Real estate investing comes in all shapes and sizes, but most investors eventually find their niche in a particular asset class that fits their investing style and goals. Our guests today have an interesting journey that led them to scale up in an often-overlooked area of real estate: laundry facility investing. 

Neil Henderson and Clint Harris, hosts of the Truly Passive Income Podcast, sat down with Sam Wilson, an experienced real estate investor and syndicator based in Memphis, TN. Sam shares how he went from flipping houses to parking lots to finally finding his niche in the self-service laundry industry.

If you’re an investor looking to diversify into more recession-resistant assets, pay attention. Laundry facilities just might be the perfect addition to your portfolio.

From High-Volume House Flipping to Parking Lots

Sam Wilson started out years ago as a high-volume house flipper in the Memphis area. He was grinding it out, managing crews to rehab foreclosures across the state of Tennessee.

After attending his first Best Ever real estate conference in 2017, Sam knew there had to be a better model than the management-intensive, hair-losing model of house flipping.

He learned about commercial real estate syndication and raising private capital to invest at scale. This appealed to Sam’s desire to own assets passively which would throw off regular cash flow without having to be so hands-on.

“…we’ve done well in land, we’ve done well in parking, we’ve owned some multifamily assets right now, but I will say to your listeners, for better or for worse, we’ve been involved in a lot of different asset classes. And I would probably say, just from a personal perspective, it’s been for worse.

Just because, without focus, you can’t scale. You can’t get the meaningful traction that you need without just devoted focus.”

His next venture after house flipping was investing in parking lots. This seemed like the perfect hands-off asset. He traveled extensively to research parking lot markets in cities across the Eastern U.S.

By early 2020, he had built up and sold off a portfolio of parking assets. His timing turned out to be remarkably good, as he had just sold everything right before the COVID-19 pandemic decimated the parking industry.

Pivoting to Laundry Facility Investing

With parking lots no longer a viable option during the pandemic, Sam had to shift gears quickly. After researching other asset classes, he realized he already had the perfect new niche right under his nose.

Laundry facilities stood out for having excellent recession and pandemic-resistant qualities. People still need to wash clothes, even during downturns.

Beyond that, Sam realized the laundry industry was ripe for consolidation and disruption. Most laundry mats were still dingy, coin-operated stores with little customer service. Sam knew he could transform this industry by taking customer service strategies from other businesses, like Chik-fil-A.

While other assets like multifamily were looking increasingly challenging, laundry facilities offered excellent opportunities to generate double-digit returns.

Sam had acquired a small laundromat a few years earlier almost as an afterthought. He realized it was crushing the returns of any other asset he owned. The light bulb went off that this could be scaled dramatically.

Key Elements of the Laundry Facility Investing Model

To understand how laundry facilities work as an investment, let’s break down Sam’s business model:

Upgraded Retail Laundry Experience

Instead of just rows of coin-operated machines in a dingy store, Sam creates an upgraded experience. New equipment, online payment systems, automated doors for easy 24/7 access, security systems, and free wi-fi all cater to retail self-serve customers.

Most importantly, stores have attentive staff on-site to keep stores clean and assist customers. Think of it like a high-end Apple store compared to a typical neglected laundromat.

Commercial Laundry Services

With staff on-site, laundry facilities can offer commercial pick-up and drop-off laundry services. This includes handling large wholesale contracts with hotels, hospitals, and other commercial clients that generate massive laundry volume.

For example, a property management company with hundreds of vacation rental units can drop off all their linen laundry each week for washing, drying, and folding.

Delivery Services

The final element is offering home pick-up and delivery laundry through their own drivers or third-party services like DoorDash. Customers can schedule convenient at-home laundry pick-up and delivery through an app. This caters to busy professionals who value the convenience.

How Laundry Facility Investing Works for Passive Investors

So how does this work for passive investors looking to invest in laundry facilities? Sam realized that syndicating individual stores was too costly and inefficient.

Instead, he launched a fund that pools capital across a portfolio of 20-25 stores across Tennessee. Here are some of the key reasons this model offers an excellent opportunity for passive investors:

  • Diversification: With 20+ stores, investors enjoy broad diversification across different markets and locations.
  • Economies of Scale: Running a large portfolio unlocks major economies of scale in financing, vendor relations, staffing, marketing, etc. This leads to better profit margins.
  • Built-In Recession Resistance: Laundry is a needs-based service with inelastic demand. It generates stable cash flow regardless of market cycles.
  • High Cash-on-Cash Returns: The fund targets an 11-14% annual cash-on-cash return paid out through monthly distributions. That’s achieved with only 50% leverage.
  • Experienced Operator: Sam and his team have demonstrated success ramping up single stores. Now they apply that experience across a growing portfolio.
  • Future Upside: If Sam can consolidate hundreds of stores over time, they could eventually look to sell or IPO the portfolio.

The bottom line is investors are betting on an experienced operator to transform an overlooked industry. So far, the model is showing excellent results.

Laundry facilities offer investors regular cash flow at favorable risk-adjusted returns. For investors concerned about the stock market or overheated asset classes, self-service laundry could be an ideal diversifier.

About Sam Wilson and Bricken Investment Group

Our guest, Sam Wilson, is the Co-Founder of Bricken Investment Group along with his wife Elizabeth. Their primary focus today is acquiring and operating laundry facilities to build a large consolidated portfolio.

Sam brings years of experience as an investor flipping houses and commercial real estate. He also hosts the How to Scale Commercial Real Estate Podcast, which recently passed 800 episodes.

Investors can learn more about Sam and Bricken Investment Group’s offerings at their website:

BrickenInvestmentGroup.com

Listen to the Full Podcast Episode

Sam shares far more details about his journey in real estate and the laundry facility model in the full Truly Passive Income podcast episode.

Listen to the interview on YouTube here:

YouTube player

Or find the Truly Passive Income podcast available on any major podcast platform.

Take the Next Step in Your Real Estate Investing Education

For investors new to real estate syndications, the laundry facility niche may seem obscure. But Sam’s story illustrates that compelling opportunities exist well beyond the worlds of apartments, storage units, and mobile home parks.

Passive real estate investing offers numerous ways to generate income streams and diversify your portfolio. But it all comes down to partnering with experienced sponsors and operators.

The team behind Truly Passive Income live and breathe real estate syndications. They’ve already helped hundreds of investors get started in syndications as passive limited partners.

Learn more about how to passively invest in real estate syndications by downloading their FREE Passive Investor Toolkit

It covers everything you need to know to evaluate sponsors, deals, and set up your own diversified real estate portfolio. Add some true diversification and passive income to your life by tapping into the power of real estate syndications.