Jordan Berry [00:00:00]:
Small multifamily rentals, duplexes, triplexes, fourplexes. They’re often called the perfect first real estate investment. House hacking is the term most people use for buying these. But are they really better than owning a laundromat? Which one makes more money, builds well, faster and gives you more control over your financial freedom? Listen, there’s only one way to find out. Today we’re putting laundromats in small, small, multifamily, head to head in nine different categories from cash flow to complexity. We’ll find out which one truly deserves your next hundred thousand dollar investment. Hint. One of them makes money while people sleep and the other makes money while people do laundry.

Jordan Berry [00:00:46]:
And just in case you didn’t know, this is part of our ongoing series where we’re putting laundromats head to head versus different asset classes. So make sure you check out our ultimate asset battle playlist to see how laundromats stack up with other assets as well. Okay, we’ve got to start with comparing two average base hit deals. Nothing exotic, nothing fancy. I get comments all the time like hey, I’ve done deals like this, I’ve done deals like that. Yes, there are outliers in all asset classes where you can do much better and where you can do much worse. But we’re going to take base hit average deals. That’s what we’re trying to do across the board in this series.

Jordan Berry [00:01:29]:
So let’s start with our small multifamily 4 Plex example. Now a typical base hit average fourplex deal might look something like this. A purchase price of $600,000 with $120,000 down payment. That’s 20% pretty common, pretty typical. Rent per unit in this type of deal might be around eighteen hundred dollars a month, which means the gross income, the total income for this asset would be around $7,200 a month. Expenses which would include like mortgage, taxes, insurance, maintenance, management, vacancy, things like that might come out to around $5,400 a month, leaving a net cash flow of around $1,800 a month. Now listen, that’s a cash on cash return on your home hundred thousand dollars of about 18%, which let’s be real here, that’s not bad, that’s actually really good. Most people would love to have an 18 cash on cash return.

Jordan Berry [00:02:29]:
Now let’s compare that to your average base hit everyday laundromat deal. For this deal we’ve got a purchase price of around $400,000 and a down payment of around $100,000 your gross revenue total income would probably be around $25,000 a month with expenses including rent, payroll, utilities, supplies, insurance, maintenance, things like that of around $18,000 a month. Which leaves you profit before your loan payment of around $7,000 a month. And after your loan payment, that profit will be around $4,800 a month. That gives you a cash on cash return of 57%. So the multifamily deal looks solid and let’s be honest, that’s a solid deal. It’s an 18% return, it’s got predictable tenants. But the laundromat, that’s a cash printer, that doesn’t care about the stock market or the Fed.

Jordan Berry [00:03:28]:
But let’s see how they stack up against each other in our nine different categories that we’re comparing against all asset classes. And we’re going to start with what most people are actually looking for. Thanks to Robert Kiyosaki and his book Rich Dad, Poor dad. That’s cash flow. Multifamily is netting around eighteen hundred dollars a month while laundromats bring it in around 4, 800amonth. So when it comes to cash flow, we’ve got to give laundromats a 5 out of 5 laundry pods. It’s tough to beat. And I’ve said it before and I’ll say it again, if your goal is cash flow, if your goal is to leave your nine to five, if your goal is financial freedom, laundromats as an asset class are just hard to beat.

Jordan Berry [00:04:13]:
Our multifamily investment, that is a super solid deal as well. I’m going to give it three out of five laundry pods. You don’t get rich on gross numbers. You get rich on what’s left after expenses. And laundromats win that game in this head to head matchup. Let’s move on to category number two, tax advantages. Let’s be honest, multi family crushes here. Depreciation, cost segregation, 1031 exchanges, it’s a playground for tax strategists.

Jordan Berry [00:04:41]:
Laundromats are no slouches either, offering write offs 100% bonus, depreciation on equipment and more. But it’s not quite as powerful long term as multifamily investment. So listen, I got to give multifamily five out of five laundry pods here. And laundromats, I’m only going to give them four out of five laundry pods. But I will say that the one, two punch of laundromats in real estate, this is the real, this is the real secret here. Why choose either or when you could have both. You know what I’m saying? Okay, but let’s keep it rolling with category number three, equity potential. Homes appreciate tenants, pay down debt, and you build equity while you sleep.

Jordan Berry [00:05:24]:
Laundromats build equity when you increase net income. So if you’re an operator, you can literally force appreciation by improving your store multifamily. I’m going to give that four out of five laundry pods and laundromats super solid here as well, But I’m still going to give them a 3 out of 5 laundry pods. Different paths, but very similar potential in these two asset classes. All right, we’ve got to talk about it. It’s the buzzword that everybody loves in real estate and everybody loves in laundromats, and it’s not really true for any business or investment. But we’ve got to talk about how passive are these investments and where do they stack up? Now, the way I see passive income is I see it as a scale. On the far right, you do absolutely nothing, and on the far left, you do absolutely everything.

Jordan Berry [00:06:16]:
And all investments are somewhere in the middle there. So let’s find out where they stack up with terms of how passive these investments can be. With property management, multifamily can be mostly hands off. Laundromats can get there, too, but you’ve got machines, you’ve got maintenance, and you’ve got operations to manage. So multifamily, I’m going to give it four, four out of five laundry pods and laundromats, I’m going to give three out of five. Here’s the real secret, though. Passive income comes from active intelligence. If you want to lean any investment or any business more on the passive side of that spectrum, you earn that passivity by building systems.

Jordan Berry [00:06:58]:
All right, let’s keep it rolling here. I threw this category in specifically for myself because I’m just not that smart. So we got to know how complex are these investment classes and how do they stack up next to each other? Managing tenants and repairs isn’t easy, but it’s familiar. Everyone understands housing to one degree or another. Laundromats are a pretty simple business, but more foreign to most investors. So multifamily and laundromats, I’m going to give both of them a three out of five laundry pods here. The learning curve is different, but it’s not harder, it’s just newer for laundromats. Okay, category number six, we need to know how liquid are these funds? What if you find another investment? What if you need the cash for something? How Easily.

Jordan Berry [00:07:43]:
Can you get access to it? Let’s start with the real estate. It has a bigger buying pool and faster closing timelines. And there are more options to be able to pull money out of property than there are for laundromats. For example, a home equity line of credit or to refinance with a cash out on that refinance. Laundromats, they’re super hot right now and they can sell pretty quickly, but deals still do take longer to close. So I’m going to give multifamily 4 out of 5 laundry pods and laundromats mats 2 out of 5 laundry pods for liquidity. Okay, I have asked people over and over and over, what is your goal in the laundromat space or in the real estate space? And everybody wants to own a whole bunch of these things. Whether it’s real estate properties or laundromats, everybody wants to own a bunch of them.

Jordan Berry [00:08:33]:
So we need to talk about how scalable are these two investment classes. Laundromats can really shine here. Multifamily can be limited in its scaling potential by lending and capital, and laundromats can actually scale a little bit faster once that first one is cash flowing. Because your returns are so good there, it’s actually not too tough to scale to multiple locations. Buy your next one with the profits. So multifamily, I’m going to give it three out of five laundry pods. Laundromats, I’m going to give three out of five. This one might be a little controversial.

Jordan Berry [00:09:11]:
I love to hear what you have to say about it in the comments. Okay, listen, when I see an opportunity, I move. But not everybody is like that. So we’ve got to talk about, for some of you guys out there, how risky and resilient are these businesses. That rarely even crosses my mind. Whether it comes to buying businesses or crossing the street, it doesn’t matter. I’m all for it. But maybe it would be wiser if we talked about risk and resilience and took a little time to see how these two asset classes, how do they stack against each other when it comes to risk and resilience? Tenants can move out, economic downturns can crush rent growth, but laundromats, listen, they’re pretty recession resistant.

Jordan Berry [00:09:56]:
People still need clean clothes. Even in 2008, when everything went downhill, 2020, when everything went downhill, Laundromats still did pretty well across the board. So I’ve got to give laundromats a little bit of an edge here with four out of five laundry pods and multifamily, I’m going to give them three. Here’s something I learned along the way. In good times, people wash their clothes more, and in bad times, they wash at home less. So either way, when you have a laundromat, you’re still winning. Okay, probably the number one question I get when I talk to people who want to buy a laundromat is how much money do I need to get started in this industry? So we’ve got to have category number nine. Initial capital needed to get into the business.

Jordan Berry [00:10:43]:
Multifamily requires 20 to 25% down, plus some reserves for repairs, things like that. Laundromats can be financed with SBA loans, and that could be as low as 10 to 15% down. But typically you’re putting somewhere between 25 and 40% down for laundromats. So multi family. I’m going to give the edge at four laundry pods with laundromats being at three laundry pods. Pretty close, but a slight, slight edge to multifamily. So we’ve got to come up with the final tally. What’s the verdict? When you stack these two asset classes together, which one overall is the best investment? Listen, I’m going to tally these things for you in one second.

Jordan Berry [00:11:27]:
However, before we do that, I want to say this. You have got to align whatever investment class that you end up investing in. You’ve got to align that with your goals and how you want to live your life. So while we’re going to have an overall score and then we’re going to place small multifamily on our overall leaderboard for our entire ultimate asset class battle series here, figure out what’s the most important to you out of all of these. It may not be the same as the overall score. So, for example, if you’re looking for cash flow or leave your job as quickly as possible, the overall score may not matter initially as much as cash flow, tax advantages, those types of things. So with all that said, how do these two stack up? Well, we’ve got laundromats coming in at a super solid 30 laundry pods with small multifamily coming in at. Drumroll please.

Jordan Berry [00:12:29]:
33 laundry pods. So the edge goes to small multifamily overall when it comes to which one is the best asset class for an average everyday base hit. But remember, align whatever asset class you are investing in with your goals. And I will say that so far up to this point in our series, I’ve invested in every asset class that we’ve talked about, including small Multifamily and I really love it. I really love small multifamily. I love short term rentals and I love single family rentals. I’ve had them all. I have them all.

Jordan Berry [00:13:05]:
And I’ve got to say, you can’t really go wrong here. But again, align your goals with the asset class that you’re looking for and take them down as you need them to go. And overall, I’ll just give you this little framework. If you’re looking for appreciation, stability and long term value, multifamily is probably your game. And especially if you’re in a position where you can quote, unquote house, hack that multifamily, live in one unit and let your other tenants pay off the mortgage for you and live rent free or at least at a reduced, reduced rent or reduced mortgage. That can be a super powerful way to get started in investing and a super powerful way to jumpstart your investing career. But if you’re looking for cash flow and control of your time and your life, again, tough, tough, tough to beat Laundromats. One piece of advice to you as you’re trying to determine what asset class to invest in is this.

Jordan Berry [00:14:04]:
Don’t choose a game where you need to be lucky to win. Choose a game where you can be skilled and listen. Laundromats reward a skill. I would say real estate rewards patience and Laundromats rewards skills. So bet on yourself if that’s what you’re looking for. And choose your weapon wisely. So where does that put us on the asset class leaderboard? I’ll be honest with you, it’s been a tighter race than I expected through the first few episodes of this series so far. But small multifamily coming in for the upset, taking the top of the leaderboard up to this point with 33 laundry pods in first place.

Jordan Berry [00:14:49]:
Number two is actually single family rentals with 31 laundry pods, followed by laundromats bringing in the bronze. Third place with 30 laundry pods in Airbnb or Short Term Rentals coming in just behind them. At 29 laundry pots, you can see this is a tight race. All of these investment classes are good. You can build wealth with any of them. You can build cash flow with any of them. So I’m curious, what do you think? Did I score this one right? Or should Laundromats take the crown? Or do multifamily investors deserve the edge? Drop your score in the comments. I read them all.

Jordan Berry [00:15:28]:
And if you’re ready to go deeper on Laundromats, head over to laundromatresource.com join and join my free community. You get access to not only a ton of free information, but a lot of free resources. Listen, we’re laundromat resource over here. We got to give you resources to help you succeed if this is the asset class that you want to utilize to achieve your financial freedom and cash flow needs. And finally, subscribe, because in our next video battle, we’re going to put Laundromats up against self storage, and that one’s going to be a battle. They often get looped in together. So go check it out. Hit that subscribe button and the bell and we’ll see you in the next one.

Jordan Berry [00:16:08]:
Peace.