From Homeless to Making Millions With Laundromats

From broken homeless to multimillionaire. This is Brandon's story on taking 15k and turning it into more than 10 million bucks with laundromats. Let's copy this guy's homework.

Hey, guys, this is Brandon with investment Joy. I run two laundromats, two car washes, over 130 rentals. I have assets over about $10 million. And yet I did it while growing up poor, being evicted twice, and working pretty much every day of my life.

As normal people do when they walk into your laundromat. I wanted to ask you some totally standard, nothing weird about this, like how much did you buy this thing for? How much money did you make? And what was the story that got it all started?

So these are all questions that I love, and the answer's 85015k down. And the reason I bought it was because I like money and I want to make money. And after seeing the books on my first laundromat, I realized that these things actually are profitable if you do them in the right way.

First of all, I think people overestimate how much money they cost. Of course, in big cities, that's a different story. But a little ones, like, how do you pronounce the name of this place?

This is Chillicothe, Ohio.

They're actually pretty reasonable and they're pretty profitable. So breakdown. The profits for me specifically on this.

Business acquisition was $85,000. I got it through seller financing. The seller financed 70,000 of the 85. So all I had to do was come up with $15,000 down. My goal is $10,000 a month off this one. We're currently at 7. Water runs me 3, 400 bucks a month. Gas runs me 2 to 300amonth. Electric runs me 4 to 500. That's because currently I pay the electric bill for my girl that lives upstairs. I've got two apartments as a part of this piece of real estate. My biggest expense here beyond the mortgage. The mortgage is $537 month, $1600 a month in equipment loans.

So you're making 3 or 4k a month profit in your pocket off of just the machines or the machines. And rent.

The machines, rent and vending. That's the whole. And that's the whole pile.

Most people do not think about adding real estate to it and ancillary revenue streams or your vending and rental unit. What made you decide to go that way was that because you were in real estate before?

As a real estate agent, I was allowed to take a peek behind the curtains on all sorts of different businesses. And it was always interesting to me to look at a business and see how much vending made or much ATMs made. I looked at buying a convenience store because it was down to this and a little convenience store in my town. The convenience store made an extra fifteen hundred dollars a month net, not gross off vending machines. So I thought, well, if I have a business, I need to build ancillary revenue.

I think what a lot of people don't realize is that 10 to 15% in your business is a huge amount. So sometimes it's a little things that matter. This is a busy street, Brandon. What's the deal? Did you do a car count before you bought this thing or how does that work?

Yeah, we did. The state of Ohio provides data to investors or whoever for traffic counts. And this was a very well studied road. So I now have 25 cars a day that go in and out of here. I also know I have an apartment complex where no one owns their own washer. There's 168 units in there. So that's one of the key reasons I bought this.

What do you think this place is actually worth now?

If I sold it with the debt as well, probably over 300,000. I've already had a couple offers in the 250 range. So we've already built a decent bit of equity on this business.

Do you think that's because we single handedly increased the price of laundromats everywhere?

Maybe.

So you used to be in real estate. You started with one unit, then you got up to how many?

About I'm at 135 right now.

135 units, that's a lot. Then you said, hey, wait a second, I think businesses might cash flow even more than real estate. What happened and how did you find this deal?

I saw the books on this one. A buddy of mine who's another big real estate investor, he said, have you ever thought about buying a business before? And I was like, I have no clue I even know what they'd make. And he said, do you want to go look physically at a laundromat? This one, this is four or five years ago before it closed down. I bought it once again from a closed down business owner. We came here, we looked at the books. They were making like 8,500 bucks a month in cash on this Laundromat before they close down. And I said to myself, if this business can make 8, $500 a month gross, not net, why am I buying only dumpy little single family detached houses. When I could buy one of these and make more money than 10 houses, I'd have one headache in one location as opposed to 10 headaches in 10 locations. So I figured, why not do it next 60 seconds.

I'm going to reframe the way that you think about universities today. Now, typically when I talk about going back to college, I feel like this. And the reason why is because a lot of times they're really expensive, they're inflexible, and they tell you what to think, not how to think. But then I heard about this university called National University. They have hundreds of programs online that are flexible for people just like you and I that are maybe running a laundromat or in a job that you don't like at the moment and need to figure out how to upskill and get to the next level, but do it while you're making some cash. They're actually really cool because they were founded by an ex Navy veteran. They're one of the biggest providers of schooling for the military. There's actually this guy, Ryan Zinke, who basically went from being a Navy Seal while going through their curriculum to graduating and becoming a congressman. The world's happening faster than ever around us, but we need somebody who's going to bet on us, too. That's why they gave out more than $50 million in scholarships last year. This year they're giving away something to you guys too. But it's not around forever. So you're going to want to click the link, go check out National University, do it while you're working, so that in the future you have other people work for you. Talk about how much time it takes to run one of these bad boys. Because that's what I always get on the Internet is like, Cody, you could never run so many businesses all by yourself and you must be there all the time and blah, blah, blah, blah. And so I thought I'd hold the laundromat thing because this is about as much work as I've done on one of these things in a while. But, Brandon, when you first bought a laundromat, how much work did it take to find the deal? And then how much work did you have to do in the business every single day?

I was spending a lot of work, this deal for fell in my lap, more or less, maybe five hours of negotiation, mostly regarding the way the financing would be. It wasn't getting the deal down. It was just the financing aspect of it. I was in here two, three, four hours A day for the first month that we went in and we rehabbed it, incidentally enough, I recorded all that. So most of the stuff's documented how much time I actually spent. If no one believes Cody or believes me on how much time does it actually take to do these deals. I was two, three hours a day for the first month. That's Monday through Friday. Then once we got it actually up and running, I was spending maybe two to six hours a week here. I was down here every day Monday through Friday just to see how the business was working. Once we did the renovations, we really built up a good standardized business process. I am quite literally down to the time that I shoot video here. I could probably spend 30 minutes to an hour every other week. We are going to hybrid pay on this location. So I'm going to have the option for credit cards and for coins. I expect that to decrease my coins coin count by about half. And that will take me to the point that I only need to be here for about an hour or two every single month. I've got a sub manager under me, Kim. She's starting to appear in my videos. She's in here one to two hours a week making sure that the floors are clean, the machines are working properly, surveying my customers, just making sure everything's fine. And I'm not paying her an arm and a leg to come in and be a manager. For me, it's very time efficient. So now I'm on the hunt for looking for more laundromats.

The only thing that people always say to me is, like, you got these big expensive machines, you know, they cost about, you know, let's call it 10k to 40k depending on how much you have. Do a bunch of people come in here and just like vandalize them and break them and all of this stuff. I've actually, knock on wood. Never had somebody vandalize any of my laundromats. I'd be curious for you. Your doors are wide open here.

The only machine that I've had people vandalize has been my coin pusher, which is the kind of the gambling gaming machine. It's there intentionally. I look at it like this big easy target for somebody to. That's going, going to vandalize. If they're going to vandalize, I don't want them to spend it on my expensive machines. We took the location over and my equipment was crappier. You could see where vandals tried to destroy the coin mechanisms. Those are expensive. The coin pusher, I can rebuild the whole thing for about 500 bucks.

Here's the truth. When you're running a small business, we talk about the big fancy numbers and all the cash that you make because we want to create more owners like you, because I think that makes a difference in the world. But you're providing a service. Brandon was telling us there are 160 unit rentals nearby with, without washers and dryers. Are they going to vandalize the thing that allows them to have clean clothes? When you're providing a service for humans and you do it in a humane way, turns out people are pretty cool. Okay, now for the tough questions. How do we get a seller to agree to finance us $70,000 on an $85,000 investment? How did you do that?

Number one, he was in distress. This had set on the market empty, with no money coming in whatsoever for about a year. I had made him an offer and he said, Brandon, I need $135,000. Have to have it. And I said, look, you know, this location, it's not making any money. If you renovate it, it's going to cost all the money in the world. I'm going to be lower than that. So after about six months, he said, you know what, if you can come up with $85,000, I'll sell it to you. It's still not worth it. And then I would much rather prefer that you finance it. So that was at month six. At month 12, he said, Tell you what, you come up with $30,000, I'll finance it for you. And I said, how about 15? He stewed on it for another week and said, alright, let's do it. And then I came with the kind of the upsell to him. I said, you know, you're going to get some interest on this, so I'm not making you interest only or 0% interest. You're going to make some interest on it so then he can buy back a little bit of the money that he was hoping to make at a higher sales price. So that's kind of my process for this laundromat. And what's crazy to me is I've done it a bunch of times. I've done probably a dozen projects similar to this one in terms of finances.

Yeah, it's the other thing that I think people don't believe when you talk about on the Internet. That part of my mission is to get people to actually believe in themselves, which is a weird thing. There are people all over this country right now that need you divide their businesses, they need to retire because of sickness or because their job got moved or because they're so tired they just can't come in and run this anymore, or they're getting older. And so I think this idea of seller financing, some people think, oh, that's predatory. You got it for that. What a steal. And it's like, no, instead it's an off ramp to a human that then gets to go live another life. I think you are spot on on that. You know what? One of my favorite mentors who's a billionaire actually told me one thing, and that is never fall in love with something that cannot love you back. And a laundromat certainly can't do that. Yeah. Now, owning laundromats isn't always awesome, as I know from first hand experience.

I'm calling a cop. Whoa.

What are the five worst things about owning a laundromat?

Number one was starting a new business. It's just a new thing. I'm used to real estate. I'm not used to dealing with customers. So learning that whole brand new process probably number one. Number two was probably dealing with the money situation. I don't worry about getting robbed and stuff. But the second that I had my work crews come down here and do any sort of work, especially like my female manager, she got scared to death that she would get robbed. I have business partners. They will not collect money for me. That was probably number two. Number three was just capital expenditure planning. The capex that I spent on this early on in the acquisition was way higher than my real estate investments. These machines here were way more expensive than I would have ever thought. This washer that's sitting right over here was about $12,000, which just blew my mind that this machine would cost more than the car I drive. Number four real quick would be just the amount of work that we had to do to get this. Number five would was the amount of effort that I needed to throw in to attract new customers to really make sure the place was spotless every night.

The only thing I'd add to it is when it comes to the laundromats that I run, it's opportunity cost. When you first start out, this is a great business. As you get more of these businesses, Brandon's running all of them all the time. It actually becomes a little bit of a net loss because of your opportunity costs, which is something all of you should be listening to out there. Everybody's like, cody, you're telling everybody to do vending machines and laundromats. It's like no, no, no. Those are the gateway drug businesses to learning how to do business. And then once you've done a few of those, you can go on to bigger games. You could do a Cloro Wash, which usually has bigger capex. And you could play this game at different levels, because just like business, it's a game. Do you want to see who's better at Pac Man?

Sure.

Another game. Let's do this. All right. Let's see. I don't know who's going to be better at this.