Eastern Funding’s Marc Stern is about to get you pumped about making moves in the laundromat industry! The theme of this show is “opportunities” and Marc goes into depth on tons of reasons that right now is a great time to buy a laundromat, refinance a laundromat, purchase new equipment, renegotiate your lease, and much more! 

This episode is jam packed with Marc’s decades worth of wisdom for any laundromat owner or future laundromat owner.  Even if you’re not planning on financing anything in the near future, there is so much in this episode that will help you elevate your business and your mindset to sky-high levels!

Take out your notepad and pen because today we’re talking with Marc about:

  • Laundromats as essential businesses
  • The Federal Reserve and Interest Rates
  • Negotiating with Landlords
  • Laundromats coming up for sale soon
  • Making deals with equipment manufacturers and distributors
  • When to retool with new equipment
  • Zombiemats
  • SBA 504 loans
  • Due diligence

And So. Much. More!

Listen To The Podcast Here

Watch The Podcast Here

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Episode Transcript

what’s up everybody it’s jordan with the
london man resource podcast this is show
number 31 and i
am pumped that you’re here today because
today is a huge
show today we have on a very very
special guest
the vice president executive vice
president
whenever you put executive in front of a
title you know it’s a big deal
executive vice president in charge of
lending at
eastern funding if you’re not familiar
with eastern funding they’re kind of the
behemoth of the laundromat
lending industry so if you’re looking
for a loan
chances are you’ve heard of these guys
um
mark stern from eastern funding is
on the show today and i will just
unbiased
i will just tell you that this is an
incredible episode
and i never thought that i would be so
excited about talking about
lending uh as i was after getting off
this conversation with mark it’s
awesome and you are going to see
you’re just going to learn so much i
mean i learned a ton
and he just kind of is like a hype man
for the industry
kind of inadvertently but i got really
really excited even more excited than i
normally
am about the laundromat industry and
about where we’re at right now
and the opportunities that are available
if there’s
one theme running throughout this whole
episode
it’s the theme of opportunities and he
really drives home this point you’re
gonna be so
pumped make sure you stay tuned all the
way through to the end at the very end
i’ll bring home some takeaways
that i took away and we’ll chat for just
a few
seconds at the end there so make sure
you stay all the way
through the end okay real quick i just
want a couple of quick things
number one get on the forums make sure
every week you’re asking a question
you’re answering a question you’re
meeting people on there
there’s people introducing themselves
new members on the new members forum
and there’s i’ve been following the saga
i’ve been enraptured by it is that a
word i’m gonna say it’s a word
i’ve been super enthralled and it’s got
me in its talons
uh tom donnelly he’s the one who
he went out and did a bunch of mailers
found a bunch of laundromats for sale
he had so many he didn’t know what to do
with them so some of you guys took some
off his hand straight there on the
forums which was awesome to see
and now he is putting in an offer on one
and needs some help with it so get on
the forums and help tom out uh
there’s there’s so much going on and in
particular we have a financing forum and
that might be relevant after today so
get in there
if you got questions that come up get in
that financing form
lottermanresource.com
forums click on the financing form and
go ask your financing questions
and maybe i’ll see if mark or one of his
team will be able to jump on the forum
and help you answer some of those
questions and facilitate some of those
discussions
so make sure you’re utilizing that
that’s awesome i want to encourage you
guys
keep booking those video zoom coaching
calls
so cool they’re brand new we’ve only
been doing it for like two weeks but you
guys have been jumping on i’ve been
doing them it’s been such a huge blast
i’m recording them
i’m gonna make them available for uh
for members to watch here uh in the near
future
so if that’s something that interests
you man laundromat resource.com
coaching you can always just book the
regular coaching call for free
uh it’s free of charge it’s not recorded
and i can help you out with your
questions but if you want to be a part
of this
it’s been a ton of fun i’ve really been
loving it so
lot of my resource dot com coaching uh
click book a call and then choose that
zoom coaching call
and we’ll jump on a zoom call and we’ll
record it it’ll be a lot of fun and
you’ll get a lot
of useful and valuable information so
make sure you do that
last thing i want to tell you before we
jump into this mark i don’t want to take
up too much time because
this is so good but the last thing i
want to tell you
is something awesome is happening
i got a phone call earlier last week
from dave the laundromat millionaire
men’s you may
recognize him from show number two still
the most downloaded episode of the
laundromat resource podcast
so if you haven’t listened to that i
will link it in the show notes
or in the description down below if
you’re on youtube um but
dave the laundrette millionaire men’s
gave me a call last week and said hey i
want to do
a live q a i think we should do it
together
what do you think and i said if the
laundromat millionaire is doing
something and wants me to be a part of
it i am
in i’m doing it i’m so excited i can’t
wait
so we are doing it so mark your calendar
december
2nd that’s a wednesday december 2nd
at 2020 in case you listen to this way
in the future
you might have missed it but it’s
probably archived somewhere so look for
it
um but yeah december 2nd
2020 four o’clock eastern time
or if you’re on the best coast one
o’clock
pacific time and sorry throwing a little
shade on the east coast over there uh
but uh four eastern one pacific we’re
doing a live
q a and man i will say that
i if i wasn’t being a part of it i would
i would be there for it because dave is
like he’s just
one of the most knowledgeable and giving
guys that i know and i’m just
i’m super honored he asked me to be a
part of it with him uh but really i’m
there just to kind of bask in his glory
and learn from his wisdom so
um join me and us uh on there i’ll put a
link down below it’s gonna be on
dave’s uh facebook page laundromat
millionaire facebook page we’re gonna do
it live on facebook this time we’re
planning on doing more in the future
and we’re gonna do them in different
venues so make sure you stay
tuned and pay attention to that but jump
on this first one
this is like one of those events where
you’re gonna be able to tell your
grandkids
you were at the first live q a
with the laundromat millionaire and you
know some other guy
me um but uh hey make sure you you jump
on you
come be a part of it ask your questions
you can always ask questions
uh beforehand on any of either of our
social medias or on the website or
wherever
or in the forums we’re gonna you know
pull some of the questions from the
forums too
um so make sure you get those questions
in but if you can be a part of it live
come be a part of it live and if you’re
finding value from this podcast if you
love
dave’s uh episode of this podcast you
love what he’s doing on facebook and the
different facebook groups
hey do us a favor and share this help us
get this out to some other people
because we want as
many people as would find value from
this to be there as possible
so december 2nd link is down below or go
to the laundromat millionaire
facebook page and you can join the event
from there it’s going to be
awesome we’re going to have a ton of fun
and there’s going to be a ton of
value for you in there you’re gonna
learn a lot i guarantee it because dave
at the very least has got a lot to teach
us all
all right cool let’s jump into this with
mark stern the executive vice president
in charge of
lending at eastern funding
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the description
okay mark how are you doing thanks for
coming on the show
doing great jordan nice to be here
appreciate the invite
yeah you know i’ve been looking forward
to uh having you on here for
a long time since we uh got connected so
i’m
i’m really excited about today i know
that i’m gonna learn a lot i’m very
interested in
in what you guys are doing and what you
have to say about it i know
a lot of the audience is going to be
super interested in it so thank you i
appreciate you taking the time
to uh to come on my pleasure well hey
real quick before we jump into uh
into lending can you tell us a little
bit about you and you know your
background and who you are and how you
got here
sure i’ve been in the laundry business
for
32 years now i hate to say that because
when i started i was one of the young
bucks in the industry and now i’m one of
the old codgers
it’s funny how that happens huh i’ve
started
uh with one of the manufacturers here
and worked there
uh for 18 years i was the chief
operating officer there and also
president of their captive finance
company
i left there in 2005 i believe it was
and joined eastern uh maybe it was 2006
joined eastern in 2007
and have been here since then again
doing basically the same thing i was
doing just got rid of the manufacturing
side and
really concentrating mostly on the
lending which i’ve
been doing as i said for over 30 years
now
wow that’s pretty awesome and i mean
just the uh
the history that you have in in the
industry and in the lending side of it
in particular
is pretty fascinating yeah it’s been a
great business and it’s certainly
provided a great uh background and
and great opportunity for me i’ve
traveled all over the country
visited laundries in almost every state
have customers in almost every state and
it’s really nice when you go into a city
and
and you know that you can pick up the
phone or go buy a laundry and you know
somebody there so it’s
it’s been a great experience yeah that
is pretty cool
that is pretty cool to be so connected
uh in the business and
and it’s a pretty cool community to be
connected
with too there’s you know a lot of my
owners are
you know we’re a unique bunch uh but i
think a good bunch too so
yeah and it’s it’s really been very
interesting
because you know really these are owner
operators
we’re not like a franchise we’re not
like some of these big you know
mcdonald’s where a guy may own
hundreds of mcdonald’s we have some big
uh multi-store operators
but they’re hands-on and being in the
hands-on business and working with
hands-on people
has been really great throughout my
career
yeah yeah very cool well hey
i’m i’m like kind of itching right now
to talk about i know that
right this point in time we’re in the
back end of 2020
right now and at this point time it’s
just a really unique
period of time in our country i guess in
our world’s history um
but i’m i’m kind of curious as we bring
it down to
sort of our level here in the laundromat
industry
i’m wondering if there are any unique
opportunities available to
laundromat owners uh you know from the
lending perspective
well there are jordan and you know i
want to just back up a few months
and go back to when this pandemic
started and it caught everybody by
surprise
and we were hearing from our customers
all over the country
you know what’s going to happen what do
you think is going to happen
everybody saw most everybody saw a drop
in their business
in march april and maybe even into may
and then things started to
come back a little bit we as a company
had a um
a webinar and we had almost 200 people
come on and we had a couple of laundry
owners talking about
how they were handling the pandemic the
industry as a whole
went out and hired a lobbyist and
we were part of it with some of the
manufacturers and we were
we were successful in getting the
laundry business deemed
an essential business so everybody’s
laundry
could stay open when most other
businesses were closed
and that was a terrific thing for the
industry
so fast forward you know we’ve kind of
we’re still in this pandemic
you know it seems to be maybe the second
wave as dr fauci predicted
um but the stores are open
most of the laundries that we have been
dealing with and the customers that i’ve
talked to
have seen their business come back if
not a hundred percent
95 percent um but there are some
definite opportunities out there right
now
uh i think that uh
you know one of the things that happened
right at the beginning of the pandemic
was
the federal reserve dropped the interest
rates
the vet the prime rate went down to 3.25
percent
a number that it was at back in the uh
depression or recession that we had in
2007
and eight uh we are a prime based lender
as are
the most of the people in this industry
so interest rates
have dropped that’s a good thing that
makes buying equipment
very inexpensive when you put in you
know
interest rates that are in the fives or
sixes today
yeah i’m sure we’ll get there but i’m
really curious about that because
like you said i mean the the interest
rates are are
so low and you know i bought equipment
i don’t know maybe like five six seven
years ago now something like that
and interest rates were pretty low then
and i was it’s a you know it’s
prime based loan also and i was like man
i don’t
i don’t know is it going to go up high
and i never anticipated it being
where it’s at now nobody did yeah yeah
right
yeah i don’t think anybody did it cause
caught everybody by surprise
but there was it was needed to keep the
economy going especially during the
shutdown
and if you listen to the fed today
these rates are not moving anytime fast
i think we’re going to see these low
rates for at least the next
12 24 maybe even 36 months
so that’s an opportunity that’s an
opportunity for existing laundry owners
who need equipment to go out and buy it
for people who are
getting into the business uh to
to uh get an acquisition loan at a rate
that’s favorable
that that’s a big opportunity right now
and we’re seeing it
we’re we’re getting calls from customers
who either want to retool
or new people trying to get into this
business or existing customers who are
going out to buy another laundry they’re
they’re calling us and and we’re
we’re active things are definitely going
on yeah i mean uh
it’s you know it’s parallel to
kind of the real estate i mean the
interest rates are obviously set up
different everything but
in terms of supply and demand like right
now from like the brokerage side for
example there’s probably
50 plus buyers for every laundromat oh
yeah inventory is just not
able to keep up with the demand right
now and i think a big part of that is
because of the low interest rates
yeah that’s that’s definitely true
certain parts of the country are more
active than others
where you are southern california is
definitely the most active
buy sell area in the country
uh for laundry businesses i mean it’s
just
it’s unbelievable how many stores you’ll
have one go up and like you said there’s
50 people prowling around trying to get
it get at that store especially if it’s
a good one
which also brings to
to mind another opportunity that’s going
on right now because
of what’s happened with the retail
market
landlords are now faced with vacancies
or with businesses that are teetering
and going out
getting ready to go out of business and
so the landlords
have just have come to the realization
that i’d rather have a tenant in there
who’s paying
who’s deemed an essential business than
one who’s not paying me
and so what’s happened is we’ve seen
rents
dropped throughout the country and
landlords being much
more amenable to talk to existing
uh laundry owners whose leases are about
to come up
for renewal at better rents or someone
who wants to build a new laundry
in a space that’s been vacant recently
because of the pandemic
so there’s another opportunity another
opportunity to find a good location
at a rent that’s below where it was 12
or 18 months ago
yeah and i i mean i can’t oh you know
over emphasize
how big of an opportunity that is
because the rent is going to be
your biggest expense or at least one of
them if not your biggest
expense and so if you’re able to lock in
a long-term rent at
a low rate right now that’s i mean
that’s a huge asset
in and of itself to you right there it’s
huge
and you know you with the finance
company usually get rid of us
in anywhere from five to ten years but
the landlord you live with
so if you can get a long-term lease
at a at a rent that is really
substantially less than it was 12 or or
24 months ago
it’s a very good opportunity yeah and i
see
i mean tell me what you think but i see
this as being
a point that we stick a pin in as
laundromat owners
going forward even you know post
pandemic where we can point back to this
and say hey
you know the the longevity and security
that laundromats as a tenant bring
to your rental real estate
that that’s a huge negotiating point for
us
even post pandemic where we can say hey
if something else happens
we’re going to be open still we’re going
to be paying rent while
some of these other retail locations are
not going to be able to remain open yeah
it’s a huge plus for our industry
and i remember in 2007 2008 we saw
something similar
where landlords prior to that were
riding high
pushing tenants around asking for absurd
rents and when
when it hit the fan in seven and eight
they
came to a reality that hey you know what
a tenant like this who’s gonna
especially if you’re building a store
and you’re investing a lot of money
in their property this is a long-term
tenant this is not a shoe store where
the guy wakes up one morning and says
i don’t really like the business anymore
and he throws you know his shoes in the
truck and he leaves
you can’t do that when our business so
you know we
we like to have the saying that
especially when you’ve paid for all this
infrastructure
you’ve got cement feet in that business
so you’re not getting up one morning and
saying well i think i’m going to walk
away
and landlords know that because they see
how much
a laundry and guy invests between the
new equipment
or remodel or just building a store from
scratch is an expensive project
yeah yeah and just for you know for the
the new or future investors out there
you know
that’s uh that’s a huge a perk of
a laundromat for uh for a landlord
um but it also just emphasizes how
important it is to get a
solid long-term lease right if you’re
gonna buy your first any laundromat but
especially your first laundromat
because if you don’t get a long-term
lease and the landlord changes
their mind well you can’t just throw
your equipment in the back of a truck
and move down the street
very easily it’s going to be very
expensive if
if not impossible so make sure you’re
getting
you know good long-term solid lease
under your belt if you don’t know what
that is
make sure you got somebody good in your
corner helping you figure that out
exactly that’s a that’s a
very good cut uh recommendation that
you’ve made
and there’s certain things within that
lease that need to be looked at
as well that anybody in the industry
uh can help you do and we we certainly
look at leases when we get deals in
and we give our comments back to the
tenant we like to
or to the customer we like to see that
lease before you signed it
because uh there are things in there
that are red flags and if you’re not
familiar with it
we can help point those out yeah which
is a huge
i mean in my opinion that’s a huge asset
of bringing someone like you and eastern
funding in
on financing your deal not just for the
money but also
i mean what you have 32 years of
experience in the industry and
when you start combining the rest of the
people you know at eastern funding
who’ve been doing this that’s a lot of
years of experience behind your purchase
looking at your lease
making sure your location is going to be
profitable because if it’s not
profitable
the owner’s not gonna be able to pay you
money so you want to ensure
right that owner is has the best
chance possible to you know have a
successful business absolutely the last
thing we want to do is
take back a store and the other thing
having so much experience because
other people in my in our company also
have a lot of experience
we know a lot of these landlords so you
know we
we can say oh yeah i know mr jones and
uh
we can deal with him and and help you
deal with them so
that’s one of the things that we as a
company provide
we’re not just the money lender we want
to be your business partner
uh i’ve got many many customers that i
started off
with them with one store and they have
three four five or six stores or more
and it’s just a good relationship
that we forge uh because we provide
we provide these extra services yeah
huge i mean i love that you just said
we don’t want to just be the money
lender we want to be your business
partner because that’s
especially somebody going in for the
first time i mean that’s what
that’s what i that’s what they need
right they need somebody who’s
you know you’re aligned with them you
succeed when they succeed and so
when you partner with them their chances
of success
are so much higher so i’m glad you said
that huge yeah
exactly and and that’s why we’ve been in
business so long
we we’re starting i think our 24th year
we wouldn’t be around that long if we
didn’t work in that
with that mantra we also did an
interesting
uh study on our own business 60
of our customers are repeat customers so
that says a lot that definitely says a
lot
you know it is as somebody who has
worked with various lenders on various
you know laundromat and real estate
deals you know when you find a good
lender you’re going to stick with a good
lender or somebody
partnering with you because when you get
a bad one i’ve had bad ones and when you
get a bad one
it’s it’s a better yeah it’s a bad one
so yeah definitely hurts so there joe so
the industry
this year was a uh definitely a tough
year for everybody
um i think going in i don’t want to be a
doomsday guy but going into 2021 i think
it’s going to be pretty much the same
until we get this vaccine out and people
get comfortable about socializing again
but our industry has withstood the storm
i mean and this was a major major storm
i’ve been through several recessions
here um
including as i mentioned earlier 2007
and eight and this was far worse
it came out of left field nobody knew
how to handle it
a country shut down for you know 30 days
plus
it was just it was tough but we as an
industry have weathered this storm and
and it just proves that this is a great
business um
and and so and there are opportunities
we’ve talked about a couple
low interest rates reduced rents
uh i think and i’ve seen i know this for
a fact there are a lot of stores
that are coming up for sale maybe
there’s older owners in there who just
don’t want to invest
anymore or the landlord’s looking to
renegotiate the lease and the owner
doesn’t want to
sign a long-term lease so if you can
find and they are out there a good
location to buy
now’s the time to do it and you know you
may have to
put in some extra money into the new
equipment but if the
infrastructure’s good the lease is going
to be
as good as you’re going to get at this
point in time
and you should be able to to make a good
deal
interest rates low equipment
manufacturers they want to sell
equipment right now so they’re making
deals too
so everything is in your favor now
whether you’re retooling
whether you’re a new investor whether
you’re existing customer going out to
buy a new location or build a new store
you got a lot of things working in your
favor right now
yeah i think you know not to be
underestimated again is those
the manufacturers opportunity right now
with them making deals and
wanting to move equipment i mean it’s
you know just like the rest of the
economy everybody’s trying to figure out
how to
keep keep money moving keep product
moving and
yeah so people are wheeling and dealing
all over the place so
not just landlords but equipment
manufacturers and
it’s a good opportunity to kind of take
a look at all of the
you know expenses that that you run up
against when you buy a laundromat
or retool a laundromat because there’s a
lot of opportunity
there to lock in low rates to get great
prices
and to save a lot of money and make your
roi shoot through the roof
exactly exactly and that’s the other
thing
you have money in the bank today what
are you getting in an interest rate
less than one half of one percent you
come into this business you’ve invested
money where are you going to get a 20 to
25
or better return on your money
especially right now
yes especially right now yeah so it’s
another
reason to strongly consider this
industry and
as we said you know there’s a lot of
things in in your favor right now
to do good stuff yeah i agree and and i
like your point
you know that there’s a lot of aging
owners right now there’s a lot of aging
stores right now and
you know the fact that this industry is
still by and large a mom and pop
industry almost you know almost
exclusively a mom and pop industry uh
in and of itself you know aside from all
these other opportunities you know that
that presents a lot of opportunities as
well because there’s a lot of
inefficiencies when there’s just mom and
pops
you know running and selling their their
businesses so
that’s very true and you know one of my
one of our colleagues brian grill
coined the phrase zombie mat and brian
has gone around the country over the
past
five six years talking about these older
stores that are just need to be updated
and if they’re not updated then they’re
going to go out of business
and so and it’s been true and we have
retooled
as a result of this there’s been a lot
of retooling going
out throughout the country um and
opportunities are there uh for everybody
let me let me ask you this question you
may not know the answer to this but i
just it just popped into my head so i
thought i’d run it by you
how how would an owner know
if it’s a good time to retool or not
that’s a good question um
we generally this laundry equipment
especially dryers can last a very long
time
uh laundry i’ve seen equipment out there
washers out there 20 plus years still
cranking still making money i’ve seen
dryers out there 30 plus years
still cranking and still making money
the time to consider it is usually
somewhere in my mind between 12 and 15
years because
at that point you’re starting to spend a
lot of money on repairs not to say that
you can’t do it
but you know if if you’re just replacing
relays
and and a door lock possibly as opposed
to
a motor and a bearing job which can be
very expensive
you can you can live live with it but
when you start to get into those more
expensive
things most people cannot do their own
bearing jobs
you have to go out and hire somebody to
do it it’s five six seven hundred
dollars a board goes
it’s a thousand dollars so these start
to become very expensive so
when your repair bills start to mount up
number one
then you have to look at your utility
cost because the equipment today
is so much more efficient than it was
10 or 15 or 20 years ago that if you’re
spending 25 to 30
on utilities and you buy new equipment
you can easily knock off seven to ten
percentage points
with the new equipment and utility
savings your
your hot water costs less your water
cost in general less
you know years ago nobody cared about
what it cost
for water water is a big component
you’re a laundry owner you know that in
california
yeah in california don’t even have one
really you know so
those are very very those are the two
things
when repair bills start to mount up
and you start to look at your utility
savings because any of these
manufacturers will come in and give you
a
they’ll go through your equipment and
tell you how much you can
save and we’ve seen it we look at pro
formas
and we look at utility bills so we see
the savings
but those two things when the equipment
bills go up
and when it’s time to check your
utilities and see how much you can save
then it’s time to retool because chances
are
when you do that retooling your
cost your equipment cost
your cost to me your finance cost is
paid
by usually one turn a day possibly more
and the other thing that that laundry
owners do
you can’t forget this when you retool a
store you should be increasing your
prices
because now you’ve got brand new
equipment and also
if you’ve retooled your store at that
point in time
and you have a long-term lease because
you wouldn’t do the retool unless you
have a long-term lease right the value
of your store
has just gone up tremendously
we generally look at values between
three and five times cash flow three
being this
on the lower end older equipment not a
great lease
and five being on the upper end in
southern california i’ve seen them five
and a half to six
for new stores so it’s
that’s when you need to to do that and
and we do
assist in that when we look at a retool
we’ll go through it and and show
what we think are going to be the
savings
not to mention the fact that you now got
a brand new warranty on your equipment
you don’t pay for parts and if you’re a
good savvy business person you probably
got some labor thrown in there for
anywhere up to a year so it’s it’s
almost a no-brainer
when it comes comes down to it yeah
well first of all a good tip on getting
labor
thrown in there too that’s a super good
tip so if you’re looking for a tool
negotiate how good a negotiator you are
but that’s right you know
everybody everybody wants to make the
deal today yep
i mean like you said already this you
know this is a good time to
be looking for those extra perks like
that and and saving money
the other thing i was going to throw in
is when you’re retooling
and you’re increasing prices the value
of your laundromat goes up
and you got warranty on the parts but
also that’s an amazing opportunity for
you to
do some huge promotional things to bring
in more customers because customers love
new they love
shiny they love you know not having to
you know go to the laundromat casino
where they’re not sure after they put
their money in if they’re going to get
their clothes washed or not
um you know so that’s another amazing
time and
and that can more than make up for that
one turn a day
increase that you’re you’re looking for
um for the new equipment cost so another
huge opportunity right there
correct and one other thing about you
brought up a good point about customers
statistics say that if a customer comes
into your store three times he’s
he or she is yours and they’ve had a
good experience they want to
continue to wash their clothes there the
thing that real progressive laundry
owners do
is every year they want to show their
customers that they are reinvesting in
their business
even if they’re just painting or maybe
they’re changing the lights or they’re
clean or they put in a new bathroom they
do something to show
to their customers that they’re
reinvesting in the business
and those guys those laundry owners i’ve
seen
that do that are very successful you
don’t have to go out and spend
three or four or five hundred thousand
dollars you maybe spend five or ten
but your customer knows that you
appreciate them and you’re reinvesting
in their business
that is i mean honestly that’s that’s
gold right there so if you own a
laundromat
and you’re not doing this i mean that’s
that’s now that’s you know that’s worth
all the money i’m paying you to be on
here right now so
but we don’t want to talk about that oh
yeah yeah right right
but no but seriously that is uh that is
a golden piece of advice and
um i i definitely see that in the in the
top operators that both we’ve had on the
show
already and uh and just top operators
that i’ve spoken with
offline here they’re they are doing that
they’re constantly
you know really in in their businesses
and and you know zombie laundromats only
become zombie laundromats because owners
didn’t reinvest
it exactly that’s a very good point yeah
very exciting
so you know take a lesson from you know
success follow success so
you know follow those successful people
and be reinvesting in your business
otherwise eventually you’re going to end
up with a zombie laundromat and it’s not
going to be worth it to you to
reinvest in it all at once at the very
end you know so
you’re going to lose value in your in
your laundry right so yeah
cute i mean that’s a great piece of
advice thanks for sharing that
well hey i mean there’s i’m sure we can
keep going with opportunities because
their opportunities galore right now but
i’m curious
uh you know since i have you on here i i
want to
pick your brain on sba loans because i
think that’s a huge
uh i i just hear sba loans being thrown
around all the time and
tell me what you know about them so i’ll
tell you what i know about
there are basically two types of sba
loans there’s a 7a
loan and a 504 loan the 504
loan is only good with real estate
involved
the 7a loan you can do it for equipment
you know
buy a store uh 7a loans are administered
by your local bank
through the sba we do not participate in
the 7a loan we’re not a 7a lender
we do participate in the 504 loan
the 504 loan works like this
you get the you have to be purchasing
a piece of property that you will occupy
at least
51 percent and
that is the first criteria most of the
504 loans that we’re doing
um they’re usually single purpose
buildings but we’ve done a couple where
there’s small strip centers and the
laundry
fits that category to qualify for it
uh you must be the owner operator of
course
you um we need to get
the pr the property appraised so if
you’re buying it as
is we hire an appraisal an appraiser the
appraiser
uh will appraise the property and
then if you’re an existing laundry owner
you can get in for
as little as 10 down on the appraised
property so
for example if it’s a million dollar
property you come in
for a hundred thousand eastern as the
third party lender
does 50 of the deal so we’re in for 500
and the sba takes your 10
against their 50 so they’re in for 40
the really good part about this program
are the interest rates the sba
will go out up to 25 years
at a fixed rate uh two weeks ago
their rates change i think once a month
two weeks ago
the rate was two point four
percent that’s for 25 years that’s free
money
it’s unbelievable that’s free money it’s
just unbelievable
and so and so our rate we’re higher
we’re not the government
we’re in the you know somewhere in the
fives the low sixes
but when you blend the rates you’re
usually around
in the mid threes and that’s a excellent
rate um our part of the deal the
third-party lender
can go out to a maximum of 20 years on
the amort
and but there’s a balloon after 10 years
okay
so at 10 years we worry about it then
you refinance it
or you pay it off you’re you know
we we discuss it in 10 years the sba
rate though as i said is a fixed rate
a lot of people have this um
terrible taste about the sba that you
know it takes forever to get these
things done
and you know it’s just a nightmare to
deal with the 504 program they’ve really
streamlined
and so generally what happens is
we as a third party lender we get you
approved quicker than the sba usually
we’re
a week or two weeks ahead of them and
for example let’s say this million
dollar property you wanted to close
quickly once we know that the sba has
given you
an approval in written form what we can
do to expedite the closing is we give
you a bridge loan
for the sba’s portion and then we go
ahead and close on the property and then
the sba
usually within 90 days pays off the
bridge loan
so at the end of the day you end up with
two loans one from eastern which
where we have a first mortgage or a
deed of trust in california and then the
sba is second behind us
now the next question is what happens
with the equipment the business side of
it
the business side eastern takes on its
own
in a normal transaction that we would
normally do
and the reason that we don’t put the
business into the 504 loan
is because when the sba looks at the
business
all they do is value the equipment they
don’t look at the intrinsic value of the
business so your business
that business may be worth 500 000 but
the equipment
by itself is only worth a hundred well
that’s all the sba is going to give you
for it
so for that reason we keep the business
separate and the realest from the real
estate
um if you’re building a store from the
ground up
i just completed a deal like this we’re
funding at the end of this week
we will again it’ll have to be appraised
as completed which means you got to have
all your drawings all your permits in
place
all your quotes for the construction in
place
then the sba we get that appraisal as
completed it’s the same
formula if you’re in the business it’s
as little as 10
if you’re new to the business it’s 20
down
um and sometimes it’s 15 but it’s never
higher than 20
and it’s never lower than 10. so on a
ground up construction
again what we do is we give you a bridge
loan for the sba’s portion
and for our portion that’s not a portion
to the actual purchase of the real
estate
and you use that money as your
construction money
to build the project and then once the
project’s done
the appraiser comes back in the sba
says okay everything’s done you got your
cfo
and we put in two permanent loans in
place again
just like we did on the uh one that we
did
where the building was already in place
so
that’s the way it works we’ve done quite
a few of these
over the past year and a half i i have
to tell you
since the pandemic had accelerated a bit
because of these very low rates
the other good news about the sba’s rate
is it is assignable so if you
sell the building let’s say in year 18
you can actually assign that loan if the
person qualifies to the buyer
so there’s a lot of pluses
right now for these 504 loans
and a lot of customers are looking into
it
and and doing it yeah that’s
that’s huge i mean i guess the theme of
this
uh show has been opportunity and that
has
opportunity written all over it i mean
i’ll be honest like lending does not
normally get me very excited but
you know it’s just that’s that’s huge i
mean
just having the the sba kind of jump in
at such a low rate
you know financing 40 of the of the
purchase prices
is crazy it’s huge yeah it’s huge and
even if they’re financing 30
if you’re new to the business it’s still
a great deal with these
low rates i don’t see these rates going
above three percent
from the sba within the next 24 to 36
months
and it’s a fixed rate so once you’re
locked in that’s the difference between
the
504 and the 7a loan the 7a loan
is a floating rate so today you may have
a prime plus two loan
so you’re paying five and a quarter
that’s cheap
but what happens when the prime goes
back up to five and a half now you’re
paying seven and a half
whereas with this 504 loan you are
locked in for 25 years
and you know the rates are going to go
up during 25 during a 25 year period oh
my gosh
yeah so yeah it’s just a it’s a terrific
program
and we work the sba has a
they do they have a non-profit
organization called
cdc community development corp they’re
all over the country
we align ourselves with the local cdc
office
and we jointly do the project together
and so far i’ve worked with several
different cdc’s and
my colleagues at eastern have worked
with others as well they’ve
really been a pleasure to work with they
get the job done
and it’s not a nightmare like you think
it might be if you’re organized
it goes very smoothly if you’re
unorganized that’s a different
picture but i’ll have to bring my wife
in
on mine then well yeah whoever’s the
most
because they do ask for a lot of
information but not that much more than
we would normally ask for
in our normal uh credit app um they want
to see projections tax returns bank
statements personal financial statement
uh a mission statement of or a business
plan
um and that’s about it it’s really not
bad but you do have to be organized but
if you’re organized it goes very
smoothly i did one
uh two years ago and we closed the whole
thing
it was an existing building we closed
the whole thing in 90 days
a to z including the sba paying off the
bridge loan
and we probably would have closed in 60
days except for the fact that was the
year that the government shut down and
they shut down the sba for 30 days
so that delayed us but it does
it’s a it’s a terrific program that
um if you can get into it and find the
right piece of real estate
now’s the time to do it wow so for the
504
is that acquisition only or do they do
re refinancing with the five
they do refinancing but you cannot
refinance another sba loan number one
so if you have a 7a loan you cannot
refinance it with a 504
and if you have an outstanding loan it
has to have matured for at least
24 months okay to be
available for refinancing the reason i
ask is
super selfish because i have a piece of
property that
yeah no it’ll get excited about yeah if
you’re
if you’ve got two years under your belt
chances are it will qualify
yeah yeah okay well we’ll have to talk
offline at some point sure so um
well hey okay listen i cannot possibly
be the only one who’s very excited about
all of these opportunities that we’ve
been talking about and more
so uh let me ask you this question
um number one so we have a little
section of the podcast called
secret sauce listen up it’s the secret
sauce
so if you had to pin down one
one tip for an existing laundromat owner
you know to help them either you know
keep their business moving forward
during this unprecedented time in our
history or to retool a store or
something like that
yeah you got one one tip you want to
throw out for somebody
who’s a laundromat that’s a tough one um
i mean you’ve been giving us so many
tips so
i i think for right now the
tip is to keep your eye on your
customers they’re the ones that pay the
bills
pay attention to them see what they want
you know the pandemic has
changed a lot of things i think that the
drop-off business
is going to increase in a lot of
laundries so if you’re not doing it
you should do it commercial business you
know may take a little more time to come
back but
keep your eye on your customer you know
they
help pay the bills and they will give
you a lot of signals as to what you can
do better
for them and increase your business
yeah that’s huge huge advice and
you know you you say humbly in the
beginning that’s a tough one but that i
mean that is
that is the secret sauce right that that
is what’s gonna
separate the wheat from the chaff i
think during this time who’s gonna
come out of this thing you know better
than before
and who’s going to fall by the wayside
is whoever keeps their eye on the
customers because it is all about the
customers right now
and you will and there’s going to be
some big winners here
at the expense unfortunately of some
people who don’t do that
yeah yeah and you know don’t don’t be
that person if you’re listening to this
you’re you know you’re on the right
track so you know
just you know like i say this every
single episode
hey put this stuff into practice because
learning about it
you know hearing mark talk about all of
this this
you know decades of wisdom is good but
it’s not
gonna make your business any better it’s
not gonna keep you afloat during this
time
it’s only when you start to put this
stuff into practice that
you know it’s it’s going to benefit you
so put it into practice
um awesome awesome secret sauce we have
another little section called
pro tips pro tips and this is geared
towards people who haven’t
bought a laundromat yet you spent all
this time getting people so excited
about all these opportunities right now
if you got to give a tip to somebody
who’s maybe looking to
buy their first you got
you got a good tip or two for them well
i think
yes um number one do your proper due
diligence
talk to as many people as you can in
this industry
go to the coin laundry association the
cla
go to their website get on their blogs
there’s a lot of other
sites on on facebook for laundry owners
ask questions you can never ask enough
questions
and just do your proper due diligence
and then when you zero in
on it if you’re working with a broker
really you’re paying that broker
or if someone’s paying that broker maybe
the seller is but more than likely you
are so rely on that broker
to help you navigate this thing when it
comes to us
believe me we’re going to ask plenty of
questions to make sure you did your due
diligence
and we’re not afraid to tell you to walk
away from a deal if we don’t think it’s
a good deal
we don’t want bad loans and we don’t
want any of our customers to get in bad
bad loans to get in a bad situation so
just do your due diligence get deep into
it
speak to people like jordan who own
businesses
uh there’s and laundry owners are
friendly people
you know if you’re going to buy the
store across the street they may be not
going to tell you everything
but generally laundry owners will be up
front and tell you about their business
and why it’s been successful or
what they have done to make it
successful
yeah and just just you saying hey we’re
not afraid to tell you to walk away from
a bad deal
should inspire confidence uh in in
somebody
in working with you because you don’t
you don’t want to work with somebody
who’s not going to tell you if they know
that there’s a deal that’s not going to
be a great deal you don’t want to work
with that person if they’re not willing
to
have a hard conversation with you
because it’s really easy to get
wrapped up in a particular deal i’ve
seen this happen over and over and over
and you get married to a deal and your
mind has already kind of renovated that
place and
you know seen you operating it and when
you get
you know when you get news that you know
it’s not
it’s not going to be what you think it’s
going to be that can be really hard to
take
but i’ll tell you what it’s way easier
to take that conversation than it is to
buy a bad deal and to have to live with
that bad deal and i know that from
experience
so absolutely great advice great advice
and
and i love that mindset again another
one of the things i’m sure that has
kept you guys in business and and turned
eastern funding into one of the
behemoths in the
laundromat lending arena right now
this has been incredible uh packed
packed with very
exciting information and very practical
information i really
appreciate you coming on if i mean there
will be i’m
i’m positive of it but if people want to
get in contact with you
uh or or eastern funding is there a best
way that they can
connect with you guys yeah they could if
you want to get in touch with me
directly the best way is by email
mstern easternfunding.com
and you know we’ll if i can’t help you
i’ll send you to somebody else in the
company who can
go to our website we have a nice website
we also have our app
which is eastern funding
www.easternfunding.com
we have an application online it tells
you where
what we finance what industries we
finance in of course the laundry
industry is our largest industry um
and you know again we’re we’re here to
help we
we as i said earlier we’re business
partners not just money lenders yeah
yeah and i’ll put links to all of that
in the show notes and uh and if you’re
watching on youtube it’ll be down below
in the description so you can just click
on those
the other thing i was going to say is i
was kind of snooping around on the
website earlier
and i’ll put links to these two things
also but i saw that there
is a free downloadable checklist
for anyone looking to acquire their
first laundromat and also for anyone
looking to
buy new equipment right and we have
we also have a laundry buyers guide
which is an introductory
guide for people new into the business
which we
readily send out free of charge it’s
just good information good basic
information about the industry good and
i’ll put links to
all all of those things in the show
notes and in the description
so uh mark this
has been incredible uh
more than met expectations i really
really appreciate you coming on i think
a lot of people are gonna find a lot of
value in this
and we’re gonna have to have you back on
because there’s a ton
more that we could talk about that we
weren’t able to get to today but i
really appreciate you taking the time
and thanks for coming on the laundromat
broadcast thank you i appreciate it and
uh
thank you again for the invite yeah
we’ll talk to you soon
okay okay how cool of an episode was
that
with a lender i mean an executive
vice president on top of that i mean
those
they’re not typically supposed to be the
ones that get you pumped up they’re not
your hype guys
but i was hyped after this episode mark
was
amazing he brought a ton of value for
uh for all of us i i know i i learned a
lot and i gained a lot out of it so i
hope you did too
one thing that i pulled out that i loved
i mean there’s so much it’s hard to
really pick something but i loved his
secret sauce and saying
hey keep your eye on the customer when
when business is getting tough you know
everything is kind of up in the air
things are volatile or things open or
things close
we don’t know but he says keep your eyes
on your
customer and i loved that i thought that
was amazing secret sauce
worth every every penny because man the
customers are the lifeblood of our
business
right so we need to keep our eyes on the
customers and it’s really
easy to keep you know focused on the
numbers as they start to drop
or there’s so many other like problems
as they come up machines that break down
your laundromats flooding there’s
homeless people everywhere all this
stuff
i mean can can distract us but he says
keep your eyes on your customer and i
love that and i need to do a better and
better job at that
you know especially now and so like
always i encourage you find at least
one thing out of this episode maybe you
need to just give them a call or shoot
him an email
because you need to talk about
refinancing or you need to talk about
financing new equipment because
rates are so low or you need to figure
out how to renegotiate your lease with
your
i mean there’s so much in this episode
that we should probably pick more than
one thing out of this one but pick at
least one
put it in the action because action is
where the money is made
right we can learn learn learn but if
you’re not putting it in the action
you’re gonna be stagnant you’re gonna
stay still so put it into action
mark if you’re listening to this man
thank you so so much for coming on
and i i loved it and i really really
appreciated it
and it was awesome to get to know you so
hopefully you guys
got at least half as much as i did
because if you did
then this was an incredible episode for
you also
all right i cannot wait until next week
we got some cool stuff for you again
next week this has just been a ton of
fun thank you guys so much for being
along on this ride
you know we’re you know we’re just we’re
rolling here
and uh you guys seem to be loving
these interviews and i know i’ve been
loving them so thank you for being along
for the ride
join us again at that live q a with dave
the laundromat millionaire men’s
december 2nd and i cannot wait to
see you guys there all alright we’ll see
you next week
[Music]

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