82. Where the Headwinds Are Taking Us in 2022 with Marc Stern

The past 2 years have been a wild whirlwind for everyone, especially for small business owners. 2021 ended with some very fascinating developments that have deep-reaching implications for us laundromat aficionados.

Jordan is joined by Marc Stern, Chief Lending Officer and Executive VP at Eastern Funding, for this hugely important episode discussing where we’re at in the beginning of 2022 and where we’re heading this year. Jordan and Marc talk about some hefty topics that will directly impact your pocketbooks…and net worth…and the survival of your business. No joke!

In this episode, Jordan and Marc discuss the present and future with respect to:

Inflation
Interest rate fluctuations
Equipment pricing
Equipment delivery times
Cost of construction
Where the opportunities lie during at this crossroad
How you can capitalize on the changes happening

Plus, Marc gives his best tips to those hoping to buy their first laundromat, those who have just bought their first laundromat, and those who have been around the business given the current circumstances.

There’s plenty more in this episode. It’s definitely not one to miss!

Watch The Podcast Here

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Episode Transcript

Read the Transcript Here

hey what’s up guys it’s jordan with the

laundromat resource podcast this is show

and i’m pumped you’re here today because

today seriously is one of the most

incredible episodes we’ve had on this

show and the reason for that is we have

mark stern back on the show he is

the chief lending officer and executive

vp at eastern funding and we hit some

heavy topics there is a lot

going on in the world right now and a

lot going on in our industry right now

and we hit some heavy

heavy topics

all of which

have serious implications on us as small

business owners and us in the laundromat

industry in particular so this is a do

not miss episode if you have anything to

do or want anything to do with this

industry so

i look forward to that i want to take a

couple seconds i’m not going to take a

whole lot of time in the front end

because i you i want you to stick around

for the rest of this episode seriously

uh but i do want to acknowledge first of

all welcome to all the new people to all

the new members

laundryresource.com and a huge thank you

and welcome to the new pro members who

signed up in the last week since we made

our first big upgrade to the pro

membership

again we’re continuing to build every

week for eight straight weeks this is

week

two

i have

uh some cool stuff coming out there’s

some cool resources for pro members that

are out right now just coming out when

this episode is coming out uh so we have

some

very cool downloadables for free we have

a sample letter of intent that you can

take both to purchase a laundromat and

to give to a landlord as an intent to

rent or lease a space

we have both of those there we have a

coin collection sheet a lot of you guys

have been asking for that

um so we have a coin collection

spreadsheet that you can download

and keep and use and it helps you

collect the coins it tells you how many

turns per day

all that stuff is calculated for you how

much you’re earning per day all that

stuff

very cool spreadsheet i personally use

it uh with my coin stores

uh so that’ll be there on the pro

membership sample business plan is

coming up in here and also i threw in

some sample contingencies those you guys

who are making offers on

uh on laundromat deals either without

the use of a broker or who just want to

kind of make sure your broker is doing

the right stuff uh sample contingency

list

there so that when you make your offer

you’re you’re not putting yourself at

risk

by making that offer uh with unverified

numbers and no way out okay so those are

all getting added this week i uh

i have another tool that we’ve been

working on i thought it was going to be

ready this week but i got to postpone it

at least one more week hopefully we’ll

have it by next week because i’m super

excited if you’re in the how to buy uh

your first laundromat webinar this week

then you got a sneak peek of it and it

is a very cool tool i’m again i’m really

genuinely excited about i think it’s

really cool and i’ve never seen anything

like it in our industry uh so stay tuned

for that that’s gonna be in the pro

membership and you’ll also be able to

get to use it for a limited number of

times um just to try it out uh before

you become a pro member okay uh i’ll

talk about that more later okay so we’ve

got some sweet downloads coming letter

of intent all the all the things i just

said i don’t want to take anymore that

time

um speaking of webinars real quick i

just want to highlight two webinars

number one is next a week if you’re

listening to this when this comes out

that’s january 20th and look up the date

january 20th 2022 uh

a very unique webinar that we’re doing

i’m having a buddy of mine who’s a

a lender a home lender

come on and talk about

how you can get a um a home how you can

qualify for a home loan as a business

owner i know that was tricky for me when

i was buying uh the house that i’m in

now

as a as a business owner and for a lot

of small business owners that feels very

unrealistic it feels very frustrating on

how you can qualify for a home loan

however or a second home loan uh also

however my buddy’s got some very cool

ways that he can help you

either now or whenever you’re ready to

get into a home as a

as a small business owner so uh

i highly recommend you come join us for

that i’m super excited the guys work

miracles for me and continues to do so

and i’ve actually uh recommended to a

lot of people who’ve ended up using he

knows his stuff uh super good guy okay

his name is joe soto uh and again that’s

january 20th 2022. uh it’s gonna be 4

p.m

uh pacific time 7 p.m eastern time and

you can sign up for that

uh on the website lotterysource.com or

on the events page london resource.com

events come join us for that if you’re

at all either now or in the future

thinking about buying a home or a second

home and he’ll also do some q a along

with some of the information he wants to

provide okay cool i’m excited about that

one the second webinar that i’m like

really excited about also has to do with

today’s

what uh today’s podcast episode so mark

stern and i after we did this episode we

were both very impressed with ourselves

uh but seriously we were very impressed

with the conversation that we’re having

and all the things going on we just feel

like this episode

is going to give a lot of information

and give some answers but i think it’s

going to bring up a lot of questions too

so what we thought we would do

after we recorded this is get together

and pull together some top-notch owners

none of whom have appeared by the way on

this podcast you haven’t been introduced

to them through this platform yet

and we’re all going to get together and

talk about some of these issues in a

webinar now as of right now when this is

coming out

we haven’t been able to nail down the

date but i’m hoping it’s going to be

within the next

couple of weeks so

a couple things you can do number one go

to laundromat resource dot com events

and i’m gonna have a link on there where

you can sign up to get an email as soon

as we have the information um on that um

and we’ll also be sending out emails if

you’re on our email list for anything

else we’ll send out an email as soon as

we have that information to everybody

and let you know where that’s at so you

can get in on this webinar i think 100

of the people who are listening to this

needs to be on that webinar and i’ve

never said that before of course i

always want you guys to join me on the

webinars but this one

there’s just so many implications to

everything that’s going on right now

you’ve got to be on it and anybody you

know that is in this industry you’ve got

to share it with them and get them on

this webinar because it’s going to be uh

the stuff we’re talking about is just

huge for all of us okay so again sorry

for not having the dates we’re trying to

coordinate with uh just a bunch of us

and uh we just didn’t get our act

together but uh go to lotterysource.com

events and sign up to get the email for

when that’s ready on the event page and

uh or if you’re just on our email list

i’ll send out an email about that too

okay i just want to make sure you knew

about those two webinars come join us

you know the home buying one i i know

it’s a little bit different from what we

normally do but it is

a it’s a serious issue it’s really

difficult sometimes to qualify for a

loan as a business owner because of the

way

that we run our businesses and file

taxes and all that stuff so

uh come to that and joe’s got some great

tips for you and then obviously you have

got to be on this other webinar that

mark stern and i are putting together uh

for

um for you to talk about what 22 has in

store for us and how

we can end the year

much further ahead than we are right now

when i think a lot of people are

actually gonna fall behind um this year

all right that was a lot more than i was

anticipating but uh all super important

stuff thank you again for all of you

guys who signed up for the pro

membership the more people who join us

the better it’s going to be uh so come

join us laundromat resource.com join and

you’re at all interested enter at uh

that point in your

journey of

laundromats all right all right let’s

jump into it with mark because again

incredible episode you’re gonna love it

see on the other side

all right mark thank you for coming back

on the show this is i mean times right

now are so crazy and when you and i were

having a discussion about you know

what’s coming up in 2022 i said you know

we need to do this on the podcast

because i think people are interested

there’s

so many things going on and i’m excited

to talk with you about all these

different things and what that might

mean for us but thanks for coming on the

show how are you

great doing great jordan appreciate the

invite again enjoy doing it the first

time and i think we’ll have a really

good conversation this go around i hope

you and your family are all doing well

and

looking forward to 2022 going to be an

interesting year

yes it is and thank you family is doing

well everybody’s healthy and safe hope

likewise for you and everybody listening

to your heart

yeah good yeah it’s definitely poised to

be an interesting year um i mean i have

well we’ve kind of put together sort of

you know a bullet point list of some

things to hit on uh but you know kind of

highlight let’s start high level and

kind of work our way down uh i like you

know the phrase used as headwinds for

2022 and i think that’s

really just an apt term because

it kind of does feel like the winds are

blowing us in some interesting

directions right now and uh maybe we can

just kind of talk a little bit of

overview what are

you know some of the the things that are

going on you know right now and that

we’re anticipating for this year this

2022 and uh and then we can get a little

more granular for each one sure sure

well i want to start by saying

being in this industry for 30 plus years

this is the first time i’ve seen some of

these things and i think they’re major

headwinds that we’re all going to be

confronted with and we’ve got to figure

out how best we can navigate them and

get through the year and have a good

prosperous year uh considering that 2021

pandemic aside was a pretty damn good

year for most people

especially for this industry so

the topics that i see

blowing in the wind and blowing right

into us at maybe 50 miles an hour or

better are

equipment price increases

uh delivery times

uh construction cost

interest rates

and possibly value of stores i think

those are pretty

hefty topics that um

are going to be

front and center as we get into this

upcoming year

yeah i think kind of two maybe we can

touch on kind of weaving all throughout

all of those things is this uh inflation

that’s absolutely getting out of control

right now and uh everybody’s kind of

trying to figure out

you know what does that mean for

for everybody i mean whether it’s just

your personal finances or your business

finances or whatever um and but in

particular what does that mean for you

know owners or people trying to get into

this industry

uh you know here so let’s i mean that’s

right i think yeah i think inflation’s

where we got to start because inflation

slash part of the pandemic has caused a

lot of this stuff

and i think you know inflation sitting

reported six and a half percent but i

think it’s really

higher than that

is the highest in about 30 years

we haven’t really seen it your

generation certainly hadn’t seen it my

generation hadn’t seen it for a long

long time so

this is something that’s going to affect

all of us it affects everything from

food on the table gas in the cars to

equipment pricing build out

it’s just everything is is affected by

it the fed initially said this is going

to be a short-term thing now they

backtracked on it and they said nope i

think it’s going to be here for a while

we have to deal with it

yeah and i mean inflation’s always been

kind of an interesting topic for me

because i i always kind of think

inflation is higher than reported and a

big part of the reason that i think that

and and i do want to chat too you know

i’ll just kind of tease this i want to

talk about we’re going to talk about all

these things affecting all of us

but i want to kind of wrap things up

at the end and talk about where’s the

opportunity because wherever stuff like

this is going on wherever there’s big

changes there’s opportunity wealth is

transferred you know absolutely these

and so

i do want to hit on that but you know

going back to the inflation thing you

know i

i always am uh you know keeping an eye

on inflation and what it’s doing and the

big part of the reason for that is

because of our our national debt right

and inflation is good for people who

have loans inflation is good for debtors

because it makes it easier and easier to

pay off

that that money that you owe right and

there’s no bigger debtor than the united

states government that i know of and so

it makes sense for the government to

want inflation now you know they they do

with through the fed they do try to

control the amount of inflation and you

know right now as it’s accelerated uh

you know it’s it’s kind of throwing

people for a loop because i think for

like you said a long time the fed’s done

a pretty good job of raining in that

inflation in that two to three percent

uh you know rate right it’s

significantly above that now

yeah that’s their benchmark was two

percent

and now looking at six or six and a half

or even higher it’s it’s it’s pretty

much out of control so

the fed you know they’ve been buying

back they’ve accelerated their buy-back

of bonds so that they can raise interest

rates um originally they talked about

ending that program in june now they’re

talking about ending it in march so this

kind of goes into one of the headwinds

i’m i hate to say it because i’m a

lender but i think we’re going to see

increased interest rates in 2022

probably starting in the first quarter

at the end of the first quarter and if i

had to guess

i would think you’re probably going to

see

maybe anywhere from

a half to a full point

increase in the prime rate by the uh by

the end of the year still not bad

because the prime rate is sitting at

three and a quarter which is pretty much

an all-time low for many many years at

least so if you’re at four and a quarter

it’s still manageable

not terrible uh but higher than it’s

where it’s been for the for the past

couple of years

yeah and just i want to just make sure

that we’re not losing anybody because

we’re going to talk about some

interesting things here and there’s a

lot of implications in a lot of

different directions but just so we

don’t lose anybody

you know the fed uses interest rates to

try to regulate

uh the inflation amount right and so

you know over you know the great

recession all that the interest rates

dropped in order to stimulate the

economy when when interest rates drop

people borrow money and if people i i

teach this to uh

laundromat owners who are

thinking about selling their laundry

right if you can make your laundromat

financial you can charge a premium for

it because

people can if people can get a loan for

it they’re willing to pay more for it

right so when the fed drops an interest

rate it makes money easier to borrow to

go out and buy you know assets and that

stimulates the economy

and you know gets things moving right

keeps inflation where it needs to be

well if inflation goes high then you

raise uh you raise the interest rates

and it makes assets

more difficult to buy so that kind of

lowers that inflation so that’s kind of

how they try to manipulate the

very simplistic version of how they try

to manipulate uh the uh the inflation

rate so i think that’s why you’re

thinking there’s going to be interest

rate hikes

yeah i mean they they have to do it in

order to control

the

inflation otherwise it’ll get out of

control

in the early 80s

inflation was sitting in double digits

you could get if you had your money in

the bank you could get 18 19

but you were paying 20 on interest so it

kind of washed itself out so they’re not

going to allow a flight inflation to get

that much out of control and that’s why

they’re going to raise these interest

rates uh during the next year

yeah and so i mean i think the natural

tendency if you know if i’m somebody

who’s looking to buy a business or who’s

looking to buy some assets for my

business my natural tendency would be

well i got to get out there and try to

lock in some interest rates or or if i’m

going to buy a house for that matter

right like i want to go out there and

and lock up some of that debt at the

lower interest rates but there’s a lot

of other complicating factors that you

kind of make right headwinds

too so what’s uh what what are some of

the implications of these uh rising

interest rates

well i think you hit on it is that as

interest rates rise and the cost of

money or cost of borrowing money rises

that could curtail

um borrowing and you know what do you

borrow for you borrow to buy a business

you borrow to replace equipment in your

business in our industry so that could

have a negative implication but i don’t

think it’s going to be too terrible

like i said even if the rates go up one

point

that’s not an outrageous rate that we’re

looking at

you know in today we just got used to

having this very low rate and people

will just have to adjust things now what

happens if it costs more money to put

new equipment in your store or to buy a

store

obviously it trickles down and

laundry owners are gonna have to raise

prices

uh you’ll have no choice but to do that

it’s just like if your utility bills go

up the gasoline i know i was in

california uh last month gasoline was

six bucks a gallon for premium and i

live in new york it’s not quite that

high but it’s right at five so this is

something that affects us go to the

grocery store a gallon of milk is

probably 20

more than it was a year ago there’s a

cream cheese shortage

we just had in our in new york because

you know bagels and cream cheese there

was a whole thing on television on the

news that there’s a cream cheese

shortage so what are these bagel guys

doing they’re raising their prices

because they’re paying more to get the

cream cheese so it’s it’s a trickle-down

effect um but i think we all need to be

aware that it’s out there

and along with that are

the price increases that we’ve seen

on the equipment that in our industry i

mean it’s not only our industry all you

know price of lumber is up

we also finance tow trucks in our

business price of tow trucks that are up

everything is

up because of

partly because of this supply chain

crisis that we we’ve seen

yeah huge yeah

there’s a lot to talk about for the to

kick this year off man uh i want to i

want to take it down a level though of

what yours or go i guess go one level

further right of what you’re saying

because you are saying hey look we’re

all being affected gas prices are

ridiculous grocery prices are ridiculous

i just saw something about um some uh uh

like uh fruits and vegetable shortages

uh because you know there’s the labor

issue and you know on my trash isn’t

getting picked up today because there’s

a labor like there’s lots of stuff going

on today you know these days and

you know when when

the cost of us to do our business

increases like you said we have to raise

prices

but we also need to think down a level

two because

the

our customers

are you know obviously that’s trickling

down to the customers and they’re seeing

those

prices increase across the board too for

all the things they’re using they’re

using the same gasoline buying the same

groceries they’re doing their laundry at

our laundromats

and

you know it’s

it’s i would say it’s more important

now than i’ve ever

maybe i’m just paying more attention now

but it’s more important i think now than

ever that we’re paying attention to

wages wage growth versus the inflation

growth because you know a lot of us who

have laundromats in lower income areas

which is a lot of laundromat owners

those are the people who are getting

squeezed the most right and so when

we’re looking to buy new stores or ex or

build new stores or expand

uh stores we need to be considering

not just how much it’s costing us

but as we pass down

you know the the cost of all of these

things we need to have some kind of

understanding of how that’s affecting

our customer base um in the grand scheme

of everything else that’s going on

because inflation is rising faster than

wages and has been for

decades i think

i don’t know if that makes sense yeah

that yeah no that’s a true statement um

i think we’re fortunate to a certain

extent the laundry owners are in that

this is a necessity of life

you can skip this week

washing your clothes but unless you’re

going out and buying a bunch of new

clothes next week you’re going to have

to come to the laundromat

and so

you will get the business and but i

think you know we are a customer based

business and i think it’s important for

all laundry owners to convey to their

customers the reason that they’ve had to

raise their prices you know and i think

if you tell the customer that

that the customer and i know because

i’ve had feedback the customer will

understand because as you said jordan

they’re putting paying more to put gas

in their car they’re paying more to put

food on their table this is another one

of those necessities unfortunately if

you’ve had to raise your prices

it is what it is

um we all have to survive with it so

no one likes to do it it’s a little bit

uncomfortable but in the long run you

have to do it and that’s the way you

know this is a trickle-down economy

always has been

and the last guy on the on the plank

seems to always take a bit of the brunt

but in this case

you as the store owner you’re paying

more for all these things so you have no

choice unfortunately

yeah absolutely absolutely and i think

too you know we are

uh you know i i just hear more and more

conversations about owners raising their

prices and feeling like i think that’s

been kind of a weakness for our industry

for a long time and the people who it

has been yeah the people who don’t raise

prices are the people who can’t reinvest

in their business and end up with

laundry right zombie maps yeah in their

possession right that’s exactly right

that has been a long-standing issue in

this business but i will tell you over

the past 10 years we’ve gotten different

a different breed of owner

and these are more

people these people are more

business-like they’re interested in

making money they’re not afraid to pass

on price increases so it’s much better

today than it was 25 years ago i’ll tell

you that for sure

yeah absolutely and i think too i i

couldn’t agree more and i think too even

more recently even in the last maybe

four or five years it’s kind of

ramping up even more i think there’s

out there and there’s more conversations

happening between owners and i think

that you know a lot of

the uh you know the breed who you know

would keep their machines for 40 years

and that’s a source of pride and that’s

fine that’s one and would be there all

day that’s one way of running the

business but a newer kind of breed is

coming in here where yeah you’re not

trying to be there all day or they’re

trying to run a legitimate business not

a self-employment job basically right

and technology has helped you know

the social media you know it’s just it’s

an open book now to a certain extent so

you’re right it’s definitely it’s been

going

in that direction for at least 10 years

and it’s escalated for sure over the

last three to five years and it’s good

for the industry because we get more

business savvy people in this business

it’s good for everybody

we’re going off script a little here but

out of curiosity does that

does that

slow down due to all of these

headwinds coming in does that keep

people from

you know keep business savvy people from

coming into our industry or building

newer better bigger stores or

well you know that’s a good question um

i think for the

laundry owner that this is their sole

business and they work it

day in day out you know it’s not

something that’s kind of a part-time

thing i think those people are going to

continue to invest and reinvest in their

business because that’s the only way

they can make the business grow i think

people who want to get into this

business

they

maybe prices of existing stores might

escalate a little bit

uh but if they really want to get into

the business i think they’re going to do

it so it could have some negative effect

on certain parts of the industry but

overall i think the people who are

involved in the business

know they have to

you have to reinvest to keep your

business growing

and if you’re in the business and you

want to buy another store or you need to

retool i think you’re going to do it uh

you may try to put it off a little bit

but

i i think it will be done

yeah

okay let’s go uh i mean we kind of hit

on inflation and we hit on interest

rates anything else you want to say on

interest rates before we no i think we

they’ll speak for themselves everybody

will know it because you’ll hear it from

the fed you’ll read it in the paper um

it will be out there so yeah i don’t i

think we’ve kind of covered that pretty

well yeah and i’ve got i’ve got a i’m

just going to throw a quick plug out

there i’ve got a video uh it’s a couple

months old now but it’s on i i did a

video on youtube on why

i think you should consider buying new

equipment right now and i think it’s

more relevant now than it was a couple

months ago even when i put it out so i’m

going to link to that for anybody who’s

interested um and in the very

end of that i talk a little bit more

about inflation and why it’s good to

kind of lock in some of that

that debt right longer term debt right

now because of it yeah do it now

absolutely do it now

yeah okay well let’s jump to um

equipment pricing and we’re at there

because i know that’s a i mean obviously

that’s the lifeblood of our

of our business right is that equipment

right and as we’ve been seeing

over the last year or two prices have

been going up and i think it’s gonna

continue in 2022

well i think it will be it was it’s

you know for many many years in this

industry the manufacturers had maybe one

price increase a year it was usually two

or three percent and it was absorbed by

the

vendor and the vendor passed it on to

the to the owner to the uh laundromat

owner so

um that’s what it was but this past year

because of the supply chain crisis

because of the chip crisis

many of these vendors or many of these

manufacturers had multiple price

increases that’s the first time i’ve

ever seen it and

you know the

industry passed it on and

the industry accepted it they had no

choice but to accept it and the

manufacturers had no choice but to pass

it on

the pro you know as you know a couple of

the manufacturers import equipment from

europe and from china

i was told that you know and i know that

uh cost of

impor of bringing a container over was

maybe three or four thousand dollars now

it’s twenty thousand dollars i mean

that’s just an incredible increase and

as you know living in california and i

know living in new york look out in the

harbor and you see all these

boats sitting out there they can’t even

get them get them unloaded and they

can’t get them to shore so

that’s a big that’s a big issue and

unfortunately the manufacturers were

faced with price increases and it just

was passed on down the line so it’s

there it’s being dealt with it was dealt

with throughout the year because some

manufacturers had multiple price

increases during this year

and it’s just going to be the way it is

hopefully next year maybe they’ll only

have one

or two instead of

three or four

uh but we’ll we’ll see but it’s it’s a

fact unfortunately

yeah we will see be in and man i mean

listen i don’t

i don’t see at least as of right now i

don’t see any indication that things are

going to be different you know things

obviously can change uh over the year

but i think in the in the short term

first half of the year i don’t see any

indication that that’s yeah

i agree first

i agree i mean the the outlook is not

too rosy to begin the year as far as the

supply chain getting straightened out

and as a matter of fact today in the

wall street journal they had an article

about it and most of the

experts whoever’s in that considers

themselves an expert feel like it’s

going to persist for most of 2022 and

will start to ease itself out in 2023

yeah well brings the mind to me the old

saying you walk 10 miles into the forest

if you want to get out you got to walk

10 miles to get out right you can’t just

right if it’s

kind of backed us up over the last year

or two it’s going to take us at least

that long you know to get things

situated uh for us and to get get back

in on track to where we’re right if we

can ever

um and we will

yeah we will it’s just going to take

some time yeah and i don’t i don’t

anticipate

prices going backwards ever no

you know on anything that’s yeah on

anything yeah

that’s true the only thing that seems to

be somewhat volatile and goes back and

forth at gas prices yeah because that

that is such an open market that you see

what’s going on with opec and the local

and the domestic uh suppliers that you

kind of can see what’s going on but in

in hard goods like this very seldom do

prices go down once they go up that’s

where they are

yeah yeah i would say the one

possible caveat to that and probably not

in our particular industry but

technology does tend to have

deflationary

aspects as

you know technology gets

big you know faster smaller better

uh prices tend to decrease but i don’t

think there’s enough

our equipment’s not technological enough

to really be impacted too much by those

visionary pressures so i would tend to

agree what we can hope

is that

into the future maybe there won’t be as

many and maybe they’ll skip a year or

two without having to raise prices as

things start to settle down

but i don’t think you’re going to see

any of these manufacturers come out and

reduce their prices

yeah well just like probably none of us

are going to reduce our prices no you’re

not you know you’re not going to you

have a laundry you have a price you’re

not going to go back on your price not

unless there’s a major recession or

something yeah well i mean pricing is

one thing but here’s the deal is that

right now

if you know if i want to go buy new

equipment not only is it going to cost

me more than it would have at the

beginning of the year but it’s going to

take me sometimes 4 5

9 10 months to get that equipment so

delivery times are extending out too

which i think has a lot of maybe even

more ripple effects

yeah nice increases yeah i agree because

if you can’t get the equipment it’s one

thing if you have an existing laundry

and you’re retooling it and your

equipment is still working well you can

wait you know you may not want to wait

but you can wait to get that equipment

but if you’re building a laundry

and if you’ve signed a lease and for

argument’s sake let’s say you have six

months free rent

and usually that’s plenty of time to get

your store built get the equipment

installed and be up and running but if

your equipment is not coming for nine

months

that’s a problem

and you don’t want to be paying rent for

three months

when you don’t even have the equipment

in your store so

delivery times are going to be crucial

hopefully the

manufacturers will be able to catch up

as we get into the year but right now

you know i’m hearing delivery times as

as far out as 11 months on some

equipment

that’s that’s definitely i don’t know

how you’d

address that there’s nothing you can do

about it if the manufacturer can’t make

it because

they can’t get the

the uh

resources to build it or the goods the

supplies to build it it’s going to be

tough to

to fix it so

we’re just going to have to i think

everybody in the industry just has to

pay attention to it and

just monitor it as close as you can and

when you’re buying equipment with your

local vendor just push them apart to get

it as quickly as you can get it but you

have to also remember there at the mercy

of the manufacturer and if the

manufacturer can’t make it it’s going to

be kind of hard to to deliver it so

that’s something that we have never seen

or i’ve never seen in this industry not

extended delivery times like this

but we just all have to deal with it

yeah and i will say kind of going on the

other side i mean not only do you need

to kind of try to push that distributor

to get the equipment quicker i mean

you’re also having to push on the

landlord side to try to write some of

you know some of some free rent or half

rent or or whatever right and i

through just the negotiations i’ve been

doing lately

you know some landlords are willing to

do some of that but there’s not very

many that i’ve encountered that are

willing to go

nine months or a year free rent yeah and

you know even

you know even some of the bigger markets

in la and new york some of the florida

markets some of the texas market chicago

area landlords that i’ve talked with

uh even even six months is really

pushing it for a lot of these guys

because they feel like

they can kind of turn over um which is a

little bit surprising to me actually uh

coming off of the

uh you know the whole

epidemic thing well i think you know you

raised you mentioned something earlier

what some of the opportunities the

opportunities are in

in renting

uh because there are a lot of vacancies

a lot of landlords lost tenants that

didn’t reopen

and so i think they’re a little more

amenable today than they were

pre-pandemic

and so

that is a discussion that if you know

your equipment is going to be delayed

out eight seven six seven eight nine

months when you’re negotiating your

lease you have to bring that to the

landlord’s attention and see if he’ll

work with you on it because

it’s going to be tough

if you got to start paying rent and you

don’t have equipment in the store and

obviously can’t open your store so but i

do think

a landlord’s

it depends on who it is obviously you

know these huge landlords they don’t

give a damn

but a smaller landlord and we talk to

landlords all the time i spoke to two

today as a matter of fact for a couple

of customers that i’m working with

one of them was very amenable understood

what we were talking about and wanted

that tenant

he wanted the laundry as a tenant

because he knew the laundry would stay

open no matter what he knows that this

particular

tenant prospective tenant has other

stores he’s seen them he knows they’re

good they’ll be a good tenant so it just

depends on who you’re speaking to but

it’s for sure something

when you’re negotiating a lease and if

you know that your delivery times on

your equipment is going to be delayed or

could be delayed i would

bring that out during those lease

negotiations and see how the landlord

will assist you if you don’t get the

equipment in a timely fashion

yeah and i would say too just based on

my experience talking with landlords

it’s good to have that conversation

earlier oh yeah then later and just kind

of lay your cards on the table and say

hey here’s what here’s the situation i’m

dealing with

is you know supplies you know

it’s backed up the delivery times are

backed up and costs are all up through

the roof and you know so have that

conversation early and and just you know

put your cards on the table because

those landlords you know like you said

some of them are going to understand and

work with you and some of them

aren’t uh right better to know early for

you and for them uh if they’re going to

work with you or not you hate to invest

a lot of time and money and then

just to realize that they’re really not

going to work yeah

that’s very really good advice bring it

out early tell them exactly what’s going

on and see if you can make a deal with

them

yeah

uh okay i mean

and just you know just kind of to

mention this the delivery

time issue is across the board right

it’s for

all the manufacturers are dealing with

it’s not like one or two of them it’s

all of them they’re

dealing with it to varying degrees um

but

all of them are are dealing with those

those things too so it’s not like you

can say hey one is got long delivery

times and the other one is shorter and

i’ll just go with them

it’s all of them are dealing with that

issue so i just wanted to make that

point anything else on delivery times

no i think we covered it

all right well i mean listen if the

cards weren’t stacked enough with rising

inflation and

you know interest rates going up

equipment prices increasing and delivery

times being extended out we also have

the cost of construction going up and

kind of along with that is the rising

cost of labor uh both on the

construction side and also on our

employee side of things

let’s talk about cost of construction

how that’s affecting things right now

well you know we’ve

we heard from different

laundry owners that we do business with

that construction costs have gone up

anywhere from 25 to 50 percent

depending on

what you’re doing and where you’re doing

it you know in california new york

chicago the big cities it’s gone up

tremendously not only has the cost gone

up but the time to build the store has

been extended because of the supply

chain issue i mean i i get i’ll relay a

personal issue i’m doing a small

addition on my house

and

so the other day

i see a load of lumber come and i called

the contractor and i said are you coming

to tomorrow to start framing out and he

said no he said

they back ordered half the lumber

and i’m saying like what the hell i mean

what does that mean he said well

hopefully it’ll be here in a couple of

days but i can’t come do the job until i

get all the material so that is going on

with everybody

and so you have higher construction cost

you have material deliveries just like

we’re talking about deliveries of the

laundry equipment’s the same thing for

materials needed to for construction

i’ve also heard in certain parts

particularly in your backyard permit and

getting permits has been a nightmare

yeah and taking twice as long to get

permits as it usually does so all of

these things are you know you just have

to understand what you’re getting into

when you start to build

uh either a ground up if you’re doing a

ground up thing or if you’re going to

rent and you’re rehabbing a space you

just have to get all these timelines in

your

in your

mind and then and in your project so you

know

how how you can deal with it so

again i don’t think there’s much

you can do with it other than know it up

front and pin your contractor down as

best you can as to what is the time

frame to get the permits to get this

thing built make sure all the supplies

and materials that the contractor needs

that he can get or he’s already ordered

so that you’re not faced with some

unreasonable amount of time to finish

the project

yeah and i mean the other thing to kind

of consider with all that and all that

isn’t insanely true i mean

i i mean kind of famously the lumber

prices were were super high and they

came back down a little bit i think a

little bit well they’ve kind of

oscillated back and forth a little bit

but they’re not quite as high as they

were i don’t think but i mean

it’s not just lumber it’s it’s

everything and you know on top of that

you know with the supply chain issues

that are slowing things down at least

here and i know in other big metros and

i think kind of all across

you know

it’s it’s been difficult for

you know general contractors to find

subcontractors to work and to find you

know labor to do especially you know

most laundromats are smaller projects

even the million dollar laundry mats

that’s a that’s a relatively small

project

and so

you know finding labor that is in excess

of doing maybe some larger more

profitable project for a construction

worker to to take the time away from

those to come do

a relatively smaller project has just

been is difficult too you know and that

on top of the permit

and all that so there’s i mean it

there’s a lot that is stacked up on

there and i just want to kind of mention

you know we’ve been talking about the

you know the supply chain delays and you

know the permitting delays and the

construction delays and you know all

this stuff and

one of the things i think it it does

that we don’t consider very often in

this industry that maybe they do more uh

more intentionally in real estate

investing circles but i don’t hear

really talked about in laundromat

circles because it really hasn’t been

that big of an issue is holding costs

right the longer it takes

to if you’re doing ground up or a

remodel rehab the longer it takes to get

that done

you’re still you still have expenses to

be paying right and so you need to

factor those in

uh you know into these longer timelines

that you’re dealing with because it’s

gonna end up costing you a little bit

more money and the worst thing to happen

would be for you to not budget in those

holding costs right to abort before you

get to the end of the line there yeah

that’s a disaster

that is a disaster and you know you’ve

probably all of us have probably seen it

you see a house being built and then all

of a sudden construction stops well i’ll

bet 90 of the time or 80 of the time

they ran out of money or they didn’t do

exactly what you’re suggesting uh

figuring a contingency and holding costs

because almost no project runs true to

form

so and especially now so uh you def

that’s good advice

definitely need to consider that yeah i

don’t think there really is a form now

they can’t run

amorphous right now i don’t know

everything’s kind of in flux

that we’ve been talking about i mean

we’ve hit

a lot of things and you know to be

honest

you know listening to all of this stuff

i mean i could see how this could feel

to anybody listening kind of

disheartening and a little bit

discouraging or you know whether you’re

an owner or you’re trying to get into

the industry

uh you know and i think especially a lot

of people who are trying to get in

you know on by kind of on the lower

inside where they’re trying to come in

and rehab a zombie mat or something like

that it can get a little bit

discouraging i think to hear

yeah stuff

but i think you know there is a a

shining light here

and the shining light is

that this industry

is a necessity of life this industry

during the pandemic was ruled in a

essential business that had to stay open

we did not see a lot of laundries go out

of business because of the pandemic

in fact a lot of them got a little

stronger as things started to improve

so it’s still a very good industry

um yes we have hit headwinds but i can

tell you every business today has

headwinds we’re not unique it’s not like

what we’re seeing is unique to the

laundry business it’s not it’s every

industry is got some kind of headwinds

going into this to the 2022. but

as i said i think you know that for the

for the people that really want to be in

the business and are already in the

business there’s some good opportunities

out there and you know someone else’s

loss always turns into somebody else’s

game and that’s what you’re going to see

in 2022.

so i wouldn’t say to anybody who’s in

this business sell your laundry and get

out i’m not saying that at all i’m just

saying we’ve got some

things to deal with and anybody who

wants to get into the business it could

be a good time to get into the business

especially if you find one of those

zombie mats that you can pick up at a

right good price and then you stay with

it for a little while and then you start

to retool it and put in new equipment

and you’ve signed a new long-term lease

with a landlord who’s given you really

good rent because you can get good rent

now

compared to pre pandemic so

there’s some good things there you just

gotta

be careful as we get into 2022 and make

sure that you’ve taken into

consideration everything that’s going on

today

yeah yeah and you mentioned already the

rent is is one of those opportunities

let’s let’s kind of segment this out and

maybe we can kind of give some

practical advice

uh to people so let’s talk for a second

to someone who’s maybe looking to buy

their first

laundromat pro

tips

what

what are the opportunities for somebody

trying to get into this industry going

into 2022 you know with the knowledge of

all these headwinds here you know okay

so we have you know i’ll throw in the

you know the opportunity to get a good

long-term rent i mean i think that’s an

opportunity there for somebody to get in

this business are there any other

opportunities people should be looking

for

uh during yeah i think i think rent is a

big is a big thing

i think that if you um

can buy

as we refer to them these zombie mats um

possibly you can get it at a good price

um then you have to consider

when and if you have to retool the store

what’s that going to cost

i also think that the manufacturers and

vendors um

realize because of the price increases

and the um

delivery times they they still need to

sell equipment

while equipment may be higher and

delivery times longer i think you know

you can still make a good deal with some

with the local vendor because they they

need to move the metal one way or

another can’t sit in the manufacturer’s

warehouse and it can’t sit in their

warehouse so there’s some up there’s an

opportunity there and again

i think for those that are in the

business and want to

retool

i think generally when you do do a

retool you generally raise your prices

you know you might have to raise them a

little more than you would have

otherwise because of some of these

headwinds but

again i think because the business

is an essential business it’s a

repetitive business the customer doesn’t

come in just once and wash their clothes

you know they’re going to come in on a

weekly basis or bi-weekly basis so there

there’s just some good it’s just a good

industry to stay in i certainly wouldn’t

want to see and i don’t think we’re

going to see a mass exodus from this

industry i think people will stay in it

we just have to deal with some of these

things that are a little bit out of the

ordinary

yeah and i think that’s i think those

are all just really good pieces of

advice i want to say too i think

that

a huge opportunity for

uh four current owners right now or if

you’re gonna buy one you know in this

year in 2022

i think a huge opportunity is

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