stop investing in real estate for cash flow it's dumb listen when I first got into investing I bought into all the hype of hey buy real estate for cash flow that's going to lead you toward financial freedom or that's where you can get the biggest cash flow gains for your money and I found out along the way that it's a lie and I'm going to tell you three reasons in this video very quickly on why if you're looking to invest in real estate for cash flow you might want to consider something else like a laundromat let's jump right into it with reason number one and in order to explain this one to you I want to introduce you to what I call the wealth tripod now if you're somewhere someone out there who's looking to build wealth uh you're probably familiar with all of the legs of the wealth tripod that is cash flow obviously which we're here to talk about today equity and tax advantages now you can build uh wealth by utilizing and pulling the levers of any one of these legs but when you can get them working together that's where your wealth really accelerates and since we're here to talk about cash flow I want to introduce you to the wealth tripod so that I can show you why laundromats are such a powerful tool to build the cash flow leg of your wealth tripod now in order to do this I want to break down each of the asset classes real estate and laundromats and tell you how I would rank each of the legs of the wealth tripod for each of these two asset classes so let's start with real estate and we'll start with cash flow i think real estate has okay cash flow gains now they're not great they're not going to make you rich uh off the bat if you've ever done the math of how many doors you got to own to replace your W2 income maybe like me you were overwhelmed by how many doors you'd have to own uh so I'd say that real estate is okay when it comes to cash flow however where real estate really starts to shine is in equity potential where you can build equity through uh a multiple different ways right so that's applying leverage and letting tenants pay down that leverage and that's through making intentional improvements that increase the value of your property um and that's just by the market going up that's out of your hands but that happens tends to happen uh over time in general so equity gains in real estate I would say are good to great and finally when it comes to tax advantages I think real estate is a great asset class for tax advantages so just to recap okay on cash flow good to great on equity and great on tax advantages that's how I'd classify real estate now laundromats conversely I think are great when it comes to cash flow and I'll tell you why here in a second um but when it comes to equity I think they're okay and those two things are tied together on why one of them's okay and one of them is great which we'll talk about in a second and when it comes to tax depreciation and tax advantages I would classify laundromats as good to great so laundromats great cash flow okay equity gains and good to great tax advantages and before we get into why uh laundromats are so great in the cash flow leg of the wealth tripod I want to just caveat all this by saying I invest in laundromats and I invest in real estate both commercial and residential i love both asset classes and ideally you have both and I think that by having both of them working together you're covering all the legs of the wealth tripod and really have the opportunity to accelerate your wealth but if you are looking for cash flow or if you're somebody who's trying to play replace your W2 income leave your 9 to5 uh looking for financial freedom as quickly as possible those things we're talking about cash flow and laundromats far outperform real estate when it comes to that here's why this is the secret to laundromat cash flow and it has to do with how laundromats are valued laundromats just like investment real estate specifically commercial real estate are valued based on their net operating income and for laundromats you're going to apply a multiple to that net operating income in order to determine the value now right now as I'm recording this the average multiples are somewhere in the four and a half to 5 1/2 times the net operating income so a base hit average laundromat deal is five times the net income which means let's say you're looking for $100,000 of cash flow maybe you want to replace $100,000 job or you just want an extra $100,000 coming in every single year an average base hit laundromat would cost you about $500,000 and you can buy that $100,000 of cash flow that's a 20% cash on cash return on your investment unleveraged now if you apply leverage you get a loan for it you're probably looking somewhere between 25 and 35% down and that return on investment can go up from there uh but obviously you would need to buy a higher value laundromat to hit that net income of $100,000 after loan payments we won't break down the math but you can check out a loan calculator online and figure out what that looks like for you when it comes to real estate an average base hit real estate deal unleveraged is giving you about a six to eight% return on your money that means that same $500,000 that you could buy a laundromat that would give you $100,000 of cash flow is going to give you somewhere between $30 and $40,000 of cash flow so you can see that if you purchase an asset like a laundromat for the cash flow you're going to grow that cash flow a whole lot quicker than if you buy the real estate for the cash flow reason number one that laundromats outperform real estate when it comes to cash flow is you just make more cash flow when you buy an asset like a laundromat but that's not it reason number two why you should consider a laundromat before buying real estate for cash flow listen you're not a base hit kind of person and the two examples I just gave you before are base hit average everyday examples here's the beauty of laundromats when it comes to cash flow over real estate three of the biggest expenses of laundromats are rent labor and utilities and two of the three of those your rent and your labor are fixed expenses which means that gains above the break even po uh the break even point provide outsiz returns so as you grow your business above break even and beyond your return on investment grows significantly faster and you keep more of that cash flow in your pocket as if that wasn't enough I've got a third reason why you should consider laundromats to build your cash flow instead of real estate i was on the Side Hustle Show podcast a while back and on that episode Nick and I were talking about uh cash flow opportunities and one of the things that I mentioned on that show is that laundromats are like the ultimate side hustle because yes you can run them on the side they don't necessarily take a full-time uh attention to be able to run it as an owner however in addition to that there are also a bunch of side hustle or cash flow opportunities within the laundromat itself and those can be huge opportunities like adding a service like drop off laundry or pickup and delivery which by the way are booming to smaller medium-siz opportunities like adding vending machines ATM machines a little store a cafe and a whole lot of other opportunities that you can add as a part of your laundromat that increase the cash flow gains going straight to your pocket so not only do you have the primary income of your self-s served laundry but you could essentially double or triple that by adding a drop off and pick up and delivery service or add smaller services that still remain mostly hands-off like vending machines and ATMs but retain more cash flow from the space that you're already utilizing for your laundromat as you grow your business the larger the margins get and the more cash flow you keep in your pocket and there's multiple other opportunities within the laundromat business itself to increase your cash flow returns and put more money in your pocket now listen if you're watching this right now and you're excited about laundromats and you're somebody who's a DIYer you want to go learn it yourself check out our free course it's a playlist right here on YouTube it'll show up at the end right up here on how to buy your first laundromat it's a threepart course absolutely free and it'll tell you how to get started with laundromat investing if however you are here and you want to just do it right the first time you want somebody who has experience to tell you exactly what to do to give you the playbook head over to laundromatresource.com/playbook and check out the program we put together that includes uh multiple courses to help you buy your first laundromat to optimize that laundromat not just for the maximum cash flow but also to maximize your time and then we'll help you to scale your business through adding a service if you want like a wash drive fold or pick them delivery and or through building a portfolio of multiple locations that also includes one-on-one coaching with an experienced uh laundromat afficionado owner uh and a whole lot more so go check out laundromatresource.com/playbook if that's something you're interested in we can jump on a call and talk more about that listen all of this is great if you take some action on it so if you're intrigued if you're somebody looking for cash flow check outresource.com go check out that free course or book a call to chat with me about getting started in your laundromat investing journey at laundromatresource.com/playbook