BiggerPockets

A few thoughts. How much should I expect to pay for a coin-op laundry machine (washer &/or dryer)? Is it okay to go with a used one?

What kind of revenue can I expect per machine? I realize this will depend on what you charge per machine - let me know any numbers (please include cost per machine if possible.)

Thanks all.

Just curious, are you considering this for an apartment building you own? I never considered any appliance other than the built-ins, stove, oven, dishwasher (if house had originally come with one) to be anything other than a drain on my time and money!

If in a SFH I'd let the tenants go buy their own, otherwise I wouldn't mess with it.

A long time ago my wife worked for a LARGE consumer products manufacturer in their soap and detergent division. As an adjunct to their product development lab they operated a LAUNDROMAT (that's actually a trademark), if it's not WHITE-WESTINGHOUSE GEAR IN IT then it's just a coin laundry. Lots of breakdowns, lots of vandalism and lots of "the machine took my money" stories from POd customers.

That was one of the most frustrating parts of her life. On the other hand she's done ALL of our appliance repairs in the 25 years we've been married!

Hope this helps.

all cash

Alright I admit it when I was In College I bypassed the coin op washing machines by putting the coins in a pair of pantyhose before putting them in the slots. There I said it. I would think twice about it.

I recently had a similar dilemma. The washer broke down in my duplex, and I opted for a coin-op replacemnt, even though it cost twice as much ($600) as a non coin-op. Even with the added up-front cost, this one will have the opportunity to pay for itself, where the non coin-op wouldn't.

Great suggestion Rye!

You need to consider a few things when looking for extra revenue.

1. Will you get better tenants if you have the extras?

2. Is the marginal revenue worth the hassle. Rye's suggestion is a good one when it comes to coin operated equipment. You could earn some revenue without having to deal with the calls and the maintenance.

3. For 4 units and below the extra income will not impact the value. For a 5+ building the revenue can be factored in but not completely. Lenders do not want to see lots of income that is from sources other than the rents when they value the building and determine the loan.

Better to upgrade the units or other things that will improve the rental income. Or find ways to reduce the expenses so the NOI rises.

4. Cash in your hand is not bad so if you can earn some extra income without a lot of hassle then go for it. Just understand how the income will change the bottom line as not all income is treated the same.

John Corey

Last I talked with CoinMax, they didn't do service plans if your complex has fewer than 100 (or maybe it was 25) units in one place. Otherwise it wasn't worth their time and effort to service it, etc. They may have a program to help smaller companies but I doubt it gets a lot of attention.

[size=18]If you want to make money on W/D, let's run some numbers on buying the appliances and installing them yourself:[/size]

Install used W/D set ($200-$300 total) and charge $10/month for unlimited use as an option per rentable unit. Most tenants will pay that amount to avoid having to go to the laundromat. Make sure they also pay the utilities (depends on how utilities are metered in the building) or you'll lose money.

By doing this in a 4-unit complex for one year with 100% participation, you would receive revenues of 4units*$10/mo*12mo = $480/yr. Discount that cash flow at 8% (just for kicks) = $460.02 present value. If you pay out $300 for used appliances, your net present value = 460-300 = $160 NPV in the first year.

Now, because I'm a nerd, look at the useful life of these appliances. Let's say these pieces of junk will last for 3 years before they require maintenance. Then PV of cash flows from tenants = $480*3yrs = $1,640, discounted = $1,278 - initial investment $300 = $978 NPV. If you therefore expect (in PV terms) to spend less than this amount in unforseen expenses (like repairs!), you will make your minimum return of 8%.
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NOTE: That doesn't mean you will make $978[/u]...it means that you will make an 8% return on your initial investment PLUS $978. My read on this is that it's worth it; the business model is great. You do have to balance how much you want to be in the business of fixing crappy old washers and dryers...OR you just buy nice new ones and extend the expected life out to 10-15 years. Both projects make money but cheap appliances have lower vandalism/theft risk.

It all boils down to numbers and we're in this business to make money. If it makes enough money to pay you for your opportunity cost, pain, and profit, then do it. Your Internal Rate of Return (IRR) on this project is 31.9%; not bad!

-Jeff

Hi takleberry,

Does this model work if you are paying water? Would the 10 dollars only cover the extra water cost to you? I am thinking of this model in terms of a 4-plex, where currently water is paid by landlord.