Landlording & Rental Properties

Why You Should or Shouldn’t Put Coin-Op Laundry Machines in Your Rental Property

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Last year, someone raised a question on our landlord forums in an attempt to figure out is it worth it to invest in coin operated laundry machines for rental properties. Let me start by saying that I’ve never purchased one because I remember back to my college days when the machines were always breaking down [...] View the full article: Why You Should or Shouldn’t Put Coin-Op Laundry Machines in Your Rental Property on The BiggerPockets Blog. This content is Copyright © 2017 BiggerPockets, Inc. All Rights Reserved.

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Joshua Dorkin is a serial entrepreneur, investor, podcaster, publisher, educator, and co-author of
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    Frankie Mossa
    Replied almost 14 years ago
    I hope this information is useful: The three largest laundry service companies (LSC’s) are CoinMach, Mac-Gray Corp, and Jetz Service Co. None of the three have a presence in all 50 states. Each market will most likely have several smaller, local competitors as well. Coinmach and Mac-Gray Corp. are publicly traded companies. Coinmach’s symbol is “DRA”; it also has a security called an “IDS” unit, trading under the symbol “DRY,” which consists of one share of stock and one bond of some type. Mac-Gray Corp. trades under the symbol “TUC.” You can research Coinmach and Mac-Gray Corp. by going to the SEC’s website at http://www.sec.gov. Read each company’s 10-K report (annual report) to learn about the industry. The more you know about their business, the better your chances of negotiating a favorable deal for yourself. The lease is structured such that the owner/property manager is lessor and the LSC is lessee; i.e., you as owner or property manager of the building will be leasing space to the LSC to place their washers and dryers. As the commentator, rye, mentioned above, you can negotiate your cut of the monthly take of the machines. I would add that Coinmach and Jetz (and probably everyone else) will also pay a signing bonus or decorating allowance to induce you to enter into an agreement with them. Don’t forget to negotiate here as well. Everyone seems to focus on the money; however, the terms of the lease are, IMHO, even more important. There are two clauses that you must insist are removed from the lease: 1) The rollover clause states that if you don’t give notice within a certain time frame, the lease will automatically renew for a successive term. For example, one of the leases I looked at provided something to the effect that if I didn’t terminate the lease within the first month, of the last year of the lease, it would automatically renew for a new term. At the time, we were talking about a ten year lease. So what this clause was saying was that if I didn’t give notice in January of 2016, it would automatically renew for another ten years. No thank you. I got it changed to 30 days notice on my part. 2) The right of first refusal clause. This provides that even if you cut deal with another company, your current LSC can match the offer and retain your business. You don’t want this one because it reduces the incentive for competitors to make a strong offer for your business when your lease is set to expire. Basically, you don’t want to be tied to the LSC after you sign your lease; you want to be an unobstructed free agent at the end of your lease term so you can once again negotiate the best terms for yourself, including an additional signing bonus/decorating allowance. As I mentioned earlier, this is an extremely competitive industry (I discovered this by reading Coinmach’s annual report, BTW), and you should be able to get the terms that you want, within reason. Go through all the clauses of the lease and counteroffer on all the ones you find objectionable. For example, in both leases I looked at, the LSC wanted me to pay their attorney’s fees if we ended up in court. I countered with either the loser in any legal action pays the winner’s attorney’s fees, or no attorney’s fees. We ultimately ended up with the loser paying the winner’s attorney’s fees. Another clause provided that the venue for any legal action would be somewhere in Kansas. Since I live in Omaha, NE, I asked for, and got, the venue changed to Omaha.
    Walter
    Replied almost 14 years ago
    IMO, you need to be very careful in thinking through the pros & cons of establishing a laundry room in your rental property. There are issues of security & liability to consider. If something were to happen to a tenant (robbed, assaulted) while doing their laundry, you may well be sued and held liable if you have not taken reasonable security procedures: are your entry door locks & entrance buzzers in working order; are there security gates on windows; have tenants complained in the past about building security issues, etc.? The hassle may be worth it for larger facilities where there is a potential for a large revenue stream, but if the net income to you is small, you may well ask yourself if the upside gain is worth the downside risk…
    steve
    Replied about 13 years ago
    I found you also may use some product to turn ordinary washer or dryer into coin-op wahser or dryer, like a company:weavefuture, any one knew there are more products like this
    Peter Rodriguez
    Replied over 12 years ago
    Hypothetical situation: 1. You have a superintendent of a 50 apt residential building. 2. He has to deal with an offending coin-collector on a regular basis who pick-up coins from the coin-operated laundry room in that building. 3. The superintendent has an influential friend working for the building’s management company. 4. The coin-collector foolishly disclosed to the superintendent that he’s only been working for a few weeks on his collection routes on a 90-day trial basis (which means the coin-collector is not yet in the union). Question: Is it advisable, in order to get the collector to behave, for the superintendent to approach the coin-collector (taking advantage of the information that the coin-collector foolishly disclosed to him) with a subtle threat to have him terminated explaining to him that the superintendent could have someone call his employers threatening to either pull the leasing account (for the coin-operated laundry machines)away from them or threatening not to have the lease renewed for a new term unless the collector’s employers terminate him immediately? If no, why not? In detail, what could be the legal ramifications should the coin-collector be terminated as a direct result of the threat presented to his employers? Could it be proven that the termination was the direct result of the superintendent’s wrongful and malicious interference of an employment relationship between the coin-collector and his employers? If so, how?
    Tony Nathan
    Replied over 12 years ago
    I’m going coin-op laundry in my triplex after 15 years free. Cheap — a dollar a wash, 50 cents to dry. I’m fine with my tenants getting free laundry, but they always have friends who come over for weekday beers and laundry. Encroaching friends and my too-nice tenants will always exist. So coin-op is the best solution.
    corey stephen
    Replied almost 3 years ago
    this comment right here is what i came for, i was thinking of increasing rent $10/mo and offering it free. NOPE, not gonna tick off good tenants when a few bad ones invite their extended family over to do laundry.
    Kevin Walker
    Replied over 12 years ago
    Actually there are several other considerations to take into account – A coin op washer counts as a “commercial washer” (even if you only have one!) and as such will need additional waste-water impact fees in most urban and suburban areas- these run about $1500 *per machine* here (Houston) and I’ve heard some cities that are much, much higher (the LCS’s wont tell you about these fees since if you get caught, the fines are your responsibility-not theirs). Some municipalities consider the debris from the lint traps of commercial laundry machines to be a ‘hazardous waste’ which will require a permit to handle, store and additional fees to dispose of. (once again, the LCS’s figure what you dont know wont hurt *them*) While 99% of the time you will probably get away with not having the proper fees paid (so long as you dont have any new construction or repairs that bring out a building inspector for any reason) the fines can get pretty hefty and you *dont* want to be the 1% that gets caught (I’ve heard some of the mid to large size complexes receiving six-figure fines PLUS having to pay all the fees owed) And lastly, in some jurisdictions if you have any commercial washers or dryers the space they are in is automatically counted as a ‘laundrymat’ (or ‘washateria’ for those of you in the southwest) and will require specific use permits and may conflict with zoning. My advise is to contact the local utility district, zoning boards and building permit offices and check on the specific codes relevant to your area before making this decision- dont just listen to the LCS sales pitch.
    Joshua Dorkin
    Replied over 12 years ago
    Wow! Great information, Kevin!
    Denise
    Replied over 12 years ago
    I agree with Tony above. After having free laundry facilities in a 8-plex we own we have finally decided to go with coin operated washers and dryers. This is not a matter of making a couple of hundred of dollars extra a month. Cost of electricity, water, and cleaning fees for the laundry room which tenants continue to trash have left us with no choice. We also have had the “friends of tenants” problem. Sad to say that a few tenants will ruin it for everyone. Our only other option would be to close the laundry facility.
    Zach
    Replied over 10 years ago
    Even run-down areas in my city have on-site laundry services. (Not coin-operated) I don’t know what it looks like in other states, but here I’ve never even seen so much as a commercial laundry business around town.(My current city has a population of 100,000) Either I’m not looking hard enough, or the coin-operated laundry machine is going out of fashion.
    Morgan
    Replied almost 9 years ago
    As has been stated, it really depends on the property, such as how many apartments, who’s renting, etc. However, it’s generally a good idea to at least have the option, especially in lower-income apartments. In all the apartments I used to live in, there have been coin-operated machines and they take at least $1-2 to wash and then an additional $1-2 to dry. So the machines will eventually pay for themselves sooner rather than later. Making the laundry room secure, as well, would be an added benefit. Coin operated also secures that only those willing to pay will use the laundry facilities instead of those who are just free-loading. Which is added security for the complex. There are certainly variables to weigh, but overall, having the option there for the tenants is always a good idea.
    Lee
    Replied almost 9 years ago
    We have a coin op laundry at an 8 plex we own. One of the most nauseating clauses I found when dealing with a local LSC besides the poor splits was that the contract applied to all future owners, heirs and assigns of the property. We bought the building and out laundry contract had a 50/50 split, which given my costs, created an expense. We had to play hardball to change that split so we could eek out a profit. So two lessons: know your utility costs and watch who the contract applies to.
    Peter Burton
    Replied about 8 years ago
    As a hostelier I offer clean, cheap, no frills digs. I am presently putting in a coin operated machine for my guests because they often conveniently forget to pay for laundry washed folded and returned. I am owed $120 for the past 4 mo. of unpaid bike rentals and laundry. Hunting it down is not an option, however making sure payment actually is made–is. Doesn’t make me cheap, keeps me from being a chump.
    Sam
    Replied over 7 years ago
    Hi, I didn’t read all the comments, but my wife and I run a 29 unit apt building, and have 3 washers and 3 dryers. we bring in about $350-400 per month. The machines are about 8 years old, basic Whirlpools, and I think we should sell them, as they still look good, and buy the new computer run-front loaders. We pay for every drop of water, so the savings sure wouldn’t hurt! also, our building has 208 volts, so that’s on the low side, but it is what it is. BTW, we used to rent from MacGray, what a crappy deal for the landlord! So what recommendations for new machines? I have a very good relationship w the local Lowes, if they offer coin op
    Ryan S
    Replied over 7 years ago
    I found this post extremely helpful, as I am considering adding some coin-op units to my 7 unit multi-plex. I had a couple questions I was hoping someone could help with: – What is a fair price to charge for each load of wash/dry? I have to imagine that you can charge a small “convenience” price premium compared to the local laundromat rates. – Does anyone have experience adding the coin-op feature to an existing freestanding washer or dryer? – If you add laundry facilities to your property, is it smart to write up a lease addendum for each tenant explaining the rules and limiting your liability?
    George
    Replied over 7 years ago
    First of all, thank you for the informative article. I currently have an 8 unit apartment that I’m thinking of adding coin op laundry machines as well as some vending. I too, was curious on what you feel is a fair price to charge for each use. Do you suggest renting or purchasing the laundry equipment? I was thinking of purchasing and was wondering if anyone could shed some light on these Dexter units: http://www.westernstatedesign.com/coin-op-laundry/ I am planning on adding 2 wireless cameras to the laundry room in hopes that it will help maintain a clean and respectful area. Any other input would be greatly appreciated.
    SAM
    Replied over 7 years ago
    Hmmm… my comments are entered under the name “SAM”… weird
    jc
    Replied about 7 years ago
    I use a laundry service. they provide the machines and keep about half of the money. it offsets the utility costs (water, electric, gas, etc), but having it makes it easier to rent the nicer units for top rental prices and faster. For single family houses, we either have hookups or provide a washer and dryer..
    vadim
    Replied over 6 years ago
    I am planning to put a coin-operated washer and dryer., but do not know which manufacturer and model to pick. Seems like there is not a lot of option online. Can anyone help out and post names of the good quality machines? I would really appreciate any help!
    Luis Drien
    Replied almost 5 years ago
    It seems to me to be an obscenity to install coin-op laundry equipment inside an individual rental, whether it is a house intended for one or multiple renters, or an apartment. From a landlord’s perspective, I provide standard residential equipment to my SFH tenant, and its presence is factored into the rent. Since the tenant is already paying for the water, gas, and electricity, there is no reason to expect her to also pay extra to use the facilities. That being said, her lease requires that she pay for minor repairs, which takes care of wear and tear expense and ensures that she is a little more careful in her usage. From a tenant’s perspective, coin-op inside the rental unit is a ripoff, not only for the reasons stared above, but also because a) the tenant is not free to install his own and is a captive audience, and b) it’s in the landlord’s interests to set the heat way down on the dryer to force the tenant to spend even more just to dry his things. Case in point: my son shares a house with three other students. The total rental per month is $1950, exclusive of water and electricity. It costs him $3 per load to dry his clothes, and because the dryer is set low, he has to t Run each load twice. Pretty lucrative for the landlord, who is not only cheap, but a cheat. My son has his own set, but is not permitted to install them. One of my business tenets in structuring contracts is to reverse the field, and if a provision is something I would think is unjust, it’s probably not fair to the other party, either. So it is with this issue. In-unit laundry equipment is optional, and if you’re that worried about it being abused then don’t provide it, or factor it into the rent, but donr use it as a means to rape your tenants. Just my opinion.
    Luis Drien
    Replied almost 5 years ago
    It seems to me to be an obscenity to install coin-op laundry equipment inside an individual rental, whether it is a house intended for one or multiple renters, or an apartment. From a landlord’s perspective, I provide standard residential equipment to my SFH tenant, and its presence is factored into the rent. Since the tenant is already paying for the water, gas, and electricity, there is no reason to expect her to also pay extra to use the facilities. That being said, her lease requires that she pay for minor repairs, which takes care of wear and tear expense and ensures that she is a little more careful in her usage. From a tenant’s perspective, coin-op inside the rental unit is a ripoff, not only for the reasons stared above, but also because a) the tenant is not free to install his own and is a captive audience, and b) it’s in the landlord’s interests to set the heat way down on the dryer to force the tenant to spend even more just to dry his things. Case in point: my son shares a house with three other students. The total rental per month is $1950, exclusive of water and electricity. It costs him $3 per load to dry his clothes, and because the dryer is set low, he has to t Run each load twice. Pretty lucrative for the landlord, who is not only cheap, but a cheat. My son has his own set, but is not permitted to install them. One of my business tenets in structuring contracts is to reverse the field, and if a provision is something I would think is unjust, it’s probably not fair to the other party, either. So it is with this issue. In-unit laundry equipment is optional, and if you’re that worried about it being abused then don’t provide it, or factor it into the rent, but donr use it as a means to rape your tenants. Just my opinion.
    Nick Vanghele
    Replied over 3 years ago
    Do not include a laundry facility for the following reasons: – Liability insurance. It will go up do to the addition of “common areas”. – Heat! Up north especially, tenants will want, and will leave the thermostat at 80+. $$$$ – If there are laundromats nearby, let em go there. – Bedbugs, roaches and even mice love to hop around. They all meet at the laundry room. – Neighbors. If you are closer than the laundromat, you are the new laundromat. And if you think your tenants can be disrespectful, their friends, family, and neighbors are worse. – You will NOT attract more, or better, tenants just because you have a laundry room. – When the machines break, or the coin boxes are full, YOU will get the calls, not the leasing company. You will also get called to see if you have 20 quarters for a fiver. – You will become the laundry complaint department. “They took my clothes out before they were dry!” “They used my dryer sheets!” “My clothes are gone!” – Be a landlord, not a laundromat!