2023 Predictions for Laundromat Owners

2022 was a wild ride for the world in general, and for laundromat owners in particular! But in the beginning of 2022, Marc Stern from Eastern Funding came on the show and prepared us all for what was to come. He was spot on!

Marc joins us again today to look ahead at what we, as laundromat owners, can expect in 2023 and how we can best prepare ourselves to navigate our changing world. There’s a lot going on right now and Marc’s nationwide perspective gives us a view of our industry that can be hard to see when we’re focused on running our businesses day-to-day.

This episode is packed with great insight and practical tips to help you navigate your year. Jordan and Marc discuss:

  • A recap of 2022
  • Laundromats as recession-proof businesses
  • The 3 main costs of laundromats and how they are being affected
  • Interest rates for 2023
  • Trend on purchasing laundromats
  • How to raise prices in your laundromat
  • How big will the recession be
  • Recession’s effect on rents
  • Is now a good time to get into the business?
  • How successful laundromat owners are navigating the current climate
  • Effect on wash and fold and laundry pick-up and delivery
  • Lending options to utilize right now
  • Where the opportunities are right now in the laundromat industry

And so much more!

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By Laundromat Owners.
For Laundromat Owners.

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Episode Transcript

01:15:02:14 – 01:15:21:02
Jordan Berry
Hey. Hey. What’s up, guys? It’s Jordan with the Laundromat Resource podcast. This is show 109, and I’m pumped. You’re here today because today we’re going to take a quick peek back at last year and all the crazy things that happened. But then we’re going to focus the majority of our time on what’s coming out ahead of us this year.

01:15:21:02 – 01:15:37:23
Jordan Berry
And I have super special guest, Mark Stern from Eastern funding on with me again. He joined me at the beginning of last year and we did this. It was such a huge hit. He decided he would come back and share with us again this year. It’s we’ve already did a little pre chat and it’s going to be a killer episode.

01:15:38:15 – 01:16:07:06
Jordan Berry
Things are changing all over the place right now and hopefully this is going to help all of us navigate the waters a little better. But real quick, before we jump in with Mark, I just wanted to welcome all of you guys who are new listeners. This is the Ultimate resource podcast and we are talking with a lot of Matt owners and industry professionals trying to help you get into the Laundromat business the right way the first time and to help you build a profitable business and serve your communities better.

01:16:07:06 – 01:16:33:07
Jordan Berry
So that’s what we’re all about here. Check out lot about resource dotcom. If we mention anything that has a link. If you’re on YouTube, everything’s going to be down below in the description. If you’re listening on the podcast, however, go to the show notes page. A lot of my resource dot com slash show 109 and you can get all the links to everything and I’ll link to Eastern funding and Mark’s email address in case you want to get a hold of him.

01:16:34:04 – 01:16:37:09
Jordan Berry
But without further ado, Mark, how are you doing?

01:16:37:18 – 01:16:44:03
Marc Stern
Doing great. Jordan Thank you for bringing me on. Number 109 Sounds like a good number to me.

01:16:44:16 – 01:16:51:18
Jordan Berry
That’s a that’s a great number, I think. Thank you for coming on here. I know you’ve been on a futile note probably two or three times already.

01:16:51:18 – 01:16:55:20
Marc Stern
This is third. I feel like I’m one of the stars from Saturday Night Live.

01:16:56:04 – 01:17:14:00
Jordan Berry
Yeah. This is a this is a big deal. I don’t want I don’t want to give you a big head or anything, but this is kind of a big deal. Not many make it on three times. So you’re kind of a big deal now or. No, but I appreciate you taking the time to come on real quick before we jump into what’s coming ahead of us.

01:17:14:09 – 01:17:37:05
Jordan Berry
I thought we’d kind of just recap a little bit of last year because last year was a little bit of a wild ride. A lot happened and, you know, obviously rolling into this year, a lot’s still going on and maybe more to come going forward. But last year you have like a quick synopsis of, you know, Yeah, how did that play out for us in our industry?

01:17:37:06 – 01:18:01:20
Marc Stern
It played out kind of the way I thought it was going to. You know, we started out the year still in the pandemic, but, you know, getting out of it. But I felt like there were some major headwinds that we were going to have through 2022. First of all, equipment prices. Second of all, tie cost, third of all interest rates.

01:18:02:20 – 01:18:40:03
Marc Stern
Unfortunately, all of those went on the upswing and by and large, the industry handled it pretty well. We were very busy during the year. I saw a lot of new stores being built throughout the country. We saw a lot of retools, a lot of acquisitions. People still wanted to get into this business. That’s the good news. And I think that’s going to really follow us into 2023 is that the laundry business is still considered a high return business, somewhat recession proof and a good bang for your buck.

01:18:40:10 – 01:18:53:03
Marc Stern
So I think that’s a positive for the industry. But some of those headwinds that we had last year are still with us and how best to navigate them. I think that’s what we’re going to talk about today.

01:18:54:12 – 01:19:12:04
Jordan Berry
Yeah, Yeah. We’ll we’ll talk about what they are and how to navigate them. But, you know, it’s kind of funny. I went through and I just sort of skim through our interview from last year and I, I got to say again, not to give you a big head, but you kind of sound like a genius about that. Well, I mean, pretty much everything.

01:19:12:04 – 01:19:35:08
Jordan Berry
I mean, first of all, the title of the podcast episode last time was the headwinds for 2022, and it was a little bit of headwinds for us there. So you nailed that. But I mean, you pretty much nailed everything that that we were going through. And I don’t know if you knew the degree to which some of the things were going to play out, but you’re pretty much spot on on everything.

01:19:35:08 – 01:19:38:13
Jordan Berry
So there’s a lot of pressure here in this episode.

01:19:38:19 – 01:19:40:18
Marc Stern
You got to up keep it.

01:19:41:00 – 01:20:05:22
Jordan Berry
The expectation is high. Yeah, yeah. Well I mean with that said what let’s, let’s start digging in right? What does 2023 have in store for us? I mean, we’re, you know, three weeks in as a record in this. We’re three weeks into the year and already a lot’s happened. So let’s talk about like what’s going on and what do you see coming in the future here for the rest of the year?

01:20:06:05 – 01:20:32:17
Marc Stern
Well, let’s talk about equipment pricing. I think the three things that affect the industry are equipment cost, tenant improvement, cost or construction cost and of course, interest rates on your loan. We’ll start with the equipment prices. So that I think the manufacturers all had increases at the end of last year. And I think that we might have plateaued a little bit on this.

01:20:32:17 – 01:20:58:23
Marc Stern
I don’t necessarily think we’re going to see multiple increases from the manufacturers store in 2023, hopefully not. So that’s a bit of good news. Construction costs, depending on where you are in the country. You know, some places went up as much as 40, 50%. Your backyard, California was one of them. And New York, where I live, was also very high on construction costs.

01:20:58:23 – 01:21:26:07
Marc Stern
But again, that was related to the supply chain issue, which pretty much has dissipated. For example, I know lumber costs have come way down. So I think we might have seen somewhat of a plateau on construction cost. Unfortunately, both of those equipment and construction, I don’t think they’re going to drop prices, but hopefully we won’t see any major increase in prices.

01:21:26:20 – 01:21:57:17
Marc Stern
That leads us to the last topic, which is interest rates and unfortunately, interest rates, as everyone knows, since the middle of last year, have just gone skyrocketed. The Fed had gone up three times or four times with a 75 basis point increase, which was unheard of. They hadn’t seen something like that since the early 1980s and they’re not done yet.

01:21:58:09 – 01:22:43:14
Marc Stern
The good news is they’re slowing down. So the Fed meets next Tuesday and Wednesday and the odds are they’re going to raise the interest rate a quarter point, which will bring the prime rate up to 7.75%, a pretty high rate, especially when you consider two years ago the prime rate was three and a quarter percent. So the good news on interest rates, if you believe what you read and I’m kind of a believer and what I’ve been studying and reading is that they’ll probably go up a quarter point in February, another quarter point in March, which will bring the prime rate to eight and then stop.

01:22:44:01 – 01:23:09:00
Marc Stern
And then I think the Fed is going to pause, take a breather, see if we’re really heading into a recession. And if we are, how bad is that recession and pause and then by the end of the year, all things being equal, if the economy has slowed down but not hit a major recession, and if the inflation has gotten under control, maybe we’ll see a little bit of a drop.

01:23:09:10 – 01:23:41:07
Marc Stern
One thing I can tell you, interest rates are not going to drop as fast as they went up. That’s barring any kind of pandemic or major war or anything. But they will come down eventually. And people need to remember that in 2000, 18, 2019, the prime rate was sitting around five and a half, which is probably where we’re going to end up possibly in the next 12 to 18 months.

01:23:41:07 – 01:23:59:13
Jordan Berry
Those are some those are some bold predictions. You just went you went straight with like the hard concrete numbers. I love that. That’s what I love here. And, you know, next year we’re going to find out where we’re at and we’ll see if you keep your streak. Yeah, but I mean, you’re right. Like, who knows what’s really going to happen?

01:23:59:13 – 01:24:21:17
Jordan Berry
There’s so many different things that can influence all of these different, you know, factors. The government could pump more money into stuff and, you know, rates could go up or down based on, you know, what’s going on in the world. So, I mean, there’s a lot of different things. But I appreciate you, Sharon, actually, you know, throwing out specific benchmarks to be looking out for.

01:24:21:17 – 01:24:52:00
Jordan Berry
Yeah. And and of the three kind of big costs, the equipment, the construction and the, uh, and the interest rates, I mean, I think that the one that is concerning customers, you know, your customers, laundromat owners, the most right now is, is the interest rate thing. Have you seen are we as a kind of collective group, are we slowing down on store acquisition or are we slowing down on equipment acquisition?

01:24:52:00 – 01:24:53:16
Jordan Berry
What’s what’s the trend there?

01:24:53:18 – 01:25:35:20
Marc Stern
Well, the trend has still been pretty robust. I mean, yes, the interest rates are higher. People are concerned about them. But the fact of the matter is the laundry business is still a great business. It’s still somewhat recession proof. You still have a high return on your investment and people have to continue to use the laundries. So the laundry operator has to be attuned that when interest rates are high like this and when equipment costs and construction costs are high and you price yourself in the market, you have to price yourself accordingly.

01:25:36:12 – 01:26:09:14
Marc Stern
And if things come up like interest rates, you’re going out, you need new equipment, you have to buy, you’re paying a higher interest rate. When you install that equipment, you’ve got to raise your prices. And laundromat owners have to do that. And I think we’re seeing that in your backyard. And gas prices have gone through the roof. Laundromat owners are just you know, I got calls upon calls last week telling me how much the gas prices had gone up in the state of California.

01:26:09:22 – 01:26:32:03
Marc Stern
And these laundromat owners are saying, I have to raise my price. I’ve got to pass it on, and the customer knows it because the gas prices went up in their home or their apartment. So they are sympathetic to it. But as a laundry owner, you’ve got to be the one who raises the prices. You’re not doing it because you’re greedy.

01:26:32:06 – 01:26:35:21
Marc Stern
You’re doing it because you have to do it.

01:26:35:21 – 01:27:03:12
Jordan Berry
Yeah, absolutely. And I want to touch on that in a second. But real quick anecdote. So I was speaking at a distributor show in the Pacific Northwest this last weekend, and the question even came up because it’s the the gas, the natural gas thing is is so it’s so big right now, especially here in California. But, you know, in some other places, too, somebody even brought up the question like, should we be looking into electric dryers at this point?

01:27:03:12 – 01:27:24:12
Jordan Berry
Right. It’s it’s causing us to figure out, like, how do we need to shift, how do we need to pivot our, you know, our businesses, you know, not just with utility costs, with everything going on, but these are the kinds of conversations that, you know, that are are starting to happen around the industry a little bit. So it’s kind of interesting.

01:27:24:12 – 01:27:53:00
Jordan Berry
On the on the raising prices thing, I want to ask you, because, yes, some places are seeing these huge increases in utility, some places aren’t. But and you and I have talked about this before and we talked about this before we hit record, too. Like as an industry generally speaking, we’re not the greatest at raising prices, but we’re we’re in a period of time right now where if you don’t, you’re going to you’re going to get left behind in this.

01:27:53:00 – 01:28:12:18
Jordan Berry
You’re not going to be able to survive. It’s costs are going up, rents are going up, utilities are going up, interest rates are going up, equipment prices are going up. Everything’s going up. Right? You have to be on top of raising your prices. And, you know, generally speaking, we’re afraid to do that. So what have you seen other owners who are pretty good at doing this?

01:28:12:18 – 01:28:17:11
Jordan Berry
What have you seen them doing to help them raise prices and communicate with customers?

01:28:17:11 – 01:28:50:06
Marc Stern
You know, they they are explaining to their customers why they’re doing it. For example, I know some owners in California with this recent price increase that you’ve had with gas, they’ve put notices on their front doors explaining to the customer, Hey, this was my gas bill three months ago. This is my gas bill now. It’s unfortunate, but I have to raise prices and the customer understands because the customer is seeing these same increases in their apartments or their homes, so they get it.

01:28:50:07 – 01:29:12:05
Marc Stern
The other thing that I know, I have a customer again in California. Every year he does something to his laundry, If he might be repainting early, might have replaced the ceiling, he might have done something to the floor. And when he does that, he raises his prices. And so the customer sees, hey, you know, this guy has given me something back in this store.

01:29:12:06 – 01:29:35:20
Marc Stern
So I understand if he’s raising my prices a little bit. So you’ve got to show the customer that you’re doing it for a valid reason. Not that you’re doing it to be greedy. And most laundry owners today, I think, understand that, you know, you’re given to the community, you’re given to the customer base. If it cost a little more, but you’ve got a better mousetrap trap, they’re going to come.

01:29:36:12 – 01:29:50:21
Marc Stern
So that’s the way I would do it if I was in business today in any in any state, I would be doing something every year that would be a justification for me to raise my prices.

01:29:50:21 – 01:30:12:17
Jordan Berry
Yeah, absolutely. And that’s that’s the way that I’ve tried to approach it, too, every year be doing something. I think pretty sure I’ve talked about that on the podcast before, but every year doing something to improve your business. Exactly. Not just because if you don’t, then your business continues to just deteriorate, but also to communicate to your customers, Hey, we care about you, we care about the community, we care about this business.

01:30:13:03 – 01:30:36:09
Jordan Berry
And, you know, we want you to have a good experience here, Right. And it also allows you to, you know, justify raising those prices. It’s that whole value thing that gets talked about, right, Like adding value to the customer and their experience at the laundromat. So, yeah, Yeah. And thank you for sharing some of that. Just the practical ways people are doing that, because that is, that is pretty difficult for a lot of people to do and we get hesitant on it.

01:30:36:09 – 01:30:40:07
Jordan Berry
But now is not the time to hesitate on the price raising.

01:30:40:07 – 01:30:41:00
Marc Stern
Exactly.

01:30:41:13 – 01:31:04:23
Jordan Berry
Okay. Yeah. So I mean, out of curiosity, and you don’t have to go too far down this rabbit hole, but I’m just kind of curious what you think. I’ve I’ve seen a lot I’ve heard a lot of buzz around recession and, you know, a lot of people are saying, hey, we’re we’re in recession right now. A lot of people say the recession is coming.

01:31:05:06 – 01:31:14:11
Jordan Berry
And then I’m hearing people say it’s maybe going to be more of a plateau, not as much of a recession. What do you have any thoughts on that? What are you seeing in terms of recession?

01:31:15:23 – 01:31:39:04
Marc Stern
You know, we do businesses all over the country. So we see things that others don’t necessarily see. I personally think that we might be in a small recession right now. I don’t think it’s going to be a big one. I think the you know, the the Fed has tried to have a what they call a soft landing so that we don’t go into a major recession.

01:31:39:13 – 01:32:26:15
Marc Stern
And that’s where I think I think that’s where we’re going to end up in somewhat of a minor recession, which will have a positive effect on certain things in our industry. For example, rents. Landlords get very scared when there is a recession, and especially if they’ve got vacancies in their strip centers. So I think there’s a very good possibility that if there is somewhat of a recession and it doesn’t have to be a big one, that you’re going to see rents come down in a lot of communities, you’re going to see landlords be much more amenable to giving long term leases to good, solid businesses like the laundry business, which can be a staple or

01:32:26:16 – 01:32:46:05
Marc Stern
even an anchor in some of these strip centers. So I think that could be a bit of a silver lining, if I’m correct. And the recession is not too deep, but I think there will be some sort of a recession. But again, I don’t think it’s going to be a killer.

01:32:46:05 – 01:33:10:20
Jordan Berry
Yeah, well, that’s good. That’s good. I know We will see. I mean, I think that like you said, I mean, there’s just so many variables that factor into this. And I think the Fed’s been working really hard to try to bring in bring us into that soft landing and, you know, navigate the they’re walking like a fine line, right, of trying to you know, slow things down but not keep, you know, make them come crashing down on us.

01:33:11:03 – 01:33:15:18
Jordan Berry
It’s a tough, tough one to play. I like your like your faith in the Fed.

01:33:16:16 – 01:33:21:06
Marc Stern
I don’t know if I have that much faith in the Fed. We we don’t really have a choice.

01:33:21:22 – 01:33:37:12
Jordan Berry
We don’t. We don’t. That’s this is the this is the economy. We live in here. You’re right. Okay, Well, listen, I mean, there’s a lot of a lot of obstacles potentially facing us. I mean, can I just ask you a question?

01:33:37:19 – 01:33:38:03
Marc Stern
Sure.

01:33:39:04 – 01:34:00:15
Jordan Berry
Is is now is now a good time to be getting into this industry or or or not? Should we wait for interest rates come down? Should we wait for more inventory to come on the market? I’ve seen a lot of like low inventory on the market right now, too. What’s your thought on timing in terms of getting into this business?

01:34:00:16 – 01:34:32:21
Marc Stern
I mean, you know, it’s that’s a tough question. Interest rates are going to continue to go up for another couple of months, I think. So if you can lock down a rate now, do it. Don’t forget anything that you’re paying for now, whether it’s higher interest rates, higher equipment costs, construction costs, you’ve got to be able to price yourself in your market so that you can be competitive and still bring money to the bottom line.

01:34:33:07 – 01:34:58:20
Marc Stern
So I think if the opportunity is there, if you can buy an existing store at the right price, maybe it’s one of these older stores, as we like to call them, zombie maps. But it’s got good bones and it’s in a good area. You should do it if you’re in business and you have to retool because your equipment’s old and it’s inefficient, you should do it, you know, How much are you spending on as a percentage of utilities?

01:34:59:00 – 01:35:27:11
Marc Stern
Whereas if you bought new equipment that would drop, you know, five or ten percentage points. That all goes to the bottom line. So I think you have to recognize the opportunity. And if it’s there and it’s a good opportunity, you need to pull the trigger because as we stated earlier, the business will still come. It’s how well you manage and run it will bring what will determine comes to the bottom line.

01:35:27:11 – 01:35:38:04
Marc Stern
So, yes, I think now, even though you got some of these headwinds in front of you, I do think if the timing I think the timing is right, if you’ve got the right opportunity.

01:35:39:20 – 01:36:00:04
Jordan Berry
Yeah, I just I want to take a second to apologize to those of you who are listening to this two or three months down the line who are now in the higher interest. But you know what? Let that be a lesson to you that you should have been listening to this podcast, you know, a long time ago. So, you know, could have could have gone right to the bottom line.

01:36:00:04 – 01:36:23:00
Jordan Berry
Listen to this episode when it came out. No, just kidding. Yeah. I mean, I think yeah, I think you’re right. And and, you know, like, interest rates are scary, rising costs are scary, but kind of what you’re saying from from what I, if I understand you correctly, is, listen, this is a business and business is numbers. So make sure you’re making the numbers work.

01:36:23:00 – 01:36:29:03
Jordan Berry
If the numbers work, move forward. If the numbers don’t work, don’t move forward or figure out how to make them work, right?

01:36:29:14 – 01:36:50:04
Marc Stern
That’s right. And, you know, in our business, we see a lot of projections by the customer. And if we don’t think they’re right, we’ll tell the customer. And, you know, I’ve told customers in the past, don’t do this project for whatever reason. We don’t want somebody to get into the business and fail. That’s the last thing anybody wants.

01:36:50:04 – 01:37:10:16
Marc Stern
That’s the last thing the customer wants. You know, you’re spending good money on this. You want it to be successful. So again, my my answer to your question is do it. If the opportunity is correct and all your due diligence shows that this thing will make money, then you should do it, whether it’s an acquisition or retool or new store.

01:37:11:17 – 01:37:32:05
Jordan Berry
Yeah, And this is you know, this is not a sponsored podcast or anything by Jason. Funny, but it is one of the reasons that I suggest that if you’re buying your first laundromat, it makes a lot of sense to partner with a lend a Laundromat specific lender because they’re bringing that expertise. And I always say, Hey, look, you got a lot of people on your team to help you.

01:37:32:10 – 01:37:58:07
Jordan Berry
You know, buy a business, run a business, be successful. But only one really is putting their money where their mouth is. And that’s your lender, Right. And your lender does not want you to lose money because then they lose money or they at least don’t make money. And so there’s a lot of value that when you partner with a lender who’s not only giving you money, but also has the knowledge and resources in the industry to make sure you’re getting it right ways.

01:37:58:09 – 01:38:32:03
Marc Stern
We’ve always said, and I don’t want to do like you said, we’re not sponsoring this, but we’re business partners. We’re not money lenders because many, many, many of our customers are repeat customers and they come back to us because we’re partners with them and we’ve helped them grow. So that is a very true statement. No lender wants to have a bad loan, but we do a lot of due diligence with our customers to make sure that whatever they’re investing their money in and we’re investing in them, that it’s successful.

01:38:33:06 – 01:38:57:07
Jordan Berry
Yeah, yeah, yeah. And I like that. I like that mindset. Okay. I want to talk about in a second here, what are some opportunities that we should be looking for and looking at heading into 2023 as long matters? But before we you know, get all rainbows and sunshine and you know, that is there is another obstacle. Let’s stay negative for a second.

01:38:57:07 – 01:39:05:11
Jordan Berry
Are there any other obstacles that we need to be aware of coming down the pipeline in 2023? I think you’re right that we need anymore, but.

01:39:05:15 – 01:39:25:19
Marc Stern
We don’t need anymore, that’s for damn sure. But I do think they’re pretty much the same ones that we identified last year, but some of them have abated a little bit. Some of them have taken a few steps back. They’ve slowed up a little bit. Like I said, I think equipment pricing has slowed up a little bit. Construction cost has come down a little bit.

01:39:26:00 – 01:39:48:16
Marc Stern
Unfortunately, we’re on the side of interest rates that continue to go up. But they also, as we get into this year, if I’m right, are going to slow up and they’re going to stop, take a pause and eventually start to come back down. So, yeah, I think that’s the negative. The positive is still it’s a it’s a damn good industry.

01:39:48:22 – 01:40:19:18
Marc Stern
You can make good make a good return on your investment. I still think there’s opportunities out there if you’re find a good location and and a let’s say a willing landlord or reasonable landlord, you can make a good deal on the lease. Don’t forget, you live with the landlord for a long, long time. So it’s it’s a positive to have a good relationship with your landlord and to have a good long term lease the lender you get rid of after a period of time.

01:40:19:18 – 01:40:46:05
Marc Stern
But the landlord and your customers, they are there forever. So you want to have a good rapport with your landlord and you want to be able to make a good deal. So I think you’re going to continue to see or you will see some good opportunities from landlords. And as I said earlier, I think there’s still plenty of these existing laundries that are older laundries that may be owned by older people who are thinking of retiring.

01:40:46:06 – 01:41:13:06
Marc Stern
And now the business, you can get some good opportunities to pick up some of those stores and then it’s up to you as the new owner to rejuvenate it, put money into it, buy new equipment, spruce it up, make it a modern laundry. Today, with social media, it’s easy to get the word out that you’ve got a great mousetrap and you just have to work it right to bring the people in.

01:41:13:06 – 01:41:37:01
Jordan Berry
Yeah, Yeah. We can reach people easier, cheaper, quicker than ever before through some of the social channels and some of the advertising platforms that are available to us. And I just had a really great question for you that followed up on that. And it you know, I’m getting old over here and you know how that goes. If it comes back, I’ll I’ll swing back around to it.

01:41:37:01 – 01:42:04:16
Jordan Berry
But don’t hold your breath on that one, okay? I mean, oh, I know what it was. I look at me, I’m like young and spry again. Are you seeing. Okay, so. So I do a ton of consulting, kind of all over all over the place. But I’m wondering from your perspective, are you seeing inventory being low right now in terms of laundromats for sale on the market?

01:42:05:11 – 01:42:12:11
Jordan Berry
That seems to be a big struggle that I’m seeing from a lot of my clients is finding an actual deal to buy that.

01:42:12:11 – 01:42:48:01
Marc Stern
That’s you know, California is the mega mecca of laundromat sales. No other state has the turnover that your state has, and there’s always not enough inventory for every one storage for sale. We got ten people looking at the rest of the country, you know, is not as active in the acquisition area as as the state of California, although there are plenty Florida, New York, the other large states, Illinois, Texas.

01:42:48:01 – 01:43:16:09
Marc Stern
Of course, these stores have these states all have stores for sale. And I think we’re still faced with the same problem that we’re always faced with. Not enough good stores for sale and a lot of people looking. So I don’t think that’s ever going to change. I’ve always heard that throughout my 30 year career in this business, you know, we got a lot of people out there looking, but not a not a lot of inventory.

01:43:17:16 – 01:43:38:11
Jordan Berry
Yeah, Yeah. And I mean, that seems to be one of the big bottlenecks from a lot of my consulting clients who are trying to get into this business and are just struggling to find Yeah, to find those deals. It’s tough. Okay. I was just curious what you were seeing on that. Okay. I think we’ve been like dark and depressing enough.

01:43:38:11 – 01:44:16:12
Jordan Berry
We’ve got rising utility costs, rising interest rates, we’ve got lots of hurdles and obstacles to overcome, trying to figure out how to navigate raising prices, all that stuff. So let’s go rainbows and sunshine a little bit. You’re talking to a lot of owners, like I said, all over the place, the ones who are who are navigating all of these changes over the last year, year and a half or so, who are navigating a couple of years, going back to, you know, COVID even, who are navigating all of these things well, what are they doing differently or what are they doing well to help them navigate?

01:44:16:12 – 01:44:37:18
Marc Stern
I think the one thing they all have in common is a positive outlook. They don’t look at the fact that it’s costing them more to borrow money or buy equipment. They’re looking at it as that This is my business. This is one of the issues that you have when you own a business. But the bottom line is it’s still a good business.

01:44:37:18 – 01:45:05:18
Marc Stern
I still have customers coming in every day. I still have that repetitive business. I’ve been able to expand my business through Wash and fold or pickup and delivery. You know, one of the things we haven’t really talked about it, but one of the things that happened during the pandemic was wash and fold and pickup and delivery skyrocketed. And it hasn’t really dropped off that much for their owners that really embraced it and are using it.

01:45:06:05 – 01:45:40:16
Marc Stern
It’s terrific business. You make a lot more in that part of the business than you do when the customer walks in and is doing the laundry themselves. So I think that the owners are generally, even though we’re in some tough times, I think they’re generally optimistic about this because again, this is a blip. This is not going to last forever, just as we’re going to start to see prices settle down with construction and with equipment, the interest rates are going to drop back down.

01:45:40:16 – 01:45:58:15
Marc Stern
And then a year or two from now, we’re going to be talking and that rate is going to be somewhere where it’s supposed to be the prime rate, somewhere in the 5 to 6 range, which is where it was pre-pandemic. So I think you have to look at every business has cycles. Every business has an ebb and flow.

01:45:58:15 – 01:46:22:05
Marc Stern
Nobody always goes up and nobody always goes down. You always go down, You’re out of business. So I think you have to, as a business owner, you have to realize that this is just a blip in the business cycle. It’s going to get better. It’s already better than it was a few months ago for some parts of our of the headwinds that we have.

01:46:22:14 – 01:46:24:15
Marc Stern
And I think that’s the way you got to look at it.

01:46:26:10 – 01:46:45:18
Jordan Berry
Yeah, absolutely. And and it’s easy to get caught up in that, you know, the way things are now or the way things are always going to be kind of thinking, right. It’s really easy to get caught up in that because, you know, it’s just what we’re experiencing now. But having that bigger picture, having that bigger perspective is is critical.

01:46:45:18 – 01:47:15:16
Jordan Berry
And I would say too, like during the during the the tougher times, the more turbulent times, like maybe we’ve been in for a little while now, in some respects it’s, you know, have that positive outlook is huge to continue to push forward because you know what I see too, it kind of building off what you said is a lot of the successful owners are forging forward right now, not hurtling up and, you know, getting completely defensive.

01:47:15:23 – 01:47:46:08
Jordan Berry
But what I also see them doing is being very diligent about what they’re doing, being very diligent about knowing their costs and what they need to charge in order to cover those costs. And being very diligent in the way that they roll out new services. If they’re going to add a wash drive folder, they’re trying to expand it, or if they’re going to add a pickup and delivery, if they’re trying to expand it, just being more diligent about keeping an eye on all of those things so that they can maximize the business that they do have right now.

01:47:46:08 – 01:47:54:21
Jordan Berry
So not being defensive but, you know, being offensive, but also being diligent about keeping an eye on your business right now.

01:47:55:14 – 01:47:58:08
Marc Stern
Yeah, I agree with I agree with that. Good advice.

01:48:00:01 – 01:48:35:20
Jordan Berry
Thank you. Appreciate that. It’s a lot coming from you. Okay. So, I mean, we we’re moving into 2023. We’ve got a lot to be thinking about. Lots a lot to be navigating. One of the things one of the reasons I launch this podcast, one of the reasons I love having you on and your, you know, three, three guest on here is because, you know, when we’re kind of helping each other and we’re talking about some of these issues and stuff, we can all kind of help navigate these things, you know, together.

01:48:36:13 – 01:49:08:00
Jordan Berry
And so I do appreciate you coming on there. I wanted to you’re, you know, Eastern fun and you guys are a lending company. So I wanted to go into that just a little bit and see what are you seeing on the lending side? What are some maybe you know, and this is you know, just to kind of preface all this, this is not any specific advice or anything, but what what are some of the options that are out there for laundromat owners, you know, for trying to buy our businesses or business and real estate or new equipment, some of that stuff?

01:49:08:00 – 01:49:09:19
Jordan Berry
What what should we be looking out for right now?

01:49:09:23 – 01:49:35:16
Marc Stern
Right. Well, you know, we are a bank owned company, so we’re a direct lender. We’re not a broker. So the purchasing of equipment or building a new store, that’s something we’ve been doing for over 25 years. The real new part of the business and that’s a new something that we got into several years ago, has to do with real estate.

01:49:36:07 – 01:50:03:23
Marc Stern
Every body looking for a laundry to buy. Not everybody, but most everyone would love to buy the real estate and the laundry. And so that’s like the now in the best of all worlds, because you’re your own landlord, you don’t have to enter some third party on a deal with the landlord. So those are very hard laundries to find with the real estate, but they’re out there.

01:50:04:05 – 01:50:39:09
Marc Stern
And one of the things that we’ve done over the past few years is we’ve gotten associated with the SBA under the SBA 504 program. And under this program, if you occupied 51% or more of the building, you can qualify for it. And the beautiful thing about the SBA is it’s government money. So under this program, the borrower either has to put ten or 20% down somewhere in between, depending on if they’re been in the business before or not.

01:50:39:18 – 01:51:09:14
Marc Stern
We’re in for 50%. This is all based on the appraised value of the real estate. And the SBA is in for 30 to 40%. The beautiful thing is that the SBA will give you a 25 year fully amortize loan at a very low rate. Today, their rate is 6.3%, which is far better than any bank, including our bank, that we could give out for real estate during the pandemic.

01:51:09:14 – 01:51:18:20
Marc Stern
Believe it or not, the SBA rate was under 3%, fixed for 25 years. No, no, just, you know, nothing Crazy.

01:51:18:20 – 01:51:19:09
Jordan Berry
Crazy.

01:51:19:14 – 01:51:43:09
Marc Stern
So their rates do fluctuate with the ten year treasuries. They’re a little higher now. They’ll probably settle back somewhere in the low fives when things calm down. And then our rates on real estate, we’re in the sevens. We’ll probably settle back into the sixes. So when you combine up you’re going to have today, you’ll have a rate somewhere in the sevens which is fixed.

01:51:43:09 – 01:52:05:12
Marc Stern
And that’s not such a bad real estate loan in today’s market. When rates start to fall back, you’ll probably be able to get something in the high fives or low sixes again for a 25 year loan. That’s a pretty good, pretty good rate and it’s fully amortized. So that means you pay principal and interest right from the get go.

01:52:06:05 – 01:52:36:23
Marc Stern
So though that’s a very good program, I think that you will, you know, during this year, if I’m right and if we are in a little bit of a recession, you’re already see that real estate prices have plateaued and they’ve come back down. So if you can find that good piece of real estate where you can either build a laundry on it or buy an existing building and put a laundry in it or buy a laundry that owns the property, you should try to do it.

01:52:36:23 – 01:52:56:21
Marc Stern
And this the way we do it is through this SBA 504 program, which has been a very attractive program, and it’s offered all over the country. So no matter if you’re in Paducah, Kentucky, or you’re in Los Angeles, California, you can do it and we can help you.

01:52:56:21 – 01:53:13:09
Jordan Berry
Yes, love that. Love that, love that. And I think probably a better option if you find the laundromat with the real estate is just send it to me and so now, oh, man, I love the laundromat real estate combo play.

01:53:13:09 – 01:53:14:11
Marc Stern
I think it’s great play.

01:53:14:12 – 01:53:37:01
Jordan Berry
It’s awesome. You can do some really cool stuff with it. So. Yeah, for sure. And that lone Holy cow, man, that’s. It’s. It’s so insane what you can get with that. 504 So definitely, if you find yourself in that boat, check out that loan option, you know, get in contact with Mark there and he’ll get you set up with somebody who can get you set up with that loan.

01:53:37:01 – 01:53:58:09
Jordan Berry
Okay. I mean, all right, we’re going into 2023 and we’re going full bore. Like the message I’m hearing is, yeah, there’s there’s some obstacles right now, but it just means we need to shift our game plan slightly a little bit right now. But you’re still very what is you’re still very bullish on on laundromats.

01:53:58:14 – 01:54:22:18
Marc Stern
It’s a great business. And I got some of this gray hair, so I’ve been through a few of these slowdowns or recessions, and the laundromat business has weathered it all and it works. And we know it works. And it’s been very successful for a lot of people. We’ve got a lot of customers that are second generation laundry owners.

01:54:23:04 – 01:54:40:19
Marc Stern
Family started it. My father or mother started it, and now the kids are in it. So it’s it’s there, the business is there, the opportunities are there, the rewards are there. You just gotta adjust your mindset a little bit when you’re into some of these headwinds.

01:54:41:18 – 01:54:59:18
Jordan Berry
Yeah, and I think this is a good opportunity for us to just say, Hey, you should always be looking at your mindset and how you need to adjust it because this, even though you know, there’s been some crazy things happening over the last year, year and a half, you know, that maybe haven’t happened in a while in our industry.

01:55:00:02 – 01:55:12:18
Jordan Berry
I mean, things are changing constantly, right? And when you get into a groove and you just stay there for decades, I mean, that’s when Yeah, that’s when you get into it. That’s where’s the the zombie map.

01:55:12:23 – 01:55:35:15
Marc Stern
Just you just set a mouthful, change changes constant. And if you don’t change, you’re in an industrial graveyard, you’re out of business. You must change with the opportunities and the and the realities that confront you. So I think that’s that’s a good point for everyone to remember. We’re in a little bit of a difficult time now, but it’s a blip.

01:55:35:18 – 01:55:47:03
Marc Stern
It’s not going to last forever. And if you have your mind set in such a manner, you will. You will weather the storm and you’ll come out a winner.

01:55:47:23 – 01:56:09:18
Jordan Berry
Yeah. All right. Let me ask you this kind of maybe last question. I don’t know. I don’t want to commit to it being the last because you might provoke something else. But maybe last question is somebody who’s looking to get into the business right now. Don’t own a laundromat yet. Where where’s the opportunity? Because there’s always opportunity, right?

01:56:09:18 – 01:56:23:19
Jordan Berry
Every every market has opportunity, every interest rate fluctuation has opportunity. There’s always opportunities. So where is the opportunity for people trying to get into the business right now?

01:56:24:02 – 01:56:42:15
Marc Stern
Well, I think it depends on how much money you want to commit to the business right now. First of all, you got to have cash. This is not a business that you can get in for 5000 bucks. You know, you have to have some money as a down payment on a store that you’re buying or a store that you’re building.

01:56:42:15 – 01:57:07:10
Marc Stern
If the opportunity, as we said earlier, if you find an existing laundry that maybe is a little bit rundown or maybe it’s not, maybe it’s just an owner who wants to get out if the opportunity is there and the numbers look good and the store has the potential or or or is already in its potential, that’s something you should seize the opportunity on.

01:57:07:15 – 01:57:44:08
Marc Stern
If you want to build the laundry and you have the cash to support that type of an investment. Again, I said it earlier, I think landlords are hungry now. I think, you know, the pandemic put some businesses out of business. There’s vacancies. I’m working with a customer on the East Coast. She just got a terrific rent around $5.15 a square foot, which, you know, is just unbelievable for where she is and what she’s going to be doing.

01:57:44:19 – 01:58:12:00
Marc Stern
So you just have to find these opportunities and it might take a little longer. I think the biggest thing that I my advice to people who are just thinking of getting into the industry is be patient, because some of these things just take time. You might go and look at 20 laundries and none of them look good. And then the person you’re working with two weeks later calls you and bingo, there’s the winner.

01:58:12:08 – 01:58:41:09
Marc Stern
Or you’re looking for space to build a laundry and you just can’t seem to find it. Then all of a sudden a broker comes up and says, Hey, I found another location, go look at it, and there’s the winner. So you got to be patient. It’s a big investment when you get into it. And if you do the right due diligence and you are patient, if you have to be patient to do it, then you should be fine.

01:58:41:09 – 01:59:07:00
Jordan Berry
Yeah. And that’s been that’s been my the mantra I’ve been offering up to consulting clients is, hey, right now you have to be patient. But you also, if you’re really trying to get in, you should be proactive, right? Proactive in, in, in the actions that you take. But patient in the response because all you can control right now is what actions you take and how much of them you take out.

01:59:07:00 – 01:59:12:17
Jordan Berry
And then but if you’re taking the action, results will come. They just might take a little longer than you.

01:59:12:17 – 01:59:41:13
Marc Stern
Yeah, that’s a good point about being proactive. You know, you got to do things for yourself. You have other people, whether it’s your broker, your consultant, your lender, they’ll all help you. But you need to be the proactive one. You need to be on the phone pushing them. Hey, you got anything new driving around looking for yourself, visiting stores in the market that you’re interested in looking for possible retail spaces that are open.

01:59:41:18 – 02:00:01:03
Marc Stern
You do need to do it yourself. If you’re going to do it, how fast you’re going to get those kind of results. But a proactive person is going to have a and you’ll find it quicker and B, you’ll learn a lot. You’ll see what is good and what is bad and where you should be and where you shouldn’t be.

02:00:02:13 – 02:00:23:05
Jordan Berry
Yeah, absolutely. And just in case anybody out there, I mean, those are some great ideas in case anybody out there is okay, I’ll take the action. But I don’t know what to take. I’m going to put a link in the description below on YouTube or on the show notes on my resource accounts I show went online to the part one of the free How to Buy Your First Laundromat course, which is all about that.

02:00:23:07 – 02:00:44:09
Jordan Berry
The three best ways that are working right now that I’ve found to find you anonymous, I’ll put a link there in case you want to go check that out and get started taking some action on finding those. Okay. Well, I mean, listen, we can’t leave a lot about owners, current loan managers hanging. So where’s the opportunity for current laundromat owners right now?

02:00:45:15 – 02:01:10:09
Marc Stern
Well, I think they are. They have same opportunity as a new person, either to find an existing store that you can in your market that you want to purchase and rehab, retool or find a new location or just concentrate on your business today. How can you make your laundry better? What do you need to do to fight some of these headwinds?

02:01:10:13 – 02:01:34:09
Marc Stern
What do you need to do to keep your customer base? You know, sometimes the best thing is just concentrating on your own business had better, better what you have. And then as the cycle starts to change a little bit, then you start to expand. So I think you have you have several different opportunities today as a laundry owner and just depends on which path you want to go down.

02:01:35:06 – 02:02:04:14
Jordan Berry
Yeah, I love that you got the opportunity to expand or improve right now. And you know, one of the one of the things that I think is true well, you can tell me if it’s not true, but I think, you know, one of the one of the silver linings to turbulent times, difficult times change in times is it gives us an opportunity if you take advantage of it, to really get into your business and really hone things and refine things and streamline things.

02:02:05:03 – 02:02:31:01
Jordan Berry
And that’s going to obviously benefit your your business. Right? But the other thing that’s going to do is it’s going to give you a lot of clarity to where if you do decide to expand and you go get another one, you’re going to have refined systems and refined operating procedures and refined business model that’s going to be able that you can be able to transplant to your next location and you’re going to be off and running.

02:02:31:01 – 02:02:49:12
Jordan Berry
And I think one of the mistakes I made early on when I bought my second one is I hadn’t hadn’t nailed down the operations and everything on my first one yet. And so when I added a second one, it made it that much more complicated that now I was trying to juggle two different ones. Right. So good point on that.

02:02:50:00 – 02:02:55:19
Marc Stern
Improve what you got today will benefit you and tomorrow?

02:02:55:19 – 02:03:20:23
Jordan Berry
Definitely. Yeah. Forever. Yeah. Ongoing. It’s like a it’s like a dividend paying investment there. It’ll just keep paying dividends. Awesome. Okay, well, this has been great. I think it’s super helpful for me. Hopefully it’s super helpful for a lot of people listening to this. Really appreciate you taking the time to jump on here. Kind of in the middle of your day and and share with us this wisdom coming up, 2023, helping us to navigate.

02:03:21:06 – 02:03:35:20
Jordan Berry
Last question, I think for real this time I have for you is if somebody is interested in talk about maybe the five or four loan or just lending in general, what’s the best? Where can you point them to to have a conversation with you or Eastern five?

02:03:35:20 – 02:04:01:22
Marc Stern
Oh, they should email me. You can email me at M Stern at Eastern funding dot com. That’s the best way to reach me. And then we’ll set up an appointment to go over that program really in-depth and fully get a good flavor for it takes 20 or 30 minutes, so it’s not a five minute discussion. So I’m more than willing to set that time aside to help people.

02:04:02:23 – 02:04:31:01
Marc Stern
That’s what I’ve been doing for 33 years in this business and I enjoy it and be more than happy to discuss that or anything else in the industry. It doesn’t necessarily have to be related to our lending. I’ve been fortunate to have traveled all over the country since I’ve been in this business, and there’s only a very few states that I haven’t been in, So I think I can lend some help to a lot of folks if they need it, whether it’s for lending five or four program.

02:04:31:01 – 02:04:33:15
Marc Stern
But just talking about the industry like we did today.

02:04:34:17 – 02:04:51:02
Jordan Berry
Love it. Argue you are you’re awesome. I appreciate it. I appreciate once again and well you know I’m going to I’m going to say you are currently awesome, but I’m reserving judgment on that for this upcoming one. And I’ll tell you next year how.

02:04:51:05 – 02:04:53:00
Marc Stern
You put a lot of pressure on me.

02:04:53:00 – 02:05:10:14
Jordan Berry
Yeah, you know what? You did it to yourself by being so great on the last $1. I yeah. Now I really appreciate it and I think it is going to be helpful helping all of us kind of navigate, you know, the year going forward. So and you know what? I’m just going to say you’re awesome no matter how it plays out this year.

02:05:10:15 – 02:05:17:23
Marc Stern
I appreciate it. We might have to have a fourth peat sometime in the middle of the year in case things are right.

02:05:18:14 – 02:05:42:07
Jordan Berry
Adjust. Yeah. Course correction. Course correction. Yeah, yeah. Well, I’ll be open to that. And if we need to, we’ll put it on the books for sure, but feel free to reach out to Mark. I’ll put the his email address in case you missed it. It’s down below in the description on YouTube and it’s at the show notes on my research accounts I show 109 Mark, thank you again and I will have you on at least next year and maybe middle this year.

02:05:42:07 – 02:05:44:06
Marc Stern
Well. Supervisor Thank you, Jordan.