Jordan Berry [00:00:00]:
Today, we’re putting laundromats head to head against one of the most popular investment strategies in the world, or at least in the United States, single family rentals. Which one gives you more cash flow, which one is easier to own, and most importantly, which one actually builds well faster? We’ll break it down with real numbers, compare them across nine categories, and at the end, we’ll put them both on an asset class leaderboard to see where they rank. So let’s get into it. Start with what a typical deal looks like. There are plenty of better and worse deals that we could compare, but I’m shooting to compare an average base hit deal. Here’s the numbers breakdown. Single family rental purchase price, $300,000. Down payment, 20% down at $60,000.

Jordan Berry [00:00:53]:
Typical rent at this price range is about $2,250 a month. And the expenses, including mortgage, taxes, insurance, maintenance, property management, let’s call that around $1800 a month. So the net cash flow is about $450 a month or 50, $400 a year. That’s a cash on cash return on your $60,000 investment of 9%. Now let’s take a look at an average base hit Laundromat deal purchase price, $400,000. Down payment, $100,000. Your gross revenue of a Laundromat at that price point is around $25,000 a month with expenses including your rent, your payroll, your utilities, supplies, etc. Maintenance, all that stuff is around $18,000 a month.

Jordan Berry [00:01:46]:
So your profit before your loan payments, called the net income, is $7,000 a month. But in order to compare apples to apples, we’ve got a loan on this property. So let’s put a loan on the business. And after you factor in the loan payment for that $300,000, your laundromat base hit typical deal is going to cash flow you $4,800 a month or about $57,600 a year. That’s a cash on cash return of 57%. It’s a similar ballpark investment in these two assets, but radically different results. Let’s break it down into some different categories so we can do a side by side comparison of single family rentals and laundromats. Category number one, cash flow, single family rentals, $450 per month.

Jordan Berry [00:02:41]:
Laundromats, $4,800 a month after loan payments. This one’s not even close. The cash flow for a Laundromat is really, really tough to be in it. The typical laundromat deal destroys the typical real estate deal when it comes to cash flow. So if you’re looking to leave your 9 to 5 or you’re looking for financial freedom, we’re talking cash flow here. And laundromats are tough to beat. So on a scale of 1 to 5 laundry pods, laundromats take in the top spot here with five laundry pods. Whereas cash flowing rental real estate, I’m going to give it two cash flowing laundry pods, category two.

Jordan Berry [00:03:25]:
We got to talk tax advantages here. Listen, let’s be honest. Real estate wins here, but only slightly. You get depreciation, mortgage interest deductions, even 1031 exchanges, which is a huge advantage of real estate that businesses no longer have. However, a laundromat allows you to depreciate equipment, funnel legitimate expenses through the business pre tax and allows for other write offs like travel, education, memberships, as long as it’s part of doing business right. Both asset classes currently allow for 100 bonus depreciation, which means you can write off 100% of the value of the improvements on the land of your rental property and 100% of the value of the hard business assets in your laundromat in year one. Now listen, I know this is YouTube and this can live on and I’m not a CPA so make sure you check with your CPA before implementing this. But as of right now, that’s what the landscape looks like.

Jordan Berry [00:04:27]:
So how does that stack up when it comes to our scale of one to five tide pods? Single family rentals, five out of five tide pods. When it comes to tax advantages, great, great advantage there. And laundromats close behind. And I’ll give it a four out of five tide pods. And in fact I’d put them equ to each other if we could. 1031 Laundromat still. But since that’s not currently the case, I’m going to give it a 4 out of 5 laundry pods. All right, if you’ve been around here for a little bit, you know we have what we call the wealth tripod.

Jordan Berry [00:04:59]:
And the wealth tripod is made up of three legs. Leg number one is cash flow. Leg number two is tax advantages. Leg number three is equity. You get all three of those and you are supercharging your wealth accumulation and build up. So let’s talk category three equity potential here. Homes, especially single family homes, appreciate loans, get paid down by tenants. And listen, equity potential in single family housing traditionally has been pretty darn good.

Jordan Berry [00:05:31]:
Especially because the leverage that you use can actually supercharge that appreciation Laundromat appreciation is tied to its net income. If you grow the net income, you add equity in your laundromat loan paydown also adds value to your business. However, equity tends to grow a little slower in laundromats than it does in real estate. So just trying to shoot straight with you. Laundromats tend to be a cash flow play and a little bit on the taxes. Real estate I say though, takes the win when it comes to equity here. So let’s give single family rentals a 4 out of 5 laundry pods and laundromats 3 out of 5 laundry pods. So not bad, but not quite as good as rental real estate.

Jordan Berry [00:06:13]:
One of the big buzzwords when it comes to real est and when it comes to laundromats actually is this whole concept of passive income. All right, I own both single family rentals, I own laundromats, and I’ve owned other asset classes that we’re going to go head to head with, by the way, in a series that we’re calling our ultimate asset battle. So stay tuned for that. But let’s talk about the passivity scale here for both single family rental real estate and laundromats. With property managers, rentals can be fairly hands off. Laundromats can also be automated with attendance and software. But listen, you still have machines breaking down, you still have things to manage. So while you can set laundromats and real estate really more leaning more towards the passive side of the scale of passivity versus completely active, you can lean them pretty heavily towards the passive side.

Jordan Berry [00:07:08]:
But listen, neither one of them is ever going to be completely passive and laundromats a little bit less so than rental real estate. So how do they stack up in our laundry pod scale? Well, single family rentals, I’m going to give them three out of five laundry pods when it comes to how passive they are. So laundromats, just like I said, not quite as passive as single family rental real estate. I’m going to give them two out of five laundry pods on our scale category five. Super important to me because, listen, I’m just a simple guy. I like simple businesses, simple investments that I can run and understand and, you know, don’t have to put in too much brain power to make them work. So category five is complexity. Single family rentals are pretty straightforward.

Jordan Berry [00:07:54]:
You buy them, you rent them, you repeat. Like you said before, you can have management companies that help you do all that. There’s lots of tools, resources, people that can help you make sure you have the Right deal for you. Laundromats, however, they require learning operations. You gotta learn about machines. Customer service is huge in laundromats. While they’re pretty simple relative to other businesses, anytime you’re working with people or machines, you’re going to have problems. And laundromats, listen, you’re working with a whole lot of both, a whole lot of people and a whole lot of machines.

Jordan Berry [00:08:30]:
So let’s talk about where they stack up on our scale when it comes to complexity of this investment asset class. Single family rentals, I’m going to give them four out of five laundry pods. Not too bad, not too complex. There’s a lot of information and resources out there that can help you and a lot of people in that industry that can help you succeed. Laundromats, like I said, a little more complexity, a little less infrastructure around to help you build it out. That’s why we have laundromat resource. So check out laundromatresource.com for more resources to help you succeed with laundromats. But like I said, slightly more complicated than rental real estate, even though they’re fairly simple businesses.

Jordan Berry [00:09:12]:
So I’m going to give them a 3 out of 5 laundry pods. Sometimes you just need to get your money out of an asset to either redeploy it or you have an emergency or whatever. So category six that we’re going to talk about is liquidity. How easily can you retrieve your money when and if you need it? Houses sell relatively easily. They are not completely liquid. It does take a little time to sell them. There’s transaction costs that go along with buying and selling real estate. So I’d say they’re fairly liquid but not super liquid compared to some other asset classes we’ll talk about later in the series.

Jordan Berry [00:09:51]:
Laundromats, there’s a little bit smaller buyer pool. Although today, in today’s market, laundromats are hot. They’re hot businesses and there’s far more buyers than there are sellers. So even though laundromats are pretty easy to sell, in today’s market, the escrow process usually takes 15 to 30 days longer than real estate on average. So going to give single family rentals three out of five pods when it comes to liquidity, and I’ll give laundromats 2 out of 5 pods. Category 7 has to do with how scalable this asset class is. Listen, nobody, I shouldn’t say nobody, most of us are not here because we want one rental property or we want one laundromat. In fact, it is survey.

Jordan Berry [00:10:34]:
92% of everybody who responded to my survey said they aspired to 10 or more laundromats. I would guess that it would be similar numbers when it comes to rental real estate. So let’s talk about scalability and stack these two asset classes up next to each other to see which one comes out on top. When it comes to single family rentals, you can add more rentals, but financing limits do slow you down and you have to get a little more creative when you hit some of those limits. Laundromats can scale faster sometimes than rental real estate if you reinvest the cash flow. But finding laundromat deals is harder than finding real estate deals. So listen, on the scale of laundry pods here, I’m going to call this one a tie and give both single family rentals and laundromats three laundry pods out of five. Okay, category eight.

Jordan Berry [00:11:29]:
We’ve got to talk about how risky these investments are and how resilient they are. So sort of risk slash resilience for these asset classes. In recessions, people still need to do laundry. We saw this in Covid where laundromats did take a little bit of a hit to their revenue and to their bottom lines for a short amount of time during the pandemic. However, they bounced back quicker and the hit that they took was much less than many other industries. Single family rentals, however, depend on tenants keeping jobs. Both can be pretty resilient, but laundromats are recession resistant by nature. This one might be a little controversial, so let me know what you think in the comments.

Jordan Berry [00:12:12]:
But I have laundromats at four out of five laundry pods and rentals at three out of five laundry pods. And our final category here is initial capital needed to get started. So in our example, we had the down payment for our home at a smaller amount, which was sixty thousand dollars versus the hundred thousand dollars you needed to buy that laundromat. You can typically use more leverage to purchase real estate than a laundromat. There are options to buy a laundro for as little as 10% down. And if you want to hear more about that, check out the video linked below about laundromats and SBA loans. So how do they stack up when it comes to initial capital needed? I’m going to give single family rentals four out of five laundry pods. Laundromats, again, not quite as good.

Jordan Berry [00:12:56]:
You tend to need a little more capital, so I’m going to give them three out of five laundry pods. So what’s the verdict? Well, when you add up all the laundry pods for our nine categories, laundromats have 30 laundry pods. In single family rentals, they have 32 laundry pods. And that’s fascinating. Even though this is the Laundromat Resource Channel, and even though laundromats blow rentals out of the water on cash flow, single family rentals claw back points with tax advantages, equity growth, and liquidity. But here’s the kicker. If your goal is financial freedom, fast, laundromats dominate. If your goal is slow wealth over decades, rentals hold their ground in their proven asset class.

Jordan Berry [00:13:39]:
So where does that put us on the asset class leaderboard? Well, listen, this is the first episode in the series, so we’ve got at number one on our leaderboard, single family rentals with 32 laundry pods and laundromats coming in at second with 30 laundry pods. That’s right. In this first matchup, single family rentals technically edge out laundromats, but only because their tax advantage and equity benefits are so good on raw cash flow. It’s not even close. So what do you think? Did I score this right? Should laundromats be on top, or do Reynolds deserve the crown? Drop your score in the comments I read everyone, and I love to hear what you have to say. And like I mentioned before, this is episode one in our Battle of the Asset Classes series where I’ll be pitting laundromats against other asset classes and placing them on our leaderboard. So drop a comment and let me know what asset class you want to see compared to Laundromats next. And be sure to subscribe, because next week we’re putting Laundromats up against Airbnb.

Jordan Berry [00:14:41]:
You don’t want to miss it. And if you want to learn how to actually buy your first laundromat, check out my free course on how to buy your first Laundromat. I’ll drop a link below to the YouTube playlist.