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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