mean, there is adjustment
16:14depending on how cool the seller is. The
16:16seller be like, okay, well, I'll give it
16:17to you. Okay, that's fair. But in in
16:20reality, if you're saying, oh, I'm
16:22taking the equipment as is, then you're
16:24going to be taking as is. There's no
16:26There's no questions or bust. Nothing's
16:27going to be repaired. And so, that's
16:29also important to have those type of
16:31clauses to make sure you're protected,
16:33you know. So,
16:34>> Yeah. um that's why a lot of those
16:35clauses need to be in there to make sure
16:38like, hey, you know,
16:40I'm protected as a buyer. I'm You're
16:42protected as a seller. And so, that's
16:44where also a experienced broker or agent
16:48comes in to have those clauses in there
16:51to make sure he's protecting all
16:53clients, you know, and that's why I
16:55always say, you know, get with an
16:57you know, experienced broker agent in
16:59the coin laundry business, not real
17:01estate because real estate and business
17:04is two separate things. And I've hear a
17:07lot of complaints about
17:08you know, some clients that had real
17:11estate agents as a you know, agent in
17:14this business transaction and they're
17:16completely lost. But, they chose them
17:18because they're asking us a small
17:21percentage of the commission, right?
17:23Like, you know, it's like they're asking
17:253%, you know, which is
17:27You're you're absolutely like kind of
17:29undercutting all the other experienced
17:31brokers. I mean, yeah, the experienced
17:32brokers are going to be charging about
17:34I've seen them up, you know, 6 7% just
17:36depending on whatever, you know, they
17:38could charge whatever depending on how
17:40difficult the transaction is, you know?
17:43And just because someone's cheaper, I
17:46mean, just like anything else,
17:48you get what you pay for, you know? And
17:50that's where I think you I think clients
17:53should really consider it. Yes, it's a
17:55little bit up front, but it'll
17:57definitely definitely save you the
17:59headache of a lot of other things
18:01because if you have an experienced
18:03broker agent, they can be like, "Oh,
18:04well, we can add this into the
18:06agreement." Or we can add this into the
18:07agreement to make sure you're protected
18:09and they can sort it out with you. And
18:11that's why it's really important because
18:13if you do a for sale by owner and you're
18:15just kind of Jimmy rigging a purchase
18:17agreement, I mean, you know, that you
18:20know, that's where it's like, "I can't
18:22help you, you know?" I I can only do so
18:24much as an escrow company. I can't do
18:27the agreement for you and everything
18:29because we'll be acting out of line.
18:30That's not us, you know? That'll be
18:31something an agent or broker or possibly
18:34an attorney that can help you assist
18:36with that. So, don't come at us and
18:38saying, "Hey,
18:39you know, can you help me just do an
18:40agreement?" I can't do that, you know?
18:41So, don't come at us trying to think
18:44that we could do where all these hats.
18:45We're just here to make sure that, you
18:47know, everybody has the money in and,
18:49you know, following the agreement all
18:50that stuff and making sure everybody's
18:52kind of playing by the rules, you know?
18:54That's right. That's right. Yeah, talk
18:55to your broker or call us. We've got uh
18:58people that can help you with that as
18:59well, no matter kind of where you're at.
19:01Put that together.
19:02Well, and the other thing that I I'd say
19:04too is that the
19:06you know, the the broker a good broker
19:08can help you with um Um, you know,
19:10getting those [clears throat] clauses in
19:11there, making sure your contingencies
19:12are
19:14you know, in line with with what they
19:16need to be for that particular business
19:18and there is some nuance with those. Uh,
19:20but usually and I guess I guess I'm a
19:23little biased because I'm a broker over
19:24here. I don't do a ton of brokers, but I
19:26do a little bit here and there. Yeah.
19:27And uh, you know, usually you're going
19:29to get more. I know you're going to pay
19:31for a broker, but usually you're going
19:32to get more
19:34uh, more money for it. Uh, if you use an
19:36experienced laundromat broker or small
19:39business broker who understands the
19:40business.
19:42Um, they're too.
19:44Well, the other
19:46>> Yeah, go ahead. Sorry. Sorry. Oh, no.
19:47Sorry. I didn't mean to cut you off. But
19:49uh, I think it's really really
19:50important, you know, cuz
19:52um, you know, it it it's unless like
19:56the buyer and seller are very they kind
19:59of know what they're doing or they've
20:00been around the block for many many
20:02years. Um, but if you're a newcomer or
20:04somebody who's just trying to get into
20:06the business because, you know, on the
20:08internet you saw or whatever. Um, and
20:10you're just not sure. You're not even
20:12know what you're to look. It's highly
20:14highly highly recommended to get with an
20:17experienced agent and a broker because
20:19they can walk you through and that'll be
20:21like your first step of learning
20:22experience, you know, especially if
20:24you're trying to be
20:25serious in this industry. It's a great
20:28stepping uh, stone and then also a great
20:30tool and then depending on how your
20:32broker and agent and what your
20:34relationship with this, you can also
20:36call them up, you know, for consulting
20:38like, "Hey, I'm trying to buy this." And
20:40you know, I I I don't know what I you
20:41know, I don't know what I'm looking at
20:42or I don't know what I need to look for
20:44and this is where they come in with the
20:46expertise and they kind of walk you
20:47through like, "Hey, you need to look out
20:48for this." Or blah blah blah and you
20:50know, and so that will help you as a
20:52person. Um, yes, it's going to cost
20:54money, but I mean everything's going to
20:56cost money and it's it's definitely
20:58going to help you deal with less
21:00headaches down the road, you know, cuz
21:02if you don't and you know, you acquire
21:04this coin laundry, you don't know what
21:05to look for and the seller kind of gives
21:07you a a coin laundry barely on its last
21:09leg, and it's it's it's going to be bad,
21:12you know, and you're going to be forking
21:13out more money just to fix everything
21:15and just to make sure that you just
21:17recoup all your money, and nobody wants
21:18to go through all that, you know? Yeah.
21:20Yeah.
21:22Yeah. Well, okay. So, you know, one one
21:24thing I get asked a lot is, you know, if
21:27I'm if I'm buying a laundromat and
21:28there's like a a deposit or something,
21:31do I give that to the owner? Do I give
21:34that to the broker?
21:35And I I mean, obviously, like the answer
21:37to that is no. You don't You don't do
21:40that. And I've I've
21:42spoken with multiple people who have
21:44gone that route, who've given like
21:46earnest money to a deposit to the owner
21:49for them to hold, and then the
21:50transaction fell through, and it was
21:52like pulling teeth to try to get that
21:55money back,
21:56and it was not good. So, talk to me
21:58about how how does escrow help with the
22:00money the money issue here? Yeah. So,
22:04initially, before we start anything, we
22:06start drafting escrow instructions, we
22:09we need a deposit, right? That deposit
22:11is just in place in case of
22:14Let's say, for example, if we get all
22:16the
22:17We get our process going, we're starting
22:19to get everything, we start doing
22:21our
22:22due diligence. We're paying third
22:24parties to look up certain records and
22:26stuff. And so,
22:28those costs are nonrefundable, so we
22:30have to make sure we have some funds on
22:32hold to make sure we cover those costs.
22:35And then, we always ask bef- We always
22:37ask the clients before moving forward,
22:39"Are you okay with this? This is a
22:40nonrefundable
22:42thing that we need to pay for? Are you
22:44okay with the Are we moving forward?" To
22:45make sure everybody's serious and
22:47everybody's on board that, "Hey, I'm
22:49really purchasing this business."
22:51Because in our line of business, we have
22:54so many people like, "Yeah, yeah, yeah,
22:55I'm serious. I'm serious. I'm serious."
22:56And then, no deposit comes in, you know?
22:58And we're like, "Okay, well, you know,
23:00nobody works for free. Nobody's going to
23:02work on it if we don't have money, we
23:03don't have skin in the game, it's not
23:05really you're not really serious, you
23:07know? It's like once we see the deposit
23:09we're like, "Okay, you guys are serious.
23:11Let's do our work. Let's start moving
23:13it." And then, you know, that's where we
23:14kind of do our due diligence and stuff
23:16like that. So, I mean, that's that's
23:19very important that the deposit needs to
23:21come through escrow for that reason. And
23:23it's not because and there's other
23:25people like especially sellers they'll
23:27be like, "Oh, well, that deposit's
23:28supposed to come to me." I'm like,
23:30"Well, is it in your agreement? And did
23:31the buyer agree upon that?" And if they
23:33didn't, then I can't do that legally.
23:35I'm sorry, but you know, they'll fight
23:37tooth and nail. They'll be like, "I was
23:38a real estate broker and this and that."
23:40I'm like, "Okay, that's great, but real
23:43estate and bulk sale or business
23:45transactions are two separate things.
23:47You can't mix those things. They operate
23:50totally different on a different way and
23:52there's, you know, I would say that bulk
23:54sale is a lot more complicated and more
23:57um intricate because there's so many
23:59liabilities that you have to worry
24:01about. And with real estate it's a
24:02little bit kind of just it's already the
24:04work is already cut out for you. You're
24:05just like, "Okay, well, we just get the,
24:07you know, get this in, the loan, and
24:10then bada boom bada bing we're
24:11recording, and then that's it. You got
24:13your property, right?"
24:15But with bulk sale there's so many
24:17liabilities, you know, people pull out
24:19SBA loans, people pull out, you know,
24:22loans for the equipment. And so, we have
24:25to make sure those are all like taken
24:27care of because, you know, we don't want
24:29anybody come after us and we don't want
24:31anybody to come after the buyer, you
24:32know, cuz that's unfair because it's
24:34like that's not their loan, you know?
24:36And so, that's where I feel like um
24:40people need to understand is that bulk
24:42sale and real estate are two separate
24:45things. And um and any real estate agent
24:49who's trying to get into these bulk sale
24:51transactions, please don't ever think
24:53it's the same thing. It operates totally
24:55different. Get with an uh get with like
24:57a advisor or a mentor to kind of walk
25:00you through and show you what you can
25:03and can't do also. So, that's just a
25:05little tip for the people that are cuz I
25:07know with the real estate market right
25:09now it's kind of slow and you know, a
25:11lot of people are trying to you know,
25:12venture out into different venues or you
25:15know, what things to do. Um but yeah, if
25:17you're a real estate agent or a realtor
25:19trying to get into this bulk sale thing
25:22or business transactions, definitely get
25:23with a mentor or somebody who's very
25:25very experienced to kind of walk you
25:26through and just help you and like
25:28overlook if you're doing the right
25:29thing. So.
25:31And it saves us a lot of time.
25:33Yeah. Yeah. And just, you know, side
25:35note, if you're looking for somebody to
25:38help you kind of get into that uh route,
25:40we've got a we've got a a a um
25:43an option for you to to kind of help you
25:45make sure you're going the right path
25:46there. So, reach out.
25:48Um
25:50So, real quick, just so just so
25:52everybody's on the same page, can you I
25:54mean, you've used a the term bulk sale
25:56and I think everybody can kind of infer
25:57that's, you know, selling a laundromat,
25:59but can you uh just define
26:01like what what do you mean by bulk sale?
26:03And you're kind of contrasting it to
26:04real estate. So, what do you mean by
26:05bulk sale? Yeah, so bulk sale would just
26:07be like a business transaction, you
26:08know, just um I would just say it's, you
26:10know, it just it translates into just a
26:12business transaction. I I think it's
26:14just a fancy word of like, you know, a
26:17business transaction in a way. And so,
26:20um you know, that's what it is. I mean,
26:21it's just pretty much when you hear bulk
26:22sale, just think of it as a business
26:23transaction, you know, it's not a real
26:25estate transaction. So, that's the
26:27differentiation on that one. So, that's
26:29what um I understand it as. I mean,
26:32maybe other people have different
26:33definitions, but that's how I see it.
26:35So. But
26:36>> Yeah. Yeah. And typically, I mean, from
26:38my And correct me if I'm wrong, uh but
26:39from my understanding, you know,
26:41typically when you want to buy, you
26:43know, seek legal advice and not legal
26:44advice, but typically when you want to
26:45buy a laundromat, you want to do an
26:47asset purchase and
26:49>> Yeah.
26:49you're not necessarily buying the LLC or
26:52the S corp most of the time. And so what
26:56you're doing is you're buying all these
26:57separate assets and I think the bulk
26:59sale refers to the fact that you're
27:01buying multiple assets
27:03for this kind of asset sale on the
27:05business transaction. Yeah. And we And
27:07we list it out, you know, we list out
27:09exactly what's going to be included and
27:11you know, we we we list out exactly
27:14what's included, you know, they always
27:15say, "Oh, well, the trade name's not
27:17included." Or sometimes it is, it just
27:18depends on what agreement you guys come
27:20with and yeah, they're technically
27:22you're not buying the seller's entity,
27:24you know, cuz
27:26but for the new people that are kind of
27:28looking into starting an entity, you can
27:31always initially start the agreement as
27:33an individual and then amidst the
27:35process when you kind of get more deeper
27:38into the escrow transaction, you can
27:40definitely definitely start the entity
27:43because obviously everybody wants to
27:45make sure, "Okay, I'm purchasing this
27:46business." I don't want to start a
27:47entity beforehand and then, you know,
27:49what if I don't purchase business? Then
27:51you're paying
27:52you know, annual state fees for just
27:55having an entity, you know, and
27:56obviously a lot of people try to avoid
27:58that because they want to make sure
27:59they're like in the middle of the
28:00transaction to kind of change into the
28:03entity, which is totally possible. So,
28:05don't feel like you just because you put
28:08yourself as an individual on the
28:09agreement that you cannot change it to a
28:11your new entity that you registered for.
28:13So, that's where a lot of people kind of
28:16get confused on. So, I always tell them
28:18it's okay, you can you can change it in
28:19the midst of it as, you know, doesn't
28:21matter. So.
28:23Yeah, and I mean I think that's great
28:24cuz I get asked that all the time, like
28:26when do I need to start my LLC? I've got
28:28a lot of people who start that LLC or S
28:30corp or whatever they do Yeah. like
28:33before they even start looking and you
28:35know, some places I think that's fine in
28:37California. I mean as soon as you start
28:39that thing,
28:40you know, you the the money starts
28:42rolling out, right? You got to pay the
28:43franchise tax board.
28:46Yeah. I know. Yeah. Yeah. Yeah. Yeah.
28:47Yeah. Yeah. You got that $800 fee or
28:49whatever it is these days and then, you
28:52know, it costs more to file taxes for,
28:55you know, an LLC or an S corp, you know,
28:58if you're using somebody and even if you
29:00don't make money that year, you still
29:01have to file and so
29:03>> Yeah. Yeah. Um yeah. So,
29:05I think that's great and so, you know,
29:07just kind of reiterate what Justin is
29:08saying is you can make the offer in your
29:10name Right. Typically what we do is we
29:13include like, "Hey, this offer is from
29:14Jordan and Berry and or assigns." or
29:16something like that where now I can
29:19start my entity, my LLC, my S corp,
29:21whatever and assign my contract to that
29:25during the escrow period so that it
29:26closes under that. Yeah. And and
29:29sometimes the agent or the broker can,
29:31you know, if the buyer is really
29:32adamant, I mean, you can always send an
29:34amendment if, you know, the buyer wants
29:35to see something in writing. Some, you
29:37know, all buyers are different, you
29:38know, some are easy going, some like,
29:40"No, I want everything like in writing."
29:42So, I mean, sometimes they'll ask for an
29:43amendment and that's okay. That's
29:45totally fine, too. So, it just depends
29:47on how the client is and, you know, what
29:49kind of, I guess, character they are
29:51that, you know, if they want it in
29:53writing, sometimes they're okay with
29:54just having escrow state it like, "Oh,
29:56hey, you know, this person is this
29:57entity now." and so,
29:59um yeah, we can handle all that. It's
30:01it's not a problem. It's usually not a
30:02big deal. It's not a big change or
30:04anything like that. So, it's just more
30:06of
30:06>> [clears throat]
30:06>> the taxes, yeah.
30:08>> [snorts]
30:08>> Right. Right. Right. Um and I I We we
30:11talked about this. I just want to make
30:12sure that we were like clear on this.
30:15One of escrow's job is to
30:18uh dis- disperse all all the money to
30:21everybody where it needs to go, right?
30:23>> Yeah. And one of the huge benefits
30:25specifically for a buyer, but also for
30:27the seller in terms of just ease of of
30:31everything is, you know, all the money
30:34is going to you and then it goes out
30:36from you guys to the lenders or anybody
30:38who has a lien on the property. It goes
30:40to the agents or the brokers and then it
30:43goes to the seller whatever is kind of
30:45left over and so
30:47as a buyer you can have peace of mind
30:50that all the liens have been paid off
30:51they've been identified and paid off as
30:53a seller you don't have to worry about
30:55getting this bulk sum and then sending
30:58it out to the lenders and all that stuff
31:00that's all taken care of by the escrow
31:02company. Yeah so if if let's say for
31:06example if you have any financing
31:08with one of the the only two big lenders
31:11I really know right now is Alliance
31:13right Eastern funding those are like the
31:16two big giants right now in the
31:17financing equipment especially in the
31:18laundry world
31:20and so they file what is called a UCC
31:23with [clears throat] the state making
31:24sure hey this person under this entity
31:27is owe us money so you know everything
31:30you know you better pay us and then once
31:32we pay them we'll handle the termination
31:35for you so it doesn't show up on your
31:36record and making sure that hey
31:37everything is terminated and then also
31:39with the tax lines if you have a bunch
31:40of unsecured property tax lines that you
31:42weren't aware of which we hear all the
31:43time is like I never got the bill and
31:45I'm like
31:46I don't know what to tell you you know
31:47it's it's it is what it is you know and
31:49we have to pay it and so we take care of
31:52that we also record the release of lien
31:54for you and making sure everything is
31:57off your record to make sure everything
31:58is clean so you know if you decide to go
32:01move on as a seller to other venues or
32:04other ventures that you're trying to get
32:05to you you have a peace of mind that oh
32:08nothing is going to be dragging with you
32:09you know especially
32:11SBA loans you know you know those are
32:13huge loans those are federal loans that
32:15you cannot default on from what I
32:18understand you cannot default on those
32:19loans because it's a federal loan right
32:21and those loans are also usually
32:23umbrella filing meaning that any kind of
32:25assets that you own
32:27they want a piece of the pie if you sell
32:29anything you make money they want to
32:30make sure that goes to the loan and if
32:32we don't handle that they're going to
32:34come after us and the federal
32:35government's going to knock on our door,
32:37and we don't want to have have that. And
32:39a lot of people have the
32:41misunderstanding that an EIDL loan is a
32:45PPP loan. It's not. If you've have if
32:48you've pulled an EIDL loan, that is
32:50filed against you through a UCC filing.
32:53So, please don't think that we don't
32:56have to pay for it cuz I've had a lot of
32:57clients like, "Oh, it's an EIDL loan.
32:59It's It's a It's a PPP loan." I'm like,
33:02"No, no, no, no, no. It's It's two
33:03different things. A PPP loan is not
33:05going to be filed against you. It's It's
33:07pretty much not There's no record of it
33:10where it's going to be held against you
33:11as a liability. But, with EIDL loans are
33:14definitely filed against you, and you
33:15definitely have to pay that. And if it's
33:18way more than your purchase price of
33:20your business, you got to either
33:22talk to them and sort out a deal with
33:24them to make sure that they're on the
33:26same page um because I've had a lot of
33:29clients in the past that say, "Oh, you
33:31know, I have I have this uh agreement
33:33with SBA and this and that, and you
33:35know, it's all words until we see
33:37official document from the SBA saying,
33:40"Hey, we're willing to take 50% of the
33:41proceeds, um and we'll do a partial, you
33:44know, termination or whatever they do."
33:46Or they might uh re- you know, refile a
33:49restatement of collateral on the UCC,
33:51just depending on whatever the condition
33:53whatever the condition and agreement is.
33:54I can't determine that. That's going to
33:56be up to the person who owes money to
33:58SBA to sort it out because, you know,
34:00they don't transfer any SBA loans to the
34:04buyer. Like, let's say for example, if
34:06the buyer
34:08is like, "Yeah, I'm willing to take the
34:08SBA loan." But, they don't do that. They
34:11you know, there's it's it's a very long
34:13tedious process with the SBA because
34:15they want to make sure that they're
34:16getting paid because what if you don't
34:19have any assets hard assets that you can
34:20file against? You know, then that'll be
34:23a huge it'll be a huge bust for the
34:25buyer because, you know, your the
34:28buyer's financial situation is totally
34:30different from the seller. So, you know,
34:32you can't you can't mix it where like
34:34seller's like, "Yeah, well, the buyer is
34:35going to take the SBA liability." It's
34:37like, "Yeah, we can't do that. It has to
34:39be paid off or has to be an agreement
34:42with SBA like, hey, we're willing to
34:43take a quarter of it or half." And we
34:45have to get that all in writing. And so,
34:47that's where a lot of people are kind of
34:49um
34:49confused on or kind of get uh
34:52miss-misguided on and they're like, "Ah,
34:54it's okay. We don't need to pay that."
34:55I'm like, "Oh, no, you definitely need
34:57to pay that." So, if you have any EIDL
34:59loans, make sure make sure make sure
35:01that, you know, if you don't want it to
35:03be a long tedious process and you know
35:06you have to be very transparent with
35:08your buyer, you have to talk with them
35:11and make sure they're all on board
35:13because that is a long tedious process
35:15because sometimes
35:17if the SBA loan is not settled out, it
35:20could span out for months, you know? So,
35:23if you don't want to deal with that
35:24headache, definitely sort it out with
35:26them first and then get into an
35:28agreement or, you know, whatnot or stuff
35:30like that. So, yeah. That's what I would
35:32suggest, yeah.
35:34It
35:35It becomes a huge mess, you know? Yeah.
35:37Yeah, yeah. And I mean, SBA gets It gets
35:40tricky and it gets
35:42uh it gets complicated and uh and and a
35:45lot of laundromats don't even qualify
35:46for them. So, it's it's tough. Yeah. SBA
35:50is a tough way to go, but I mean, it is
35:52possible out there. So, if you're out
35:53there looking dependent on SBA loan, it
35:55is possible to do it. Yeah. Uh you can
35:57do it. Uh you just they make you earn it
36:00a little bit for the
36:01>> Oh, yeah. Yeah. Yeah. They're like
36:03>> the lower
36:04Yeah, the lower the down There's nothing
36:05free here. Lower down payment, but they
36:07make you earn it uh with this
36:08collateral.
36:09>> They're like, "Oh, you have a house?
36:10Great. We can file against that. Oh, you
36:13own this? Great. We can file against
36:14that." So, just make sure if you're
36:16going to go through the SBA route, you
36:18got a lot of hard assets that you can
36:19file against cuz they definitely want to
36:21see some kind of real property to file
36:23against just in case. So, just FYI. I
36:26I've seen that. I mean, every every case
36:28is different, so I'm just saying that's
36:30majority of the time they want to see
36:32kind of real property be filed against,
36:34you know, for the claims and stuff like
36:36that. So.
36:37Yeah, totally.
36:39Totally.
36:40Um okay, so let's say we've got a buyer
36:43out there who's looking to
36:46uh you know, buy their first laundromat.
36:47What do they need to know or what can
36:49they do to make this escrow process go
36:52smoothly as possible? Anything that
36:54you're like, "Hey, I wish buyers did
36:55this every time or knew this or" I mean,
36:59I would say that uh one, you know, if
37:03you're going to be solo, you're not
37:05using an agent or broker, um what I
37:07would say suggest is making sure that
37:11you know, you have a good friendly
37:13friendly relationship with the seller,
37:14you know? Cuz I've seen deals get really
37:17bad because clash of you know, clash of
37:20attitudes or character just doesn't mix
37:22well. And then on top of that, make sure
37:25the landlord is also kind of
37:26pre-approving you as a new tenant, um
37:29because usually the lease is the longest
37:33tedious process because it's always back
37:35and forth, you know, the landlord wants
37:38to see the income statements, they want
37:39to see your credit, they got to do all
37:41this stuff, making sure that, "Hey,
37:43you're a valid tenant." So, for any new
37:45buyers out there, make sure one, you
37:47have your money ready, you know, you
37:49have it ready disposable because at any
37:51moment we're probably going to ask you
37:52to wire an X amount of money to purchase
37:54a business. So, make sure that money's
37:56on um you know, hold. And then number
37:58two, if you're deciding do any kind of
38:00financing, make sure you're
38:01pre-approved. Make sure you know,
38:03everything is going to be okay cuz you
38:05don't want to be in the midst of a
38:06transaction and the lender's like, "You
38:08know what? You don't qualify." And then
38:10that's where it becomes then you're
38:12going to be scrambling like, "Oh, where
38:13did I come up with 200, 300,000 or maybe
38:16100,000, maybe 50,000?" But I mean, even
38:18if it's 50,000 or or
38:20it's still large money, you know? It's
38:23and you can't just come up with that
38:24with thin air. So, for any new buyers,
38:26definitely, definitely,
38:28get with a lender that, you know, it's
38:30going to be working for you
38:32interest-wise or whatever. Make sure
38:34that you're pre-approved for that
38:36because you don't want to be in the
38:37transaction and be like, "Oh, well, we
38:39don't have any funding." And then the
38:40deal's going to fall through. And then
38:42because you can't get funding, depending
38:44on what your agreement is, most likely,
38:46most of the time a lot of people have
38:48liquidated damage clauses. So,
38:51if they have a liquidated damage clause
38:52and you don't you don't have the funding
38:54or you have the money, you're going to
38:55be paying the fees and you're going to
38:56be losing even more money out of your
38:59deposit because, you know, you didn't
39:01pull on your end of the deal. So, that's
39:03just a heads-up for new buyers. Make
39:05sure, you know, you have all that lined
39:07up before you start kind of actually
39:09jumping into it.
39:11You know, or it's okay if you put the
39:13deposit in and then in the midst of it
39:16before we start going forward and
39:17incurring more costs,
39:19you know, talk with the landlord or make
39:20sure the landlord's on board and
39:21everything like that. So, yeah. I know
39:23it's probably kind of redundant, but
39:25it's it's it's really I highlight it
39:27very heavily because
39:29those are the two biggest things that
39:31will make a deal fall through. And And
39:33that's Those are the two factors that
39:36really stretch out the deal longer than
39:38what our people are anticipating, you
39:40know? Cuz I was asked them, "Well, are
39:42is the landlord okay with it? Do they
39:44approve you?" And they're like, "Oh,
39:45well, I I I I didn't look into that." I
39:46was like, "You should probably ask them
39:48because every landlord's different. You
39:50know, you might have a cool, easy
39:52landlord. You might have a terrible
39:53landlord. It just It's luck of the draw,
39:56you know? You'll have an absolute
39:57difficult one that's like refusing to
40:00sign because, you know, the security
40:02deposit's not high enough or the rent's
40:04not high enough. And then, you know,
40:05this is This is where also, like again,
40:08an experienced agent or broker comes in
40:10to negotiate for you so these terms make
40:13sense for you as a tenant. Cuz if you're
40:16not very knowledgeable, you don't know
40:17what's going on, I mean, the landlord
40:19can also easily take advantage of you
40:21too as a person, too, saying, "Oh, we
40:23can have you know, oh, I I got to charge
40:25this much rent." But then you're
40:26crunching all the numbers, and then, you
40:28know, how much the coin laundry makes or
40:30the business makes, you're like, "I got
40:32nothing. I'm paying all for rent." You
40:33know, so you also have to kind of watch
40:35out for that and make sure, you know,
40:37the terms on how long the lease is going
40:39to make sense for you. And like I said,
40:41this is where an experienced broker
40:43agent kicks in and really kind of
40:46serves the lease on a silver platter for
40:49you and be like, "Oh, that's great.
40:50Cool. All I have to do is sign, you
40:52know?" And that's that's why I say it's
40:54really, really important to get an agent
40:55or broker because it makes it so smooth,
40:58makes it so easy for you as a buyer and
40:59seller
41:01because they literally hand everything
41:02on a silver platter. And they they give
41:04you all the knowledge, the insight,
41:05everything. It's It's not just a
41:07service, and I think a lot of people
41:10think that um, you know, it's like real
41:12estate, like, you know, let's let's be
41:14real. Most real estate transactions
41:16I mean, most agents don't really have to
41:18lift a finger that much. You know, maybe
41:19show up, make sure everything is
41:21repaired, you know, all that stuff,
41:22making sure, you know, follow all the
41:24stuff, and then final walk-through,
41:25boom, okay, the house is ready to sell.
41:27You know, but with with bulk sales or
41:29business transactions, the real estate
41:31and brokers are very, very involved.
41:34They're You know, if you have a good
41:35one, they're very involved in the
41:36process. They're going to be there every
41:38step of the way. They're going to be
41:39there, you know, to make sure you're
41:41there there at the coin count, they're
41:43there at, you know, the lease the lease
41:45negotiations and stuff. And they do all
41:47the the hard running around work for
41:49you, you know? So, that's just a big
41:52That's a big tip for everybody. Um, you
41:54know, especially if
41:55they're trying to cut out on the agent,
41:57but I'm I'm telling you, it's really,
41:59really, really, really recommended, you
42:02know? Cuz it not only makes it easier
42:03for us as an escrow company,
42:05um, you know, it makes it easier for you
42:07as a client or, you know, as a purchaser
42:10or seller or something like that. Um, it
42:12makes it really easy for everybody else,
42:14you know? So, that's just a heads-up on
42:16it.
42:17Yeah. Yeah, uh agree 100% and I'll say
42:21that with the caveat of not all and you
42:24said this, not all agents are created
42:25equal. There's some really good ones out
42:27there and there's some bad ones out
42:29there and frankly, I mean, in our
42:31industry, I there's a lot of bad ones.
42:34Oh, yeah.
42:35>> yeah, there's a lot of bad ones. Yeah.
42:37Uh
42:38It's bad. It's bad. I mean, they leave
42:40their clients hanging dry and I I feel
42:42terrible for them, you know? Yeah. It
42:44sucks, you know? But, you definitely
42:46want an agent that one, you know, your
42:48your your personalities mesh really
42:50well, you know, and the the way the the
42:53knowledge that they have, you know, it's
42:55you definitely want to ask questions and
42:57be curious because you don't want to be
43:01stuck with an agent or a broker who's
43:03just absolutely just not involved and so
43:07lazy or just
43:09just kind of like sitting on the
43:10backseat, you know? You want a very
43:13very very
43:14I want to say aggressive, but I would
43:16say just very persistent. Proactive.
43:19Yeah, proactive.
43:21>> Yeah. persistent to make sure, you know,
43:23you're getting everything that you want
43:25or maybe negotiating so it's everybody's
43:27happy for the seller or the buyer. So,
43:29you know, that's that's really really
43:31important, you know? So, not agents and
43:33all brokers are like it's like you said,
43:35it's not all made the same, you know?
43:37You just have to make sure, hey, is this
43:39person seem honest and does this seem
43:41like they're giving me real true
43:42knowledge? And And that's the whole
43:44reason why we're doing this podcast so
43:45we can make it transparent for people so
43:48they're not like, oh, what am I stepping
43:49into or what am I looking for or what am
43:52I going to get screwed over for? So, you
43:54know, we're just trying to help that
43:55clear up so people feel more comfortable
43:57with
43:58a broker or agent, you know? Cuz a lot
44:00of people don't trust most brokers or
44:02agents cuz they think, you know, the the
44:04common consensus is they're just here to
44:06collect commission check. But, I
44:08guarantee you there is a very good group
44:11of people that will be fighting for you
44:14as a client and to make sure that you're
44:16set off on the right path and you're set
44:18off on the right path as a buyer and
44:20then, you know, making sure that the
44:22seller is all happy with their money
44:24and, you know, what they're getting, you
44:25know, cuz everybody wants to get paid
44:27for what they feel the business is
44:29worth, right? So, that's the whole goal.
44:30>> That's right. Yeah.
44:32>> Yeah.
44:33Yeah. Um do you have any unique advice
44:36for sellers that they things they need
44:38to know or things they should be doing
44:41to help the the escrow process go
44:43smoother? Um it might it may be just a
44:46carbon copy of the buyers, but I'm
44:48curious if there's anything unique for
44:49the sellers that they need to know to
44:51help us through the process.
44:52>> uh yeah, if you're starting if you're
44:55going to get into a transaction, um
44:57always have your business license copy
44:59ready for us and then your unsecured
45:01property tax bill, most recent. Um
45:04I would say the business license is the
45:05most important. We have to make sure
45:06that you're actually operating a legal
45:08business and you're actually the sole
45:09owner or, you know, whatnot. So, have
45:11that handy. Um
45:13unsecured property tax bill, great if
45:15you have it. If you don't have it,
45:16that's okay, too. We'll find out. We'll
45:19talk we have many contacts at, you know,
45:21all counties of the tax collector and
45:23we'll figure it out. So, we'll find it
45:25for you. Um just don't be surprised if,
45:28you know, you haven't been paying tax
45:30unsecured property tax bills for X
45:32amount of years and you're just
45:34wondering where the bills are, uh most
45:35likely there's going to be probably a
45:38lot of tax bills that you probably
45:41didn't even know about that you didn't
45:42pay. So, just just a heads-up on that
45:44and, you know, like I said, if you have
45:46an SBA loan um that you've
45:50you've received, just make sure that,
45:52like I said, you're in negotiations with
45:54them if the purchase price is a lot
45:56lower than what you borrowed, you know?
45:58And so, that definitely definitely um if
46:01you have an EIDL loan, definitely talk
46:03to those people and try to get in
46:05contact with somebody who can kind of
46:07help you maybe, you know, lower it or,
46:11you know, whatever it is, I don't know.
46:12As I don't know SBA personally or I
46:16don't know how they function. They all,
46:17you know, every case is different and
46:19it's unique and it's all case by case.
46:21So, just make sure that's all in play.
46:23Um,
46:24and then other than that, as long as
46:26that's all squared away, I mean, the
46:27least you're not you're not going to be
46:29concerned of, you know, that's going to
46:30go to the new the the buyer. You don't
46:32have to worry about that. All you have
46:33to worry about is, um, you know, one,
46:36you have an
46:38an account under if you have an entity,
46:40make sure that you have an account under
46:41that entity because if we close escrow
46:44and you have an your entity under the
46:46business, then we cannot wire to your
46:48individual account due to auditing
46:50reasons cuz we get audited every year.
46:52It's going to look weird if you have an
46:54entity under this business and then we
46:55send it to your individual account. So,
46:58just make sure that's all lined up also
46:59to and, you know, you have your CPA
47:01ready so then you can file accordingly
47:03all that stuff. But other than that, I
47:05mean, for the sellers, it's pretty much
47:07easy. I mean, you just have to sign
47:08everything and then, you know, when
47:10we'll call you and be like, "Hey, your
47:12money's coming." and then that's about
47:13it. I mean, you just have to look at
47:14your account. That's it, you know. And
47:16you take a vacation and come visit me in
47:18Hawaii.
47:20No, yeah, exactly. Exactly.
47:22>> Yeah. Yeah.
47:24It's pretty much it.
47:25>> Um,
47:26I'm curious from your perspective, do
47:28you see are there like common reasons
47:30that laundromats fall out of escrow?
47:33Um, it's just, like I said, um,
47:36difficult landlord. Um, can't come to an
47:39agreement. If they're doing a brand new
47:41lease, it usually falls out because
47:44the buyer wants, obviously, you know,
47:46they want a they usually want like a
47:48five five-year extension, right?
47:51Five-year extension or sometimes 15 or
47:5410 depending on whatever it is. I don't
47:57know. Sometimes I it it makes it hard
47:59because if the buyer is like, "Okay,
48:01well, this equipment is like X amount of
48:03years old, right? Like let's just say
48:04for 10 years, right? They're 10 years
48:05old, and you have a lease that's like
48:07ending in 3 years." It doesn't make
48:09sense for you to obtain a business cuz
48:11you don't have time to generate income,
48:13you know? Cuz I I believe that to
48:15generate This is what I heard. I don't
48:17know if this is true. Maybe you can
48:18correct me, but I've heard to in order
48:20for it to generate any income from a
48:22coin laundry, it takes at least minimum
48:236 to 7 years. Is that correct?
48:25Or around there?
48:26>> Well, I mean, it depends on what you buy
48:28it for and what you have to put into it
48:31and how it's performing now, but yeah, I
48:33mean, generally, I'd say, you know,
48:36it it usually it lines up with your
48:37multiple, right? If you If you buy it
48:39for a a 4x multiple or a 5x multiple,
48:42it's going to take 4 or 5 years to do
48:45it.
48:46And depending on your leverage and kind
48:47of all that stuff, it could take a
48:48little less, could take a little more.
48:50And operators, obviously, you know how
48:52they operate.
48:52>> Operate, yeah, exactly. Yeah.
48:54>> Yeah. Yeah, but that that's where I
48:56usually see it fall out is
48:58just not [snorts] a
48:59lease term that makes sense for the
49:01buyer. And that that we do need for us
49:04to efficiently close escrow is to have a
49:06valid lease to make sure, obviously,
49:08you're actually the owner of the
49:09business, you know?
49:11And so, they're they're going to also
49:12cuz like cities also going to ask um
49:16the city is also going to ask you for a
49:18valid lease cuz I think when you
49:19register a business license, they're
49:20going to ask you for documentation to
49:22prove that you're the actually the owner
49:23of the business. So,
49:24that's also to keep in account also for
49:27too. So. Yeah.
49:29Yeah, and in in I mean, it brings it
49:31brings up
49:32Sorry, go ahead. Oh, no, no, no, no, go
49:33ahead. Sorry, sorry.
49:35Yeah, I was just saying it just brings
49:36up a good point of another function of
49:38escrow is to make sure that the seller
49:40does have the ability to sell, that they
49:41do own it. Yeah. Or, you know, cuz
49:45something I've seen is like where one
49:46person tries to sell it. This actually
49:48happened to me with one of my
49:48transactions. It It a divorced couple,
49:51and the wife tried to sell it but the
49:53the ex-husband still had ownership Yeah.
49:56in it and so it lengthened out our
49:58escrow for another like 4 months while
50:00they tried to iron all that out.
50:02>> Oh, yeah. You know, to get that but you
50:04know, it if you don't have somebody
50:07looking in for that uh looking out for
50:10that then uh you
50:13are going to be in trouble when you try
50:15to take over it and
50:17they sold it.
50:18>> Legally legally she didn't own it. So,
50:20it's like they can't
50:21>> [clears throat]
50:22>> Listen, man. I This has been awesome. I
50:23mean, I
50:24I think it's going to help a lot of
50:26people just feel a little more
50:27comfortable about the escrow process and
50:29all that. Uh is there anything else that
50:31you feel like people need to know about
50:33you know, escrow, the process, what it
50:35is, what they need to do or what they
50:36need to know? Well, I mean, honestly
50:38it's just you know, we we we take care
50:41of all the the stuff for you, you know,
50:43once you get into escrow with your
50:45purchase agreement we we handle most of
50:47the stuff for you so you all all you
50:49have to do as a a buyer like I said just
50:52uh you know, recircling back to that you
50:53just have to worry about the records of
50:55the business and making sure you know,
50:56this is a feasible business that you're
50:57taking care of. So, then you don't have
50:59a peace of mind trying to scramble and
51:01like oh, what do we got to do with this
51:02and then blah blah blah and so we just
51:04kind of streamline that for you so it's
51:06a lot easier for everybody. Um and
51:09that's pretty much it and we're just
51:10trying to make sure that both parties
51:12are protected and nothing is going to be
51:14happening to any of you guys um and then
51:16obviously we're we're trying to avoid
51:18any kind of litigation or any kind of
51:20court case, you know, because nobody
51:22wants to go to court. It's it's a big
51:23waste of time and money.
51:25Um so, we just make sure that's all kind
51:27of in place so then you know, there's no
51:30mishaps or you know, misunderstandings
51:32cuz everything's all in writing, you
51:33know, I mean, you just kind of solidify
51:35everything. So, that's pretty much with
51:37escrow. That's how we deal. We're just
51:39making sure you know, nobody's at each
51:41other's throats and making sure hey,
51:43everybody play by the rules and play
51:45nice, you know.
51:47Yeah, perfect, man. Well, I appreciate
51:49you taking the time. I know you're super
51:51busy
51:52and you got to you got to roll, but real
51:54quick before I let you go, if people are
51:56like, "Hey, I'd love to ask you more
51:58questions or I'm getting ready to sell
52:00laundromat, I need escrow."
52:02What's the best way for them to get a
52:03hold of you?
52:04Yeah, you can always send me an email.
52:06It's Justin, my name, j u s t i n at
52:10newcenturyescrow.com.
52:12You can also give us a call at the
52:14office if you you know, if you'd rather
52:16just hear an explanation over the phone.
52:19You know, you can give us a call at
52:20714-986-9933.
52:23And we will definitely assist you. We'll
52:26ask we'll answer any questions, you
52:28know, feel free to ask.
52:30You know, we're always an open book
52:31here, so
52:32if you have any more concerns or any
52:34kind of different uh unique
52:38I guess situations, just give us a call
52:40and we can kind of see if we can help
52:41you out. You know, we can't always help
52:44it out, you know, depending on what the
52:46situation is. If it's
52:48you know, too crazy, it might be too
52:50much of a liability. We we might
52:52[clears throat]
52:52take it, we might not, so it just
52:54depends. So, just give us a call and see
52:56if we can, you know, help you or assist
52:58you on whatever you need. So, yeah.
53:00Awesome. Yeah, so if you're in
53:01California and looking to sell
53:02laundromat,
53:04these are guys.
53:06These are the guys to go to. Justin,
53:07man, appreciate it. And hey, we might
53:10have to follow this up with like a Q&A
53:12or something at one point, so people can
53:13ask their questions, too. Uh I get to
53:15know the guys. That'd be fun. Yeah, I
53:18mean, I hopefully I hit everything, you
53:20know, all the points. I don't know, this
53:22is this is my first time, so I was a
53:24little nervous, but
53:26yeah, if anybody has Q&A or any other
53:29questions or any concerns, you know,
53:30that'll be that'll be great. Like, I'll
53:32be happily answer anything, you know.
53:34And if I don't know, I'll let you know I
53:36don't know, you know, I might have to
53:37look into it, you know, so
53:39>> Yeah. I
53:40I I don't I'm not the holder of all the
53:43knowledge. I just know what I in my
53:45realm. So, um you know, if if there's
53:47questions that I I feel like that's out
53:49of my realm, I probably won't answer it
53:50cuz I don't want to give bad advice or
53:53lead people on to the wrong um
53:55bad advice. So, you know, just want to
53:57make sure everybody is uh you know, just
53:59trying to be truthful, you know? That's
54:01yeah, that's what we need though, right?
54:02It's like we need people to tell us what
54:05they know and not make up things uh take
54:07us down the wrong path. So, that's
54:08perfect. Uh well, hey man, let's
54:10coordinate on a on a Q&A and uh stay
54:13tuned on that. Maybe we'll have it by
54:14the time I do an intro and I can just
54:16mention uh when we're going to do it.
54:18Yeah, yeah. Just keep me posted.
54:20Appreciate it, man. And I appreciate you
54:22and uh we'll we'll chat soon. Probably
54:24on a Q&A here pretty soon. Yeah, yeah.
54:26Well, I appreciate you having me on. I
54:28appreciate, you know, kind of uh
54:30letting me explain things and I
54:31hopefully I didn't bore anybody. So,
54:33hopefully we're good here. Yeah. It's
54:35great. If if uh if they were bored, then
54:37they already knew the stuff and they
54:38didn't need it anyways cuz you know,
54:40this is I there's just so many people
54:42out there looking to buy laundromats and
54:44this is a little bit of a mysterious
54:46process here for most people. So, Yeah.
54:48uh so, I appreciate it, man.
54:50>> [laughter]
54:50>> Yeah, yeah, yeah. Yeah. That's great,
54:52man. All right, appreciate it.
54:54All right, thanks, Jordan. All right, I
54:55hope that was a super educational. I
54:57hope I hope this is a super educational
54:59episode for you and a little bit
55:01entertaining as well. Uh but listen,
55:03Justin, huge shout out to him for coming
55:05on the show and talking escrow. Uh he is
55:08the master uh of it. He knows all these
55:11things. So, reach out to New Century
55:13Escrow, especially if you're in
55:14California, but even if you're not and
55:15you just got questions, reach out to
55:17Justin with those questions and uh look
55:19out for that Q&A also. All right? All
55:21right, we'll see you in the next one.
55:22Peace.

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