YT YouTube2Text

YouTube2Text → Transcripts → My Millionaire University Interview: How “Boring Businesses” Built My Freedom

My Millionaire University Interview: How “Boring Businesses” Built My Freedom — Transcript

by Laundromat Resource · 9,161 words · 1,308 segments · language en · Watch on YouTube

Open in transcriber Summarize with AI Download SRT/VTT

Full transcript

0:00My wife had a family friend who was
0:02working a tech job, making really good
0:04money. He bought one laundromat,
0:05replaced that income, and went down to
0:07working five or 10 hours a week. And
0:08we're like, "Yes, who doesn't want a
0:10boatload of money coming in with very
0:12little time going out?" When it comes to
0:13monthly income, your average
0:15run-of-the-mill laundromat's probably
0:16making about $6 or $7,000 a month, but
0:20the range is wild. I've got a client who
0:23nets $100,000 a month, this laundromat,
0:26and it's a self-s serve only mat. This
0:28is a great business to be in for the
0:30business itself, but it's also one of
0:32the last places communities gather
0:34[music] in person. And laundromat owners
0:36have a really cool opportunity to make a
0:38real impact in communities while making
0:40good money doing it. So, that's been the
0:42surprising cool thing about laundromats
0:44from my perspective. Also,
0:47I'm really excited to talk about our
0:49topic today, which is how to buy a
0:51laundromat. Obviously, you've made a
0:53little empire in this space. You're one
0:54of the foremost experts on it. So, super
0:56stoked to have you here. Before we jump
0:58into that, Jordan, I'd love to have you
1:00share your origin story. How did you get
1:01to being the laundromat buying expert?
1:04>> Hey, listen. I like most people, I grew
1:06up dreaming about owning a laundromat.
1:08And no, I'm just kidding. Nobody does
1:10that. And it's really weird. I was
1:11telling you right before we hit record
1:13that it feels weird being a laundromat
1:15guy and talking laundromats, but here I
1:17am. And uh here's how it came to be. I
1:19was a youth pastor and a pastor for 15
1:22years. And when it came time to merge
1:25out of that as my full-time job, I was
1:27trying to figure out what to do with my
1:28life. I had young kids. I know you got
1:30some young kids, too. And, you know,
1:32having a job where I was doing some
1:34traveling. My schedule was all off. I
1:36was working weekends and evenings and
1:38just looking for a little bit of
1:39stability for the family. I was trying
1:40to figure out what to do. I had a little
1:41bit of an identity crisis cuz I was
1:42like, I don't know where to go from
1:44here. And my idea, which is kind of
1:47funny actually, my idea was we owned our
1:50house in Southern California at the
1:51time. Like I said, two young kids. I was
1:53like, why don't we rent out our house
1:54here and go buy a condo on the beach in
1:58Hawaii and sell jewelry or what? Who
2:01cares? We'll be on the beach in Hawaii,
2:02right? Whatever, right?
2:03>> And my wife said we could do that or we
2:07could buy a laundromat. And uh we ended
2:10up buying a laundromat, not a house in
2:12Hawaii, even though that's where I'm at
2:13now. And the reason for that was because
2:17my wife had a family friend who was
2:19working a tech job in the San Francisco
2:21Bay area. and he was making really good
2:22money, but he was working 70, 80 hours a
2:24week doing it. He bought one laundromat,
2:27replaced that income, and went down to
2:29working five or 10 hours a week. And
2:30we're like, "Yes, this sounds awesome."
2:33Who doesn't want a boatload of money
2:35coming in with very little time going
2:37out? That's the dream. That's why people
2:38are listening to this podcast, right?
2:41Um, so we're like, "Hey, we love that
2:43idea. Let's do that instead of moving to
2:45Hawaii." So we went and bought a
2:47laundromat. We we bought what we call a
2:50zombie mat in the industry. used to fix
2:52her upper laundromat and fixed it up and
2:56waited for the cash to roll in. And lo
2:58and behold, the Field of Dreams, if you
3:01build it, they will come model
3:03for us. And we ended up making a whole
3:05bunch of mistakes, losing a whole lot of
3:07money early on. And I shouldn't say
3:10losing money, paying for an education
3:13early on there. And ended up, you know,
3:17working my way out of that over time.
3:19But it was painful. It was a huge
3:21struggle. It was a lot of pain. I found
3:24out that other people in the industry
3:27had gone through similar things, right?
3:29There's some unique obstacles to buying
3:31a laundromat. Like, it's a cash
3:32business. So, how do you know how much
3:33money it's making? It's really easy to
3:35hide expenses. You know, the business is
3:39a mom and pop industry. So, there's just
3:41a lot of unknowns um that we didn't
3:43know. And so, yeah, so made a lot of
3:46mistakes. And once we finally kind of
3:48worked our way out of that, started to
3:49see the original vision of, hey, you
3:51know what? If you do it right, this
3:53business can be a really powerful
3:56business to be in. You know, I've said,
3:59and I believe this that 99% of Americans
4:02could replace their nineto-ive income
4:04with one or two laundrys. And so, you
4:07know, if you're looking for financial
4:09freedom, if you're looking for cash
4:11flow, if you're looking to leave your
4:12nineto-5,
4:14obviously, like you're talking about
4:15cash flow here, and it's really hard to
4:17beat a laundromat when it comes to cash
4:18flow. So, that was sort of like the, you
4:21know, and then bought and sold
4:22laundromats since then, and you know,
4:24I've brokered deals. I've done
4:27over, 1500 consulting calls now. Like,
4:29I've, you know, I'm kind of steeped in
4:31the industry, which is just weird. I
4:33never expected that. and it's laundromat
4:35feels so random, but here I am.
4:37>> Awesome. So, let's talk about kind of
4:39the numbers. You mentioned how, you
4:41know, with one or two laundromats, 99%
4:43of Americans could replace their current
4:45income. Tell me about like your
4:47portfolio. How many laundromats do you
4:48guys own? I know you buy and sell, too,
4:50so maybe that's a fluid number, but also
4:53kind of let's start with that high level
4:55overview of what are the earning
4:57potentials of laundromats. I know that
4:58can vary, but kind of give us
5:00approximations.
5:01>> Yeah. So, you know, when it comes to
5:03monthly income, like your average
5:05run-of-the-mill laundromat's probably
5:07making netting about $6 or $7,000 a
5:10month, but the range is wild. I mean,
5:14you go from me when I first started
5:16being the world's worst laundromat owner
5:17and losing money to I've got a client
5:20who nets $100,000 a month this
5:23laundromat and it's a self-s serve only
5:26laundromat. That's not adding drop off
5:28laundry or pick up and delivery. So, so
5:31these things can do, you know, pretty
5:32good money, you know, but your average
5:35like sort of base hit deal, you're
5:36looking at $600 or $7,000 a month. Kind
5:38of an average, you know, laundromat is,
5:42you know, maybe $400 to $600,000,
5:45although you can get them for cheaper
5:46and you can get them for a lot more. Um,
5:48so that's kind of what you're looking at
5:51there. What's interesting about it, and
5:53the way that I kind of like to think of
5:54it is to back into
5:57uh things. Because I like to when I talk
5:58with clients, I say, "Okay, what's your
6:00goal? What's your, you know, do you have
6:01a cash flow goal? Do you have an amount
6:03of money you need to make to leave your
6:05job?" Because then we can sort of back
6:07into, okay, here's how much you're
6:09probably going to need to invest in a
6:11laundromat. And depending on your loan
6:13terms, here's how much you need liquid
6:15in order to do that. But what's
6:18beautiful about this business is that
6:20it's a cash flow centered business. And
6:22the valuation is based on the cash flow,
6:25which means you you kind of know what
6:27you're getting as long as you get that
6:28cash flow number right.
6:30>> Got it. Okay. So, I want to lay the
6:32groundwork for the overarching question
6:34and the theme of our episode today is
6:36how to buy a laundromat. So, I guess
6:38let's start at square one. You've
6:40decided it's time to buy a laundromat.
6:42What's the first thing you do?
6:45>> Yeah, great question. Okay, so I mean,
6:47first things first is you got to learn a
6:48little bit about the business. There's
6:50lots of resources out there now. You
6:52know, ours is one obviously, but there's
6:54lots of YouTube videos and podcasts and
6:58Tik Toks and stuff. So, you know, just
7:00get familiar with the business. Maybe go
7:01visit a couple, that kind of thing. Um,
7:05you know, do your preliminary education.
7:06My one word of caution on that is that
7:08it's really easy to get into a doom
7:12cycle when it comes to education. You
7:13know, listening to podcasts, watching
7:16YouTube videos, you stay in that
7:18research mode. you get your dopamine
7:19from that, you never actually make any
7:21progress in your life, right? You never
7:22accomplish any of your goals. You gota,
7:25you know, get a base level of knowledge.
7:28There's so much stuff you're never going
7:29to know until you actually get into it
7:30anyway. So, get a base level and then
7:33then you start looking. You start
7:35looking for a laundromat. Now, right
7:36now, finding a laundromat deal is
7:39trickier than it's ever been. And the
7:41reason for that is a couple fold. Number
7:44one,
7:46there are a lot of, you know, maybe
7:48you've seen them or if you're listening
7:49out there, maybe you've seen them.
7:50There's a lot of like people collecting
7:51quarters. People love those quarter
7:53collecting videos about laundromats.
7:56There's people with stacks of cash in
7:58their hand that they're getting from
8:00their change machines and stuff like
8:01that, right? So, the profile of
8:04laundromats has been raised over the
8:05last couple years. You got Cody Sanchez
8:07talking about boring businesses, right?
8:09So there's a lot of um people who never
8:14thought about laundromats who are
8:16interested now which is a good thing
8:17because what that means is our industry
8:21has this reputation of you know I don't
8:24know when you think of a laundromat most
8:26people think of like dark dingy dirty
8:30homeless people sleeping right it's like
8:32who wants to go clean their clothes
8:34>> at a place like that right but that's
8:36been the
8:37>> the reputation of the industry So, it's
8:40helping to elevate sort of our industry
8:42there. But finding that deal can be
8:45tricky. So, we've got a couple things
8:46that we do with clients and that we
8:48encourage our clients to do or you to
8:49do. You can do this on your own, too.
8:51Couple things. Number one, obviously,
8:52you can look around online. There's lots
8:54of websites that have listings
8:57um online and you can find deals there
8:59and you can turn some of those into
9:01deals. Um, but the reality of it is that
9:04a lot of these transactions are
9:06happening before they hit the online
9:08space. So, what we encourage you to do
9:10is when you're looking online, take note
9:12of who the broker is and start reaching
9:15out to the brokers directly about the
9:17deals you find online, but also about
9:19any other deals they might have that fit
9:21your criteria. And then we also
9:24encourage you to do direct mail.
9:26Actually send letters to laundromats and
9:28say, "Hey, you know, my name's Jordan.
9:30I'm looking to buy a laundromat in the
9:32area. I've been doing research. You
9:34know, I'm curious if you're interested
9:36in selling and if not, no worries. But
9:40we've seen clients have a lot of success
9:41with that direct mail. Obviously, you
9:43can do cold calling if you can get a
9:45hold of them. Obviously, you can go, you
9:47know, speaking real estate terms, you
9:49can go door knocking. You actually go to
9:50the laundromats, but one of the
9:54reasons most people get in the business
9:56because you don't have to be at the
9:56business all the time, right? And so it
9:58can be hard to pin down an owner there.
10:00So that's why we like the direct mail
10:02and calling brokers on a regular kind of
10:06cadence there. So that's finding the
10:08laundromat. Those are the best ways to
10:09do it. I'll pause there in case you have
10:11any questions.
10:12>> Yeah. Well, it kind of leads me to my
10:13next one of you know what I guess what's
10:16the average price on a laundromat? And
10:18I'm sure this varies wildly by area and
10:21you know state of the business, but I
10:23guess maybe a better question is what's
10:24a good target sale number for buying
10:26your first laundromat?
10:28Yeah. So, there's sort of a I'll put
10:31them in three phases, right? So, like
10:34phase one was what I would call like my
10:37fixer upper laundromats. That would be
10:39like around $250,000 or less, you know,
10:42give or take would be sort of what I
10:44ballpark as a fixer upper laundromat.
10:47And as a just a rule of thumb,
10:49laundromats that are priced at 150,000
10:53or less, generally speaking, they're
10:56either
10:57you know, making very little money or
10:59they're just not making any money at all
11:01and they're going to require you to have
11:04a plan on how to revive this laundromat
11:07basically, right? So that 250 or less,
11:09those would be more on the fixer upper
11:11sides, you know, once you get over the
11:14250 to, you know, maybe
11:18650 or $700,000 mark, those are sort of
11:21those sweet spot laundromats where
11:24they've already got stable cash flow.
11:26The systems are mostly in place. You
11:29know, everything is all set up and
11:31they're more on the turnkey side of the
11:34spectrum, but there's probably still
11:35some room for improvement. um either
11:37adding a service or having better
11:40customer service, things like that. And
11:42then once you get over that like 750,000
11:46plus, 2 million, 3 million, whatever,
11:48and on, those are your kind of welloiled
11:52machines generally speaking. They're
11:54higher volume. The machines are newer.
11:58Employees are in place and they have
12:00good employees. Their systems are in
12:01place. They have good systems. and they
12:03lean heavily more towards the turnkey
12:06side of things. So, kind of depending on
12:08where you're at with your financial
12:10situation, what your goals are, uh, you
12:13know, you've got sort of these different
12:15categories that you can kind of go
12:16after. If you're looking for, you know,
12:18something that's already running pretty
12:20well, but has a little room to grow,
12:23maybe, you know, maybe that sweet spot
12:24would be the thing. But maybe you're,
12:26you know, a high income earner and
12:29you're a doctor, an engineer, or an
12:30investor and you're looking for the cash
12:33flow andor tax depreciation from the
12:36machines and maybe you want to go on the
12:38higher end of that.
12:40>> So, what's the typical, and this is just
12:42me being curious, what's the typical
12:43multiple for the sale of one?
12:46>> Yeah. So, traditionally, the range has
12:48been three and a half to five times net.
12:51Um, but like I said, the last two years
12:54we've seen more and more interest coming
12:57in because of the popularity online and
13:00also because we finally have been
13:04getting some technology that allows us
13:06to run our business a little easier. You
13:09know, we got all excited about a year
13:11and a half ago or so when we finally had
13:14touchcreens on our washers. I was like,
13:16welcome to 2008, right? But we've got
13:19software that helps us manage it now and
13:22you know we can get more access to data
13:24and analytics things like that right so
13:27you know there's been kind of more
13:30interest in the business now I forget I
13:32got so excited what was your question
13:34>> just the general multiple on the sales
13:36>> oh the multiple yeah so all that to say
13:38thank you I got I just got into it man
13:40all that to say because there's been
13:42more interest we've seen the multiple
13:43going up so I'd say the average multiple
13:45is more like four and a half to five and
13:47a half right now.
13:49>> Got it. Got it. Okay. So, the investment
13:51is there, too. If you're looking at this
13:52as an investment, you can buy one
13:54hopefully at a lower price, build it up,
13:57you know, improve it, and then look at
13:58that as the possibility of a four to 5x
14:00exit at some point in the future.
14:02>> All right. So, when you're doing due
14:04diligence as a a buyer of a laundromat,
14:07what are kind of the top, you know, two,
14:09three, four, five things you're looking
14:10at when you're assessing a deal and
14:13trying to decide if this is the right
14:14one to make?
14:16>> Yeah. So, when you're analyzing a deal,
14:18I always say there's two phases of it,
14:20okay? So, phase one of analysis is you
14:24use the numbers the seller gives you.
14:26So, here's the scary thing about buying
14:28most [clears throat] laundromats right
14:30now is most laundromats are still cash
14:32businesses. So, when you get numbers
14:35from a seller, a lot of times there's
14:37going to be a whole lot of zeros on that
14:38page, right? It's like it makes $15,000
14:42a month. Expenses are $9,000 a month.
14:45The net's $6,000 a month, right? So,
14:49that's a little scary, especially with
14:51the cash business. It could be hard to
14:52verify those numbers, but I'll tell you
14:55how we remedy that in a second. So, when
14:57we do this first analysis, there's four
14:59numbers we need. Okay? So, number one,
15:02we need the net income. That's the
15:05cornerstone of the value of your
15:07laundromat business. you're going to
15:09apply the multiple to that net income,
15:10right? So then the question then is,
15:13well, how do we know what the multiple
15:14is? There's a range of somewhere between
15:16three and five and a half. How do we
15:18know where on the spectrum a particular
15:21laundromat lies, right? So that's where
15:22the other three numbers comes in. So the
15:24first one is the age and condition of
15:26the machines. So obviously newer
15:28equipment is more valuable, which puts
15:30upward uh pressure on the multiple,
15:33older equipment less valuable, downward
15:36pressure on the multiple. The second
15:38number that determines a multiple and
15:40the third are both related to the lease.
15:42The rent amount. And you know the
15:46question then is like how do we know if
15:47a rent amount is a good amount or not?
15:50Our target of what we're aiming for is
15:5325% of the gross or less. As soon as you
15:57start creeping up over 25% for your rent
15:59amount, the multiple starts dropping
16:02there. Um, and then the third number is
16:05the number of years remaining on the
16:07lease. So for a laundromat, a long lease
16:09is better. Like if we're doing a brand
16:12new lease, what we're looking for is
16:14like a 10-year lease with two fiveyear
16:16options to renew or three five-year
16:18options to use. So we have 20 to 25
16:21years. Um, and the reason for that is,
16:24you know, if a landlord decides not to
16:26renew the lease or if a landlord says,
16:28"Hey, you know, we're going to double
16:30your rent, you know, when we renew your
16:32lease, you know, now you're in trouble
16:36because you can't just pick up and move
16:38a laundromat to a different location.
16:39You've got a lot of plumbing,
16:41electrical, gas lines, vents for your
16:43dryers. The equipment's heavy, expensive
16:46to move, right? All that stuff. So that
16:48gives us business security when we have
16:51the long-term lease. So the shorter it
16:53is, the lower the multiple goes. So
16:56that's how we do our first analysis, but
16:58I'll pause.
17:00>> Well, it actually it's going to lead me
17:01to a left turn. Israat ownership, is
17:04there a real estate play here? Are there
17:06opportunities to own the real estate
17:08that you know the actual building or the
17:10land and the building that it's on?
17:12>> Yeah, absolutely. Absolutely. And in
17:14fact, if you can get those deals, a lot
17:16of times they can be I call them like a
17:18wealth accelerator, right? Because I
17:20think
17:20>> right
17:20>> when I think of real estate, so I own
17:22real estate. I own, you know,
17:23commercial, residential, short-term
17:25rentals, long-term rentals, and
17:27laundromats, obviously. And I love real
17:30estate because of the appreciation and
17:34debt payown I can get and because of the
17:36tax benefits and cash flow a little bit.
17:38I was sort of on the Bigger Pockets
17:40bandwagon for a long time, like
17:41financial freedom through real estate.
17:43And I real I started doing the math on
17:45like how many units I'd have to own to
17:47get there. And I was like, man, you
17:50know, and just for context, if you're
17:52doing just like a base hit residential
17:55rental property, you're probably looking
17:57at maybe an 8 to 10% cash on cash return
18:02for your money. If you're buying a
18:04laundromat, a base hit deal, which is a
18:065x multiple, that's just like a base
18:08hit. It's not a home run. It's just a
18:09base hit average deal. That's a 20%
18:12return on your investment unleveraged.
18:15So once you, you know, add a loan, your
18:18return on investment can be north of 30,
18:2140, 50%. Pretty commonly for a base hit
18:25deal, right? And so you can see how the
18:26cash flow of a deal like that is much
18:29more attractive than something like real
18:31estate when you're looking to exit your
18:34nineto-5 as quickly as possible or
18:36you're looking to get financial freedom
18:38or whatever it is, right? That's where a
18:40laundromat comes into play. So if you
18:42can pair the
18:44equity potential and the tax benefits of
18:47real estate with the cash flow and tax
18:49benefits of laundromats,
18:53it's like a match made in heaven. You
18:55got what I call the wealth tripod of
18:57like tax advantages, equity, and cash
18:59flow. You got all three of those
19:01working. And obviously, you can build
19:02equity in your laundromats. It just
19:04builds slower than real estate. And you
19:06can get cash flow in your real estate.
19:08It's just not as much as laundromats.
19:10But if you pair them both together,
19:11that's a wealth accelerator for sure.
19:14>> So, would it be fair to call that kind
19:15of like a diamond in the rough type of
19:17opportunity if there's a laundromat for
19:18sale that also includes the land and the
19:20building that it's on?
19:22>> Yeah. Yeah, definitely. I mean, it
19:24doesn't necessarily have to be a diamond
19:25in a rough. It can be a diamond on a
19:28ring. I don't know what the opposite of
19:30a diamond ring is. Yeah, it could just
19:31be a diamond. But yeah, but definitely I
19:34mean I think you know and especially
19:35like I have clients who will buy like a
19:37strip center with a laundromat and
19:39operate that, right? And then they
19:41there's things you can do also. We won't
19:43get crazy into it, but you can convert
19:45leases to triple net leases. You can get
19:47them up to market rents. you can charge
19:49your own laundromat top of the market
19:51rents as long as it's justifiable and
19:54shift uh equity over to and cash flow
19:57over to the real estate which there's
19:59advantages of uh in terms of valuation
20:01stuff like that. So there's a lot of
20:03levers you can pull when you own both.
20:05So it can get really exciting.
20:07>> All right, awesome. So let's get to the
20:09next step here. Let's say you found a
20:11deal, you've closed on a deal, it's the
20:12right one for you. It's kind of like,
20:14hey, here are the keys. What are the
20:15next steps? What are the operational
20:17steps when you've now completed the deal
20:19for your first laundromat?
20:21>> Yeah. Yeah. Yeah. So, I mean, I have a
20:24picture of my wife and I were holding up
20:26keys in our first laundromat like deer
20:29in the headlight. Look, like what do we
20:30do now? Like, what is going on?
20:33>> And just like you did, we pretty much
20:35skipped due diligence. So, I'm going to
20:37just address due diligence for a second
20:38because that's where it can go really
20:41wrong. And then I'll tell you like what
20:42we do if that's okay. Is that good?
20:44>> Oh, yeah. Go for it.
20:45>> Okay, cool. So on so that first analysis
20:47we use the numbers that the seller gives
20:49us again unverified numbers average
20:52round numbers right but once we get the
20:55offer accepted which comes before we get
20:58the real numbers so we add contingencies
21:01into our offer so that if we do our due
21:03diligence and things are not as
21:05advertised we can back out of that deal
21:07or renegotiate right so our second
21:09analysis we use the numbers we discover
21:11and that's what we call due diligence
21:13right so we have what we call our four
21:14pillars of dill diligence. So we want to
21:16verify income, verify expenses, we want
21:19to look at the trajectory of the
21:21business both looking back coming to the
21:23present and from the present going
21:25forward. And then our fourth pillar is
21:27what we call our value ad which is our
21:29game plan for when we take over which is
21:31what you were asking right. So real
21:34quick on you know the due diligence side
21:38um on verifying income that can be
21:40easier said than done. We utilize what
21:42we call our income verification stack
21:45because still most laundromats are coin
21:48cash businesses, right? So verifying the
21:50income can be tricky. So we utilize a
21:53few different methods and we stack them
21:54on top of each other to see if there's
21:57anything any anomalies, anything that
21:58sticks out, anything that's weird. If
22:00they all pretty much line up, then we
22:02can be pretty confident this business is
22:03doing that. So, a couple of like things
22:05that we do is we do coin counts where we
22:08actually go and count the coins with the
22:10seller as they collect the coins to see
22:12how much money came in over a certain
22:14period of time. And when we do that, we
22:17take water meter readings from the
22:20actual water meter like on the street or
22:22in the back room or wherever it is on
22:23the side of the building to compare the
22:26amount of money that came in to the
22:28amount of water that's used because
22:30that's going to tell us a story, right?
22:33And we can utilize, you know, past water
22:36bills and the usage, how much water is
22:38used to we have a spreadsheet that does
22:42this for you. So this sounds
22:44intimidating, but we basically can do a
22:45calculation where we say, "Okay, use
22:48this much water. You have these
22:49machines. Each wash costs this much.
22:52Here's how much money you should be
22:54making." Right? So a few different
22:55methods like that where we stack them on
22:57top of each other to make sure the
22:59income's coming in. On the expense side,
23:02if you miss one
23:04$500
23:06a month expense, which is very easy to
23:09do in a business, right? Because we're
23:12working at a five multiplier. That $500
23:14a month is 6,000 a year times five.
23:17That's $30,000 of equity that can vanish
23:20like that, right? You immediately lose
23:23that equity if you close on that deal
23:25without knowing that, right? That your
23:27net worth goes down by $30,000. like
23:29it's just it's not good, right? Not to
23:30mention you're also not getting $6,000
23:33you thought you were getting um a year,
23:35right? So, you know, we have a checklist
23:37that we go through for that as well. The
23:40trajectory is just the performance of
23:42the business over time. That one's
23:44overlooked a lot, but you know, what's
23:46the saying? You don't want to catch a
23:47falling knife, right? If business is
23:49dropping off a cliff, unless you have a
23:51solid plan, it's probably not a good
23:52option. So, that brings us to pillar
23:54four, which is basically what you're
23:55asking. What do we do now? Right? once
23:58we own this thing. And the short story
24:01is it depends on your business and your
24:03business model. Most people think of a
24:05laundromat as a self-s serve laundromat.
24:08You know, the basics are the business,
24:12right? So that's keeping the store
24:14clean. That is keeping the machines
24:17working. If you've got a coin store,
24:19that's keeping quarters in the change
24:22machine and making sure that people can
24:24actually give you money for the service,
24:27right? that's
24:29smiling at people and if you have
24:30employees making sure they're smiling at
24:32people and friendly and welcoming, you
24:35know, culture of your business, right?
24:37Like these are the basic things. Making
24:39sure, you know, the people who aren't
24:42supposed to be there aren't there and
24:43the people who are supposed to be there
24:45feel welcome there. Uh, right? Keeping
24:47all the lights working, keeping it
24:49bright and safe. Um, these are the
24:51basics and if you just do that
24:55consistently, you're going to have a
24:58successful business. The bar is still
25:01very low. There's more, like I was
25:03mentioning, there's more and more like
25:04sophisticated business owners coming in,
25:06people who are passionate about this
25:08industry, people who catch the vision of
25:10laundromats coming into the business,
25:11and that's starting to change, but still
25:13the bar in most markets is very low. So,
25:16if you just take care of business, uh,
25:18you're going to be doing just fine. So,
25:21I just said a whole lot of stuff that
25:22was like a dump. So, I'll pause in case
25:24you have any questions there.
25:25>> No, that's great. I love that. I love
25:27the, you know, TCB, just take care of
25:29business, right? And it's like that in
25:30so many businesses across so many
25:32industries. If you do the basics and you
25:35do them really well, you're already
25:36ahead of 98% of your competition because
25:39in so many industries, it's like if you
25:41just do the small things like, you know,
25:43greet your customers, get to know them a
25:44little bit or treat them well and, you
25:46know, resolve issues in a timely manner
25:48and do it in a way that's, you know,
25:50polite, people take note of that and
25:52that makes them want to come back and do
25:53more business with you. So cover the
25:55basics and do it really well when you're
25:57already ahead of the game. I'm curious
25:58about the, you know, kind of the
26:00overhead of a business like this. So, we
26:02talked about the solid cash flow in a
26:04laundromat business, but what are some
26:06of the overhead expenses that this
26:08business has and what are maybe some
26:10unique to this business or maybe we
26:12probably wouldn't think of unless we
26:13were talking directly to you. Like, look
26:15at this. We are today. How convenient.
26:17>> Yeah. Yeah. So, the three biggest
26:18expenses for most laundromats are going
26:20to be your rent if you are renting, your
26:24labor costs, even if you only have
26:27somebody there. You know, we have
26:28unattended business model where there's
26:30nobody there most of the time, but
26:31somebody's probably going to come clean
26:33every day and um and do that, right? So,
26:35you got your labor and then you've got
26:37your utilities, which I would say is
26:40probably not necessarily unexpected if
26:42you sit and think of it, but it's kind
26:44of surprising how much utilities are.
26:47We're sort of a utility rental business.
26:51I mean, obviously like we're renting
26:52machines out, but those [clears throat]
26:54machines are just consuming gas and
26:57electric and water, right? Like those
27:00are just kind of non-stop.
27:02So those on average somewhere between 15
27:06and 25% of your revenue goes towards
27:10utilities depending on you know your
27:12pricing and how old your machines are.
27:14Older machines it seems like to me back
27:17in the day they just didn't care how
27:20much water a machine you they're like
27:22let's just put all the water in here.
27:24And you're like do you really need 150
27:26gallons of water for that wash? Like
27:29>> screw it. Just put it all in there. I
27:31just put it all just pump all the water
27:33drain Lake Michigan and then pump it
27:36back in there. So machines have gotten
27:38more efficient, right? So that that is a
27:41little bit of it. Other than that, I
27:43mean, you've got the other one that
27:44might surprise people, again, not that
27:46this expense exists, but how much it can
27:48be is the repair and maintenance.
27:51Listen, I mean, we've got like a lot of
27:52machines in these stores, right? And
27:55they last, you know, 15 to 20 years. the
27:58washers, it may be 20 to 25 on the
28:01dryers, but the older they get, the more
28:05often they break down. And so, you know,
28:08you've got to reinvest in your business.
28:11You know, the reason that a lot of
28:13people walk into their local laundromat
28:16and there's a bunch of machines down is
28:18because it's not cheap to fix the
28:19machines. But if you don't fix the
28:22machines, you lose customers, which
28:24means you make less money, which means
28:25you have less money to fix the machines,
28:28which means more machines break down and
28:30eventually you run yourself out of
28:32business, right? So, you've got to
28:33reinvest in the business uh and fixing
28:36the machines. And then other than that,
28:37I mean, you've got your typical like
28:40insurance and
28:43you know, I don't whatever the normal
28:45business expenses are, accountants and
28:48taxes and all that stuff. Loans. Um,
28:51another thing that might surprise,
28:52speaking of loans, that might be one
28:54that might surprise people. Equipment
28:57costs can be very high. Financing terms
28:59can be very good, but if you're building
29:01out, just kind of give you a ballpark.
29:03If you're building out a brand new,
29:04let's say it's a 3500 square foot store,
29:08you might spend,
29:10you know, $750,000
29:13on the equipment and installation on a
29:163500 foot store with brand new
29:19equipment. So, you know, and equipment
29:22costs, they were high. And then when we
29:25had that whole remember when like we
29:27couldn't get anything into the country
29:28and you know distribution was just shut
29:31down for a while and then the price of
29:33everything went up.
29:34>> I think I recall [clears throat]
29:35>> then everything Yeah. then everything
29:37like loosened up and some stuff kind of
29:39came back down. Well the cost of
29:40machines did not come back down at all
29:43and have it just kind of kept going up.
29:45So yeah,
29:46>> you can pay,
29:47>> you know, if you go buy a 80 pound
29:49machine, you're going to pay between 20
29:52and $25,000 a machine. So that cost can
29:55get
29:55>> pretty significant, which is a
29:57surprising expense.
29:59>> Yeah. Yeah. Well, I mean, it makes
30:00sense. You know, these things that they
30:02last 15, you said 15 to 25 years,
30:05there's a whole lot of loads of wash and
30:07drying that's going to be happening. So,
30:08you know, you look at that, you know,
30:10over that span, that's probably a decent
30:14price. like it's definitely not cheap in
30:16the short term, but given if you keep it
30:18maintained and you keep it in store, you
30:19get the max life out of it, obviously a
30:21worthy investment. And also, real quick
30:23sidebar, what's like the go-to brand of
30:26washer and dryer for these types of
30:28laundromats?
30:29>> Yeah. So, I'd say there's like a top
30:31three probably the number one is like an
30:34Alliance brand, which the two main ones
30:36of Alliance is Speed Queen. That's the
30:38main one I'd say, and then Hipp, which
30:41nobody knows how to say. It's like
30:42hubish, but it's hip. So, they're
30:45basically like the same machine. And
30:46then Dexter is the second one. And then
30:49Electrolux would be the third one.
30:51>> Nice.
30:52>> Those are the three main ones. There's
30:53some other ones, too.
30:54>> Okay. Okay. Well, and through an
30:56experience three months ago when we
30:57bought our new house and needed a new
30:58washer and dryer, I learned all about
31:00the quality of Speed Queens. And you
31:02know what? I ended up with a Speed Queen
31:04washer and dryer. And it's going to last
31:0625 years. So, here we are. [laughter]
31:08>> There you go.
31:09>> Okay. You heard it here first, folks.
31:11hit them up.
31:11>> That's right.
31:12>> Um, all right. So, you had mentioned
31:14unattended stores versus attended
31:16stores. So, obviously, this can play a
31:18big part in your overhead costs between
31:21labor or not having labor. Help me
31:23understand the benefits of each and are
31:26unattended stores is that kind of more
31:28the norm these days or is it a little
31:31split between the two? And which one do
31:33you prefer?
31:34>> Yeah, it's kind of an interesting
31:36dynamic happening right now. We've got
31:38sort of this the industry is kind of
31:41going two different ways, right?
31:42Unattended stores like the benefits are
31:45obvious, right? So unattended store
31:47means less labor costs and you know you
31:51less people to manage frankly and
31:53attended stores is higher labor costs,
31:54right? The downsides to an unattended
31:58store is depending on your neighborhood,
32:00you might get people coming through
32:02that, you know, laundromats tend to
32:04attract like a transient community or a
32:06homeless or, you know, community. People
32:10are looking for places to just hang out
32:12where they're not going to be bothered,
32:13right? And if nobody's at the
32:15laundromat,
32:16that can be a a you know, a place that
32:18they land. And then if you think about
32:20your target demographic for most
32:23laundromats, it's like a mom with some
32:25kids and stuff. And so that can make it
32:28feel very uncomfortable for them. And so
32:31you end up losing customers if that
32:33happens too much, right? So um again,
32:36that's not in all markets, but kind of
32:37depends on where you're at for sure. So
32:40the benefit of going attended, you can
32:43go partially or fully attended is number
32:46one, you just you erase the majority of
32:49your problems, like your return on
32:50headache goes way down or up, whatever
32:53the good way is. Um you have less
32:55headaches, less problems that happen in
32:57your stores. When customers are there,
33:00they have somebody who can help them out
33:02so problems can get resolved quicker. So
33:04your customer service should be better
33:06as long as you have the right employee
33:07in there. I've had the wrong employee in
33:09there. Side note, a couple times and
33:12everything I'm saying is not true in
33:14that case. The other kind of
33:17benefit of having attendance at the
33:20store is that then you have the ability
33:22to offer service to customers and you
33:26can open up a whole new demographic. So
33:28people can drop off their laundry like a
33:30wash and fold where they take the
33:32laundry to you or your attendants,
33:34do the laundry and fold it, wash it, dry
33:37it, fold it, and give it back. They come
33:39back and pick up their laundry. Or
33:42something that's been booming since
33:43COVID especially is the pickup and
33:46delivery model where you actually have a
33:47driver who goes to your house. You just
33:50leave your laundry on the porch or they
33:51knock on your door and you hand it to
33:53them and it comes back to you the next
33:54day clean, folded, ready to put away.
33:57um those services can be very profitable
34:00and if you have somebody there you can
34:02offer those services. You have somebody
34:04to accept the laundry and then process
34:05the laundry while you're there but very
34:08different business models. Uh for sure.
34:11>> So that leads me to my next question of
34:14are there opportunities for this
34:16business to be a subscription type of
34:17business where it's like hey there's
34:19three different tiers and here's what
34:20you get in three tiers and it's you know
34:22$50 $150 a month whatever that is. Does
34:25this business lend itself to that
34:27opportunity?
34:28>> Yeah, we're starting to see more and
34:29more subscription, you know, part I
34:31mentioned like the technology coming in.
34:34Really difficult to do that before we
34:36had some software to help us. A lot of
34:38people were doing like the handwritten
34:39tickets until even still some people do
34:41it now, but until pretty recently. Um,
34:44so now that we're seeing that, the
34:46subscription model is starting to gain
34:49some traction in the business, right?
34:51Right. And it's really easy to say,
34:53"Hey, you know, it's 225 a pound if you
34:56just bring your laundry in, but if you
34:57have a subscription, we're going to give
34:59you, you know, $2 a pound or whatever or
35:02a set amount and you can bring in x
35:05number of pounds or, you know, there's
35:06different models to do it. But yeah,
35:08which, you know, again, I mentioned
35:10we've seen the multiple rising.
35:13Depending on how things go here, that
35:15multiple might keep rising. So, still a
35:18really good time to get in this
35:19business, I think, because subscription
35:21businesses are just more valuable than
35:25other businesses. And laundromats just
35:27by themselves are almost like a
35:29subscription business. I call them a
35:30habitual business, right? Because people
35:33usually go at the on the same day around
35:36the same time to the same place to do
35:39their laundry. And they only stop doing
35:42that if you're doing something really
35:45wrong. Right? if machines are breaking
35:47down or it's dirty or some your
35:50attendants's rude or whatever that might
35:53get them to change their habit but
35:54otherwise people don't really change
35:56their habit. So it's already sort of
35:58like that but we're kind of formalizing
36:00it which I think will increase the value
36:01of the businesses.
36:03>> Yeah. And I guess it also does that make
36:06this business I presume hyper local?
36:08Right. Because if you know you're within
36:10a x square mile radius of this
36:12laundromat and you're in need of that
36:14service, that's a place you're going to,
36:16right? That kind of inherently makes it
36:17like a subscription even if it's not.
36:20>> Yeah. Yeah. And that's how it's been
36:22treated for a long time. That's why you
36:23see a lot of rundown mats because owners
36:25are like, "Well, I don't have to put
36:27money back into it. People are going to
36:28come here anyways." Um, but what we're
36:31finding is as newer, nicer, larger
36:36laundromats are coming into the market,
36:39uh, they are starting to absorb a larger
36:43and larger share of the market because
36:45people are like, "Yeah, I'm going to go
36:46to that one. It's way nicer. The
36:48experience is way better." And so they
36:50will drive past two or three laundromats
36:52or they will take a bus a little bit
36:54further to a laundromat. And then
36:56obviously as you add the services you
36:59know drop off service ex extends not
37:01only just a new demographic of people um
37:05who you know I have laundry facility in
37:08my house right I have a washerd dryer
37:09you have washerd dryer but who wants to
37:11spend half a Saturday doing laundry or
37:13who wants to do laundry you know three
37:15nights a week if I could just pay
37:17somebody to do it once a week and it's
37:19done for the week and I can spend my
37:21time doing whatever else you know why
37:24would I not do that and So having these
37:26services adds a new demographic, but it
37:29also expands the radius. If you're if
37:31I'm willing to go pick it up from you,
37:33I'm probably not going to come to
37:34Cincinnati from Hawaii, but
37:37>> uh you know, but somebody on the other
37:39side of Cincinnati where you would never
37:42drive to that laundromat would come to
37:44you and pick it up from you, right? So
37:46your radius expands as well. But they
37:49are hyper local, especially self-s
37:51served laundromats. But even the service
37:54side is definitely local business for
37:55sure.
37:57>> You mentioned the technology that's
37:58starting to show up in the industry. You
38:00said touchcreens on the units. So is
38:02that where it's essentially
38:05a you pay with credit card and b it's
38:07all done digitally there? So that I
38:09imagine that reduces a lot of the hassle
38:11with being a cash business. Does that
38:13mean that are you excluding a certain
38:15part of the demographic depending on you
38:17know the city or neighborhood you're in
38:18or do you offer both or is that kind of
38:20the future where it's like hey the vast
38:22majority of people have credit cards and
38:24my business is based in an area where
38:25that is true or maybe it's not does how
38:28does that affect your decision-m when
38:29starting to add technology into this
38:31type of business?
38:33>> Yeah, I mean it's a great question. I
38:34mean it's a debate that happens all the
38:36time. There's definitely the coin
38:37loyalists and whether that's, you know,
38:40because they feel like their demographic
38:42will only use coin or because
38:45they don't want a paper trail behind how
38:49much money is coming in, which is pretty
38:50common in this business. And so, here's
38:53kind of what I think. There's a a hybrid
38:56model for sure where you can take coin
38:58or you can take card. what most people
39:01because there's lots of the new stores
39:02are going card only but what I mean by
39:05that is they will accept credit card EBT
39:08cards but also loyalty cards right and
39:12so you can still come with cash maybe
39:15you're not you know most people they
39:17come with bills and then they put them
39:18in the changer and then they get coins
39:20and they go pay so instead of doing that
39:22they put their you know their bills in
39:24and load it onto a card and they still
39:26pay with card but you can still pay with
39:28cash right so so I think doesn't exclude
39:30that demographic. There's an older
39:32generation, you know, thing where
39:34they're like, I just want to use coins
39:36and that's, you know, that's a real
39:39feeling and you want to like honor that.
39:41But at the same time, you got to make
39:44the best decision for your business, for
39:46your overall business. And I've also
39:48found that the people who are resistant
39:50to change like that tend to forgive a
39:53whole lot if you give them something
39:54free. So having a card, loyalty cards,
39:58you know, being able to say, "Hey, do 10
40:00washes, get one free or put $20 on, get
40:03$2 free or, you know, a lot of people
40:06when they do like a grand reopening."
40:08And they add like new machines and
40:10stuff. They'll say, "Hey, for the first
40:12week, we'll double whatever money you
40:14put on your card, we'll double it." And
40:16people get over the coin thing pretty
40:19fast if you give them something for free
40:20and you teach them how to use the
40:22technology. But there's different
40:23thoughts on that. I tend to lean more
40:24towards the card system. You know, even
40:27now like Snap Cards, you and they get a
40:30card, right? EBTS. So, they're used to
40:32using cards. It's just a different kind
40:35of card. So, you know, but there's
40:37different models and different people
40:38have different feelings about it for
40:40sure.
40:41So, as we round this out here, I'm
40:43curious, and obviously this is a
40:45decision up to the person buying a
40:47laundromat, but is it easy enough to
40:49start building a portfolio of
40:51laundromats, or is there kind of a point
40:53of diminishing returns where it gets
40:55harder to own enough, or does it make
40:57sense to have all your laundromats be
40:59local to you? Can you start building
41:00like a regional or maybe a national
41:02network of laundromats? How does that
41:04work?
41:05Yeah. So, we're starting to see uh it's
41:08been really difficult to do that because
41:10of the coin thing. And like I said, this
41:12technology
41:13now that we have allows us to manage
41:15more stores. We can do them from further
41:18away. So, and we're definitely starting
41:20to see a consolidation in the industry
41:23where [clears throat]
41:24owners are owning more locations. used
41:27to be mostly onesie, twoosy owners, one
41:30store, two store, but and it still
41:32probably is, but there's more that own
41:3510, 20, 30 than probably ever before.
41:39So, yeah, it's definitely possible to
41:42kind of build an empire here. The
41:44regional thing is still being worked out
41:47in our industry. I definitely think it's
41:49possible. There are people doing it.
41:50It's doable. But in order to own outside
41:53of your area, you need two main things.
41:56You need the right technology, which is
41:57the easy piece, and then you need the
42:00right people to help you manage. Like
42:02the worst thing you want to do is, you
42:04know, drop a million dollars on a
42:05laundromat and then hand it over to
42:07minimum wage employees, right? You need
42:09somebody who's a higher tier to be able
42:11to manage your business for you. And
42:15it's hard to buy that now because it
42:18doesn't exist very much. And the people
42:20who've already built that out, they're
42:22not selling, right? And so you have to
42:25actually build that out because it's not
42:27readily available there. So it's a big
42:30opportunity though and a lot of people
42:31are starting to move in that direction
42:33right now.
42:34>> Is this an area that private equity is
42:36crashing or has not yet crashed or does
42:38not crash?
42:39>> Starting to again because the technology
42:42is getting there. We've seen some
42:44private equity come in to help with the
42:46technology in building out software and
42:49hardware payment systems, things like
42:51that. We've definitely seen that and now
42:53we're starting to see, we just had our,
42:55it's called the clean show, which is our
42:57big trade show that happens every other
42:59year. We just had it this past August
43:01and there were a lot of private [snorts]
43:04equity representatives there. So, it's
43:06definitely peing interest. I think
43:09laundromats might start going the way of
43:11like car washes and self- storage here
43:14uh pretty soon. But the one big obstacle
43:17is it's difficult to acquire them right
43:20now. And so deploying large amounts of
43:22capital quickly is tough.
43:24>> Okay. So there's sharks in the water,
43:26but there's still a lot of obstacles
43:27that keep them at bay a little bit.
43:30>> Yeah. And there's still a lot of
43:31opportunity for, you know, for just a
43:34regular person like you or me or
43:36somebody listening here to get in this
43:38business. For sure.
43:39>> Well, that was my last question is what
43:41does the opportunity look like in the
43:42present and in the near future? And
43:44sounds like it's still ripe for
43:46opportunity.
43:48Yeah, I think it's right for opportunity
43:49for the cash flow play. And I think, you
43:52know, as soon as private equity gets
43:53into an industry, their goal is to drive
43:56up valuations, right? That's how they
43:58make money. So, you know, if you get in
44:00now, like this is early early in the
44:02game here. So, if you get in now,
44:04obviously like the cash flow is like the
44:07main play, but I think there's people
44:09who disagree with me, but I they're
44:10wrong, you know, but uh but I think that
44:13the I think the valuations are going to
44:16continue to go up in this industry like
44:18we saw them do with self- storage,
44:21uh mobile home parks, car washes. I
44:26think laundromats are just going to
44:27follow suit there. It's a good business.
44:30The one thing I want to say real quick,
44:32this is a great business to be in for
44:33the business itself, but it's also one
44:36of the last places communities gather in
44:38person. And laundromat owners have a
44:41really cool opportunity to make a
44:44[clears throat] real difference in
44:45communities and make a real impact in
44:47communities while making good money
44:48doing it. And that I think is what
44:51really makes this business special. A
44:53lot of people want to get into it,
44:54including me, because they want to make
44:56money and not trade time for money kind
44:59of thing, which it offers that. But what
45:01I found along the way is that there's
45:03actually a lot of
45:06cool opportunities to make a difference,
45:08you know, altruistically, you know, in
45:10the community also to help people. So
45:12that's been the surprising cool thing
45:15about laundromats from my perspective.
45:17Also,
45:17>> I love it. gives you an opportunity to
45:19have impact in the community, not just
45:20as a, you know, a cash flowing business.
45:23>> It's awesome.
45:24>> Yeah.
45:24>> I love it. I love it. Well, Jordan, I
45:26could keep you here longer, but I
45:28probably shouldn't. You're a busy man.
45:29You have to go surfing out on Aahu there
45:31today. So,
45:32>> the waves are waves are calling, man.
45:33>> The waves are calling. I don't want to
45:34keep you any longer. So, thank you so
45:36much for joining me today. This was a
45:38ton of fun. I'm sure there's plenty of
45:39people out there who are looking at this
45:41now with a different eye and thinking
45:42that, hey, you know, I ought to look
45:44into this. So for anyone who is thinking
45:46that right now and they want to learn
45:48more from you, take advantage of
45:49anything you have to offer at Laundromat
45:52Resource, what are the best ways to
45:53either get in contact with you or learn
45:55more?
45:56>> Yeah. Yeah. So laundromatresource.com is
45:58a website. There's tons of free
45:59information over there. There's a free
46:01course you can go take to get started,
46:03get your feet wet over there. And then
46:04we have the podcast, laundromat resource
46:07podcast, which is a surprise, you know,
46:09people are like, you have a laundromat
46:10podcast with what? And it's a
46:12surprisingly popular podcast. and I do
46:14long form interviews with owners and
46:16industry professionals and we got a
46:18little news segment on Fridays and so
46:21yeah, it's a good place to kind of get a
46:23feel for what it's like to own a
46:24laundromat and get some tips from just
46:26real people in the trenches over there.
46:28So, and then obviously we're on all the
46:30socials, laundromat resource.
46:32>> All right, awesome. Well, Jordan, thank
46:34you again, man. And best of luck out on
46:36the waves today and with your LaunchMat
46:38Empire.
46:39>> Yeah, stay warm over there, man.
46:41>> Yeah, I'll try. I'll be dreaming of the
46:42waves. How about that?
46:44>> All right. I like it.
46:45>> All right. Thanks, buddy. We'll see you.

About this transcript

This page contains the full transcript of My Millionaire University Interview: How “Boring Businesses” Built My Freedom by Laundromat Resource, generated from the public captions YouTube serves with the video. The transcript has 9,161 words across 1,308 segments, with the original timestamps preserved so you can click any line to jump to that moment in the embedded player.

What you can do with it

Use the transcript to take notes, quote the speaker, build a study guide, generate a summary with ChatGPT or Claude via the YouTube Summary tool, or export it as a timed subtitle file with YouTube to SRT. You can also re-open it in the transcriber to translate the transcript into 100+ languages.

Free YouTube transcript tool

YouTube2Text is a free YouTube transcript generator — no signup, no daily limit. Paste any YouTube link and get the full transcript instantly, with timestamps, click-to-jump, translation to 100+ languages, AI prompts for ChatGPT, Claude, and Gemini, and exports to TXT, SRT, VTT, or Markdown.