Jordan Berry [00:00:00]:
If you’ve ever typed, how much does a laundromat cost, into Google, you’ve probably seen some version of the same answer. Probably seen something like laundromats typically sell for $200,000 to $500,000. And that’s, I mean, it’s not wrong, but it’s also not the number that really matters and that really matters to you. The purchase price is what you pay the seller, but that’s just one number. The total capital you need to actually pull this off, to get from where you are right now To keys in your hands and a business that’s running, it’s a completely different number than the asking price. And I have a hard time finding anybody who talks about what that number actually is. How much do you actually need to buy that laundromat? I’m Jordan Berry. Welcome back to The Complete Laundromat Buyer’s Blueprint.

Jordan Berry [00:00:46]:
This is episode 2. If you haven’t seen episode 1, go watch it first. We covered the honest answer to whether the laundromats are even the right business for you or not. And everything in this series Builds off of that premise right there. Go check it out. And we’re going to create a playlist that has all of the videos in this series together. So if you’re catching this a little bit later, we probably have more to check out. So make sure you check out the playlist.

Jordan Berry [00:01:12]:
Today, we’re going to deep dive on the money. We’re not just going to cover what does a laundromat cost, but what do I need to be in a position to actually buy one? They’re 2 different questions. And if you’ve only been asking, The first one, how much does a laundromat cost? Today’s episode is going to change how you think about this price point here. So let’s get into it. Okay. Before we dive into the numbers, I want to give you a framework that’s going to make everything else in this episode hit correctly. You’re going to understand it a lot better by doing that. And I’ve found that these frameworks really, really help simplify things and give you a good way to think about this stuff.

Jordan Berry [00:01:53]:
So most people come into this buying a business thinking about one number. What’s the price of the laundromat? And it makes sense. That’s the number. It’s the biggest number. It’s what’s listed on all the websites, the broker sites, BizBuySell, all that. And it’s what the seller’s asking for. But the purchase price is actually just one layer of what I’m going to call your capital stack. Your capital stack is the total picture of every dollar you’re going to need to have access to, not just to buy the business, but to buy it safely, To keep it running through the early months and to handle those inevitable surprises that come up with any business that’s got a lot of machines.

Jordan Berry [00:02:33]:
And let’s face it, laundromats have a lot of machines that you’re working with. So in this capital stack, we’ve got 5 layers that we’re going to go through and we’re going to build on them one by one right here on— I got a whiteboard that I’m going to just write it out in front of you here today in this video. By the time we’re done, you’re going to have a crystal clear picture of exactly where you need to be financially before you start making those offers. It’s something I hear all the time. You know, when I talk to people of like, hey, what price point are you looking at? They’re like, I don’t even know how to figure that out. Well, that’s what we’re gonna get at today. Now, I’m gonna acknowledge something right up front here. When people hear these numbers for the first time, 2 reactions are really common.

Jordan Berry [00:03:16]:
The first one is, that’s more than I expected, especially if you’ve kind of been on that internet YouTube train of free laundromats. These numbers will be— A lot higher than free, most likely. And the second one, which I hear just as often, is, okay, that’s a real number and I can work towards that, or I’ve got that, I’m ready to go. And both of those reactions are valid. The second one is a lot more useful. So let’s try to build this picture and let’s come into it with this mindset of, okay, you know, let’s, let’s get a realistic picture of what we’re looking at here so that we can start to tackle what we need to tackle to get there. All right. All right.

Jordan Berry [00:03:57]:
All right, let’s jump over to the whiteboard and talk about layer 1, the purchase price. So we got layer 1, purchase price. Ugh, you’re gonna have to bear with me on the handwriting here. This is a number you already know about an existing laundromat acquisition, which is almost always what I recommend. Not always, but almost always what I recommend for that first time around. It typically runs Somewhere in this kind of range. Small older store with aging equipment, it’s gonna be $150,000-ish, $200,000. You might find a mid-market store, solid equipment, decent revenue, good location, $200,000 to $500,000.

Jordan Berry [00:04:39]:
And this is where most first-time buyers tend to land in that range. And then you’ve got your larger turnkey, well-established operation, half a million dollars on up past a million dollars and more. And for this episode, I’m gonna anchor our example right around $300,000. Now you could plug in whatever numbers you’re looking at, but that’s where we’re gonna just focus in on to use as an example. It’s right here in the middle of that first-time buyer range, and then we’ll build the stack around that number. Okay. So our purchase price for our example is gonna be $300,000. Oh, one more zero.

Jordan Berry [00:05:19]:
Okay. All right. Here’s something that may or may not be surprising to you, that $300,000, you don’t need You don’t need all of it in cash. That’s right. You don’t have to have cash. And in fact, I say that sort of tongue-in-cheek, but if you get on some of the Facebook groups or talk to some of the grizzled veterans in the industry, they’ll say, hey, you can’t compete in this market without cash. And it’s just simply not true. We work with people every day who are buying laundromats financed.

Jordan Berry [00:05:47]:
So I say it kind of tongue-in-cheek, but I also genuinely mean it. You don’t have to buy it all in cash. And in fact, in most cases, you’re gonna finance a significant portion of it. But usually, almost always, especially in today’s market, you do need some sort of down payment. And depending on how you finance it, that down payment requirement varies quite a lot. But I’m gonna give you kind of some examples of what those might look like for you here in a little bit. So that’s going to bring us to layer 2, the down payment. All right.

Jordan Berry [00:06:27]:
Your down payment, man, my handwriting is awful. Okay. The down payment is your skin in the game. It’s the portion of the purchase price that you’re bringing in cash. And this is where laundromats can get a little tricky because they don’t always play nicely with traditional financing. And here’s why. Most banks want to see verifiable revenue. They want to see tax returns, they want to see bank statements, they want to see a clean paper trail.

Jordan Berry [00:06:53]:
They want to see all that matching up with P&Ls. And listen, laundromats are kind of historically cash businesses and a lot of operators still, I would say the majority of operators today, and especially the older ones and the mom-and-pops, have not been meticulous about documenting every quarter that’s gone through those machines. And this is, I would say, being generous. And I have literally had a seller, when we asked for a P&L, grab a napkin out of their center console, slap it on the roof of their car, and literally write it down from memory with a pen on the napkin. So listen, not surprisingly, this kind of practice makes traditional lenders nervous. It makes them not want to finance a laundromat. So the question then becomes, what are your actual financing options? Okay. So for our example, I’m just going to give you kind of a range of what you’re looking at, of $60K to $90K down for your down payment on a $300,000 laundromat.

Jordan Berry [00:08:02]:
And I’m going to give you some examples of what that might look like. Now it could be even less than that. And I’ll give you some tips on that as well. But typically that’s what you’re looking for, uh, looking at for a $300,000 laundromat per our example. Okay. Option 1 is an SBA loan. The Small Business Administration, they offer a loan program specifically designed for business acquisitions. Laundromats can qualify.

Jordan Berry [00:08:29]:
The SBA 7 loan, it’s the most common path In the SBA, you know, environment to buy a laundromat typically requires 10% to 20% down. So on a $300,000 deal, you’re looking at $30,000 to $60,000 down. Now, what’s the catch? You say there’s a couple of things. So number one, you need good credit. Number two, you do need some liquidity for that down payment. Now, it doesn’t have to be yours. which I’ll talk about here in a little bit. You can partner with somebody on that.

Jordan Berry [00:09:03]:
You can get that from a HELOC, things like that. So there’s some other ways to come up with that money. So it doesn’t have to be yours and it doesn’t have to be just cash you have sitting in the bank necessarily. There’s options to use your 401. So there’s different options to do that, but you do need some cash. And the business needs to show sufficient debt service coverage, which means it needs to make enough money To pay off that loan and leave a little profit for you. The SBA actually doesn’t want to see the business make enough money just to pay off the loan. They actually want you to make some money as well, for multiple reasons.

Jordan Berry [00:09:41]:
Number one, it’ll let you buy more businesses and borrow more money later, but also it gives them a level of security if there’s some cushion in there. Now, here’s the thing about laundromats. Not every laundromat is going to qualify for an SBA loan. In fact, a lot don’t. And also not every buyer can qualify for an SBA loan, but for the right deal and the right buyer, it’s often the best path if you can make it work. And we have done that plenty of times with clients of ours that we’ve worked with who have purchased laundromats with an SBA loan. Okay. Option 2 is seller financing.

Jordan Berry [00:10:17]:
This is where the seller acts as a bank. In fact, what’s funny about this is that the seller actually lends you money to buy their business from them essentially, but they become the bank and you pay them over time instead of getting a loan from a lender or a bank and paying them. And seller financing is, it’s actually more common in laundromats than most industries, but it’s a little bit of a double-edged sword because sellers know that there’s financing challenges or they know if they don’t have clean books. And also partly because it can help them get a better price. There’s some tax benefits to sellers. We go through that in other videos, so you can check that out. As well. But seller financing can be a great option in the cases where it works.

Jordan Berry [00:11:01]:
Now, here’s the thing is that terms are going to vary wildly. Some sellers want 20% down, they want a full payoff in 3 years. Others are more flexible on timing, interest rate, down payment. Sometimes you can utilize seller financing with other options as well. But when seller financing is available, it’s Often worth taking seriously, that is for sure. Option 3 would be more of like a conventional loan. For laundromats, they can be difficult to get. Again, similar to the SBA, they need to qualify.

Jordan Berry [00:11:35]:
And banks want to have some reasonable certainty of how well that laundromat’s performing. So similar reasons, but it’s not impossible. And in fact, we have clients who’ve done all of these methods, SBA, seller financing. In fact, I’ve purchase-to-seller financing deal with real estate in Los Angeles. You can do it in all kinds of markets. So these are not impossible, but you know, for that traditional method, typically you don’t lead with that as your plan. Now, there are some exceptions. If you have an existing relationship with a banker, that might be a great option.

Jordan Berry [00:12:08]:
And number 2, sometimes those local or like regional banks or credit unions, not the big Chase, Wells Fargo, but like a local bank or credit union, A lot of times they can be great opportunities to get loans for a business like a laundromat because they like to invest in local businesses. They like to invest in the communities, communities that they’re in. And, uh, and oftentimes they’ll work with you a little bit. Okay. For our $300,000 laundromat example, let’s just say you’re gonna get an SBA loan and it’s gonna be 20% down. So that’s $60,000 out of pocket for the down payment alone. Now let’s jump into layer 3, which would be working capital. Working capital.

Jordan Berry [00:12:52]:
Now this is a layer that, I mean, frankly, oftentimes buyers forget about completely. Even though laundromats don’t fail too often, one of the most common reasons they fail is not having enough working capital, not having planned that far ahead. And if you don’t have enough working capital, it’s actually pretty risky To get in any business that way. So let’s talk about what is working capital, just so we’re on the same page here. This is the cash cushion that keeps your business running in the early months while things stabilize. Even a healthy laundromat’s going to take some time to hit its stride under the new ownership. Customers notice the transition, revenue can dip, equipment issues surface. You might have problems with employees.

Jordan Berry [00:13:36]:
Expenses you didn’t anticipate show up. So you’ve gotta have some working capital on tap to help you cover those things. Now, the question I get all the time is, how much working capital do I need? Let me give you a rule of thumb here to help you determine how much working capital you need. Typically, we’re looking at 3 to 6 months of operating expenses held in reserve, uh, for working capital. And for most laundromats in that mid-range market, Somewhere between $15,000 and $40,000. Now that can be a lot of money. That number can feel huge. However, listen, number one, the less working capital you have, the riskier the business becomes.

Jordan Berry [00:14:19]:
Number 2 is if you don’t have that much money, a second kind of rule of thumb, I would say to mitigate the risk is at least have 3 to 6 months of your rent money. As working capital, right? So at least that you can pay the rent, uh, early on if something happens. That’s a good rule of thumb for you. Uh, a secondary rule of thumb, I’d say. So for our example, let’s put our working capital at about $25,000. That’s a pretty reasonable, I think, middle ground number for store doing, you know, decent volume. We want to have $25K in the hopper in case something happens. Worst case scenario, we don’t touch it and we take the most epic vacation ever.

Jordan Berry [00:15:02]:
For $25,000. Let’s talk about layer number 4, which is equipment reserve. Equipment. I’m just gonna call it equip. All right. You probably know this already, but laundromats run on equipment, heavy equipment. It’s running constantly. It gets used every single day, and that equipment breaks down.

Jordan Berry [00:15:25]:
It’s inevitable. In fact, it’s probably the number one reason you’re gonna hear from haters on why you shouldn’t buy a laundromat. It’s because Equipment breaks down, you’re gonna lose your shirt maintaining equipment. It’s not true. It’s a myth if you’re operating your business properly. But, you know, broken equipment that was not maintained has taken laundromat owners down in the past. So you gotta stay on top of it, but shouldn’t be something you’re afraid of. But when you do buy an existing laundromat, you’re inheriting those machines and depending on their age and condition, you could be inheriting some expensive Problems.

Jordan Berry [00:16:00]:
A washer repair could run easily, you know, $200 to $300 all the way up to $1,500. You know, dryer burner assembly, you know, $800 to $2,000. I mean, that might be on the high side, but you know, it happens. There’s costs associated with maintaining equipment. You know, you might have a payment system failure that’s unpredictable on how much it’s gonna cost. And if a machine goes down for a week, you’re losing revenue for that whole time. Not to mention, if you let it happen too much, you’re gonna start getting a reputation that you’re not maintaining your store. You’re gonna lose customers.

Jordan Berry [00:16:36]:
You’re gonna lose your ability to price at a higher price point. So you definitely wanna stay on top of this. So this is why I always tell buyers, go in with a little bit of an equipment reserve. This is money set aside specifically for repairs, emergency replacements. It’s not touching your working capital. So the question then becomes, okay, well, how much do I need to put in reserve for my laundromat equipment reserve here? Now, again, this is a ballpark, like a framework for you, but a reasonable equipment reserve for a mid-market store like ours, $300,000, is maybe $10,000 to $20,000. So, you know, just for our sake, we’ll call it $15K. All right, let’s jump into layer 5.

Jordan Berry [00:17:24]:
Which is closing costs and acquisition expenses. So just the cost to close, that’s like your escrow fees and business licenses and stuff like that. And acquisition expenses, you just— costs that come up when you’re actually buying anything like a business, piece of real estate, whatever. But this is the one that catches people off guard often because it’s not one big number. It’s a bunch of small numbers that can add up to larger numbers. So for example, let me go through a few of these things that you might have. In fact, I have an article, a blog post on laundromatresource.com. You can search up the total cost of buying a laundromat on laundromatresource.com, and it’ll give you a full detailed list of this.

Jordan Berry [00:18:07]:
But let’s go through some of them here. You’ve got legal fees for purchase, the purchase agreement, lease review. You have due diligence costs. There’s inspections. You want to inspect each Equipment. You want to inspect the plumbing, maybe electrical. If you’re buying the building, you got to inspect the building. You might have deposits for utilities.

Jordan Berry [00:18:27]:
A lot of utility companies require a deposit, equipment assessments. There might be loan origination fees. There’s potential to have lease transfer fees, which you want to understand what those are and who’s responsible for them. I had a client who was buying a laundromat and there was a $100,000 lease transfer fee. That the seller was going to have to pay to transfer it, right? And that deal ended up falling through partially because of that lease transfer fee. So something to be aware of, who’s responsible for it and how much it is, is not always there, but if it is, it’s important to understand. There’s licensing and permitting in your new name or your business name. It could be a broker fee, but that’s usually paid by the seller in the transaction.

Jordan Berry [00:19:13]:
There’s a handful of smaller incidentals that come up in every transaction. So, you know, not to mention a lease deposit, a lot of times that can be a big cost too, from, you know, a few thousand dollars to $20,000, $30,000, $40,000 for the lease deposit, depending on where you’re leasing and the rent situation for that. And if you have a corporate landlord, or, I mean, there’s a whole lot that goes into it, but you just want to kind of be aware of all these things. And what they are before you close, if possible. So all in, you know, again, ballpark framework, I’d ballpark $10,000 to $20,000 for closing costs, acquisition expenses. So again, for our example, let’s just earmark another $15K for our closing costs and acquisition expenses. Okay. Now let’s look at the full stack here.

Jordan Berry [00:20:04]:
All right. We’ve got our purchase price of $300,000, our down payment of $60,000 in our example, $25K of working capital and equipment, $15K with the closing costs of around $15K. So again, you can kind of see this adds up pretty quickly where we have, what is this? $85K, $95K, $100K. So you can see that that’s $115,000 that we’re coming with to buy our $300,000 laundromat here. And just for reference, that’s a little over 38% of the total purchase price of $300,000. And it’s not because you’re paying cash, it’s because you need the down payment plus the cushion to own it safely with all these expenses that we talked about. So now you understand why I said the purchase price isn’t the number that’s really gonna matter for you in the short term. The number that matters most is that $115,000, cuz that’s what you actually need to have a plan for.

Jordan Berry [00:21:07]:
How am I going to come up with that $115,000 to actually buy this $300,000 asset? Okay. I get so many questions about financing. I want to go a little bit deeper on the financing side because this is where a lot of buyers run into walls that they didn’t see coming. And I already mentioned that laundromats can be tricky to finance through conventional banks. And let me go a little deeper into why exactly that is, because understanding this actually helps you shop for deals smarter. Most commercial lenders want to underwrite a business based on its documented cash flow. They want tax returns, profit and loss statements, bank statements. They want to see the money flowing clearly on paper.

Jordan Berry [00:21:50]:
It gives them this measure of security and confidence that the business is performing well. Now, older laundromats, and there’s a whole lot of those all over the country, and Beyond, they may have been operating as cash businesses for decades, and the owner pockets quarters, pays expenses in cash before they ever report it, file taxes showing whatever numbers they decide to show, pulled out of a hat. That’s the reality of this industry, and it is changing, by the way, but that’s where we’re at right now. And it means the documented revenue often doesn’t tell the full story of the laundromat. And here’s what happens. Lenders see that gap between what the business owner says they’re making and what they’re trying to base the value off of and what the books show the numbers are, and they get nervous. And listen, I don’t blame the lenders for getting nervous. So if you’re buying a laundromat that is in this situation, you need a financing strategy that accounts for the documentation challenges, here’s some paths that actually work.

Jordan Berry [00:22:58]:
They might actually work for you. Let’s go back and visit the SBA 7 loan and talk a little bit more about that because let’s try to understand it a little bit, which can kind of help you. The SBA doesn’t lend money directly. They guarantee a portion of the loan, which reduces the risk for the bank and makes lenders more willing to work with you. For laundromats, you want to work with an SBA preferred lender who has actually done laundromat deals before. Not every SBA lender has, and the ones who haven’t will slow you down or decline you for reasons an experienced lender wouldn’t. Now, you know, just, I’m throwing this out here. If you are looking for an experienced SBA lender, I don’t get anything for this, but I’d love to introduce you to an experienced one that we’ve worked with clients, shoot me an email, [email protected].

Jordan Berry [00:23:52]:
Ask for an SBA lender intro. Glad to do that for you. Okay. What you need to qualify for an SBA loan. And again, these change. And so I’m trying to give you just some ballpark numbers. So don’t hold me, you know, hold tight to these things, but this gives you kind of a ballpark to work with. You know, speak with an SBA lender directly and they’re gonna give you the most updated terms that lenders are looking for.

Jordan Berry [00:24:17]:
But generally speaking, just for a framework to help you think through stuff, SBA lenders are looking for a credit score of 650 or above. They wanna see some liquidity. They wanna have a reasonable debt-to-income picture. And then business side, they wanna see a business that can demonstrate cash flow that’s gonna cover the loan payment, right? And put a little money in your pocket. And the last piece is the sticking point for the laundromats with undocumented revenue, right? They don’t know if it has enough money coming in to cover the debt. And the numbers that seller shows you need to be credible enough that a lender can build a case around them. It’s almost like a law case, right? They’ve gotta, doesn’t have to be proven with unreasonable, no, with reasonable, no, without unreasonable doubt. I don’t know.

Jordan Berry [00:25:09]:
Doesn’t have to be proven, but They need to be pretty confident here. And, you know, just again, these are all subject to change, but given today’s climate, SBA loans for a business typically run for about a 10-year term amortization and interest rates. They float with the prime rate plus a spread. So it might be prime plus 2 or something like that. SBA right now, I think, is somewhere in the range that makes the math work on most mid-market deals, but you gotta run the numbers carefully on the debt service before you fall in love with a specific store, because it might just be out of range. All right, let’s dig a little deeper into seller financing. A seller who’s willing to carry a note is actually doing you a favor and they know it. Seller financing usually means less documentation scrutiny, faster closing, sometimes better overall terms than a bank.

Jordan Berry [00:26:12]:
I’ll go back to the SBA real quick and say that one downside of SBA is that they can be very intensive in terms of the paperwork and the scrutiny, and you can eliminate most of that through seller financing most of the time. But the reason the sellers offer seller financing is that they generally can command like a higher price point and they can generate interest income on the note that they use to let you buy their business. Can have tax advantages for them depending on how the deal is structured. And the reason you should love it, if you get the opportunity to utilize seller financing, is it can be very flexible. The terms are all negotiable, unlike a lender who says, hey, here’s the interest rate, here’s how many years it is. All of that can be negotiated with seller financing and it aligns with the sellers. It aligns the seller’s incentives with your success. They want, you know, the sellers want you to do well because when you do well, you can pay back the loan that they’re giving you to pay it, right? And something that’s interesting that I don’t hear talked about too much, seller financing can actually be combined with an SBA loan in a stack structure Where a seller carries a little bit and the bank carries the rest.

Jordan Berry [00:27:33]:
Now, there’s specific ways that this gets set up and everybody needs to understand how everything works. Typically, the SBA loan is in first position and the seller’s in second position, and you’re still gonna need to come with cash. SBA does want you to have some skin in the game, but you can utilize both in a combination there. Listen, this is something that I coach with clients all the time. If a seller says no to seller financing, that’s Fine. But if they’re open to it, it’s almost always worth exploring. And I will also say that if a seller says no on seller financing, it’s worth asking a couple follow-up questions because sometimes, you know, no doesn’t mean no. I mean, you know, interpersonally and all that, like, hey, no means no.

Jordan Berry [00:28:15]:
Okay. No means no. But when it comes to negotiating seller financing and price and all that stuff, sometimes no doesn’t mean no. It means something like, I don’t understand what it is. I don’t understand the implications of that. I’m not comfortable with that right now. You know, I need to know what the terms are first. There could be reasons they say no, that is just a flat, not just a flat out no.

Jordan Berry [00:28:39]:
So it’s worth asking some follow-up questions here. I want to give you some other creative financing options here. You might have heard about buyers using a home equity line of credit, HELOC. to purchase a business like a laundromat. You can actually, in certain circumstances, use retirement funds even before your retirement age through using something called a ROBS account, a ROBS structure, rollover for business something. I forget what it stands for. You can look it up, but a ROBS structure allows you to use retirement funds to purchase a laundromat. In fact, I’ve had multiple clients who’ve used a ROBS to do that.

Jordan Berry [00:29:19]:
Or you could bring in a silent partner with capital to come in. A lot of real estate investors or family and friends who have some money sitting around that they want to put to use might be excited to invest in a laundromat without actually having to run it. So that could be a really good win-win there. And these are all real options that real buyers use. We’ve had clients that have used all of them, but also you need to know they can be more complex and each one has its own risk. Associated with it. I’m not going to go deep on that here, but I just want you to know they exist and that the capital stack I showed you on the board is not your only path. There’s lots of different ways to buy these things.

Jordan Berry [00:30:01]:
The most common path is what we went through for a first-time buyer going the conventional route. But you know, you’re only limited to your own creativity. And in fact, I think the capital barrier of getting into laundromats Is what holds people up the most. And it is an overcomeable barrier, even if you have $0 in your account today. That’s real. All right. Some of you guys are listening to this and are like, yeah, I’ve got money. I’m ready to go.

Jordan Berry [00:30:27]:
You know, help me get started. You know, that’s something that we can do. Check out laundromatresource.com. Go dig around over there. We’ve got lots of tools and resources. We’ve got services that we help people. And you’ve seen the capital stack. Now you feel very comfortable about it.

Jordan Berry [00:30:42]:
And some of you went through that capital stack, you did the math with me, and maybe the number you landed on is bigger than what you currently have access to. Now, what are you done? Is the dream over? Laundromat dream aspirations are killed, or what? No. Okay. So first of all, this is completely normal. This is a capital-intensive business to get into, and most people who end up owning laundromats didn’t have the capital sitting at the bank day one. They decided to do this. They built a plan and they worked towards it. Second, let’s just be honest about what the minimum viable number actually is.

Jordan Berry [00:31:24]:
I’ve worked with buyers who’ve made deals happen with less than $50,000 capital in the bank. In fact, I have clients like that right now, but those deals were smaller. They’re a little bit riskier and they required a lot of creativity and a lot of work upfront after they’ve bought their laundromats with lower capital. So the path gets harder the further you are from like $100,000 to $150,000 in total capital, but it is a path to freedom. Now you’re owning something that becomes yours and you’re betting on yourself. But if you’re not there yet, Here’s how I think about it. Liquid capital, credit score, debt obligations, income. Get a clear picture of your current financial position, not a vague sense of like, okay, here’s kind of where I am, but like actual numbers, write them down, go through, you know, your credit scores and the credit reporting, go through your bank accounts, go through your credit cards and all your other loans, car loans, student loans.

Jordan Berry [00:32:28]:
Housing loans, go through your income and see how much is actually coming in. This is the baseline. Everything else is going to be built from. Step 2, once you’ve identified your financial situation, you’ve got to identify the gap. If your goal is like, hey, I need $100,000 and you’ve got $40,000, your gap is $60,000. Now you’ve got a problem that’s solvable, right? You know what the target is. You can say, hey, over the next 12 to 18 months, you know, 24 months, 36 months, however long it takes, you can now work towards that $60,000, whatever your gap is. If your gap’s $200,000, maybe the timeline’s longer and the path looks very different, right? But at least you know where you’re at and where you’re trying to go, and you can start crafting a path to get you there.

Jordan Berry [00:33:21]:
And then work the gap from both ends. On the savings side, obviously, yes. Look, save aggressively if you can. Look for other ways to bring in money, to put money in the bank. Maybe look for people to partner with, you know, that kind of thing. How else you can get capital, but also look what else you can do to improve your financial position. You know, your credit score could get better. Your credit score gives you better rates.

Jordan Berry [00:33:44]:
And if you have better rates, you have less payments. You have less payments, then you’ve got more buying power, right? Paying down your high-interest debt to lower your debt-to-income ratio, build a relationship with a banker or an SBA lender before you need them, right? These are things that take time, but time spent on them is time well spent. On the deal side, smaller deals exist, older stores with lower price tags, more seller financing flexibility, partnership structures where you bring the operational knowledge and somebody else brings the capital. You know, lease-to-own arrangements in some cases. The market has more options than mid-market listing price suggests. So don’t get stuck and bogged down with just that purchase price there. There’s lots of options. And step 4, listen, don’t rush it.

Jordan Berry [00:34:35]:
I’ve said this before and I’ll keep saying it. The buyers who get hurt in this business are almost always the ones who moved too fast. They bought a store they couldn’t really afford. ‘Cause they were so eager to get in. They skipped due diligence because they were afraid the deal would disappear. They undercapitalized themselves and had no cushion when the first big equipment problem hit, you know, over and over and over again. All right, so don’t rush it. Don’t be in a hurry.

Jordan Berry [00:35:03]:
Don’t fall in love with the store. Don’t get frustrated, which I’ve seen a lot because it’s taking a long time to find a good deal. I will say, as somebody who has purchased a bad laundromat deal, I would rather you miss out on buying 10 good laundromat deals than buying one bad one, because it’s difficult to dig yourself out of that hole once you’ve bought a bad deal, especially on your very first one getting started. And the cost of buying that wrong deal at the wrong time is much higher than the cost of waiting until you’re actually ready. All right. I want to close with something that reframes everything that we just talked about. Yes, capital requirements are real. Yes, the financing can be harder than people expect.

Jordan Berry [00:35:50]:
Yes, the total number you need when you add it all up is probably bigger than the headline price that you saw on the listing, or at least your assumption of what you would need in order to buy that price. But here’s the other side of that math. A well-run laundromat that— in that $200,000 to $500,000 purchase price range, The middle of the market can realistically generate $40,000 to $100,000 or more in net income per year, depending on the store, the market, how well it’s operated. And there’s a lot of opportunity for growth in that, those stores very often. So keep in mind that yes, there’s some capital investment needed, but it is just that it’s a capital investment. You’re not spending money. You’re investing money into something that’s going to make you more money. So run that math for a second.

Jordan Berry [00:36:42]:
And if you put $115,000 into a deal and the business generates $65,000 a year in net income, even after debt service, that’s a return that’s really hard to find in any other asset class at any point in history, in any entry point that’s close to that. Okay? And that includes real estate. I’m a real estate investor and I love real estate, and I grew up with the BiggerPockets, hey, Invest in financial freedom through real estate. And listen, the cash flow from buying a business like a laundromat far surpasses the cash flow of real estate 98 times out of 100. So this is the way to go if you’re looking for financial freedom. But listen, there’s no guarantees. There are laundromats that are going to underperform. There are deals that go sideways.

Jordan Berry [00:37:32]:
There’s operators who pay too much. Undercapitalized and struggle. We’ve talked about all that, but there’s a reason institutional money is starting to flow into this space. There’s a reason people who understand business fundamentals are attracted to this investment. The economics are genuinely compelling when the deal is right and the buyer is ready and prepared. So your job and what this whole series is designed to help you do is to be that prepared buyer, to go in with your eyes open, to understand the full capital picture before you start making offers, to be the person who does well because you did the work upfront. And now you understand the money side of the picture. Okay? We’ve checked that off the list.

Jordan Berry [00:38:23]:
You know, laundromats are right for you from that first video. You understand the financial picture. So here’s your next step. If you haven’t taken the Laundromat Buyer’s Readiness Assessment yet, the link will be down in the description. Go do that now. One of the 5 dimensions it scores is your financial readiness. After this episode, you know exactly what that score means and what you need to do to improve it. All right.

Jordan Berry [00:38:49]:
Episode 3 is going to drop next Monday and we’re going to tackle a question almost nobody covers well. At all. How do you actually find a laundromat for sale? Not just the broker websites, the off-market deals, the direct outreach strategies, and how to identify the right market before you even start looking. This information for that video is driven straight out of our done-for-you service, where we have a team that goes out and sources deals for buyers all around the country. And this is hard-earned, first-person knowledge where we’re documenting everything that we’re doing. We’re analyzing it. We’re finding out what actually works. We’re going to share that information with you in the next episode, and I can’t wait for you to get into it with me.

Jordan Berry [00:39:38]:
So, if this series is helping you, make sure you subscribe so you don’t miss an episode of it. Drop a comment below. I’d love to hear what questions you have. And after seeing The full stack, full capital stack. What is your biggest question about the financial side of buying a laundromat? I’m going to read all the comments and I’ll answer as many as I can. So listen, I’m Jordan Berry. This is Laundromat Resource, and I’ll see you in episode 3. We’ll tell you how to find that right deal now that you know you’re that right buyer for the deal.