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.)
Good one Darryl. I'd like to know what the return is on an washer and dryer. I'm sure you make your money back, but I'm curious about people breaking the machines or bypassing the coin machine. Any one know more about coin-op washers and dryers?
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.
I've read around that it is not worth it to invest in a machine unless you're looking at a 4plus building. The only positives seem to be value-added bonus points to your tenants - saving them a trip to the laundromat. It doesn't seem like an investment with a great return unless you've got enough units.
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.
Not sure I'd go sharing all that info with everyone. lol.
I'd like to also know about the potential revenue from one of these machines. I know there will be issues, but there are always issues.
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.
If you want to lease the equiment ( like MacGray, CoinMach), they like the agreement with 50/50 split of revenue. Owner is responsible for space and utility (big expense). If utility expense is over 25% of total renevue then you have a problem. They are responsible for maintenence and collections. For obvious reasons they like long contracts upto 5yrs.
You can certainly negotiate the agreement to increase the % of revenue in your favor. Also, make sure that washer/dryer have a counter. Otherwise there is no easy way to determine the exact revenue.
Great suggestion Rye!
I found there are some products may turn ordinary washer or dryer into
coin operated washer or dryer, which is much cheaper.
weavefuture company have pretty good one,
does any one heard of others?
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.
Your market may vary, but unless you have at least 12 units and the ability to install in a secure location, I would not buy machines. Maytag or other vendors will lease the equipment to you for no out of pocket. I have had them run gas and water line extensions to connect, and it's usually easy to get a $500-$1000 up front "decorating" incentive from them to organize and spiff up the area you plan to install (by signing a 5 or 10 year contract). They handle all maintenance, at no cost. Some companies let you pull the coins and just charge a flat $25 per month per machine, some will collect and split usually 50/50. They will provide signage (including THEIR phone number for service complaints) They will recommend a price to set, but ultimately it is usually up to you. The more units, and people, the more income. Typically figure 1 1/4 loads per person, per week. I have locations where the neighbors come over and use ours. THANKS! (I put in soda vending machines next to those!) You may need to put the electrical circuits on timers to prevent late night usage and noise complaints. If you want to monitor the exact cost, you can sub-meter the circuit.
One poster mentioned used equipment...
Unless you are personally able to fully diagnose and make repairs, or if the building is really low end, NEVER buy a used appliance (two or three service calls and you've spent the cost of new, which will last at least seven years). (There are actually companies that lease coin op machines that are used, under similar terms as above but shorter, even monthly, contracts, which is perfectly ok)
Again, your market may vary, but this IS the 21st century. The tenants I want expect basic conveniences on site.
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%.
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!
YMMV, but I have negotiated coin-op equipment contracts for properties with as few as 3 units. Also, if you have a reliable, competent, CHEAP repair person available, that can certainly impact your decision. While I have had success with in-house staff, most "full-time" appliance repair types charge a substantial trip charge, and it seems the parts are always $80 or more, so with 2 to 3 service calls, you blow any profits on used equipment. Replace your used units prematurely due to a stripped transmission, and now you have delivery and disposal charges, plus another machine, plus the sheer aggravation to tenants and their resulting calls to you. New units OTOH, have some warranty period, and after that time are usually completely trouble free for 5 -7 years. Depending on your contract, you may have a straight expense writeoff as well. Additionally, older units are less energy efficient than new models, which can be a factor if you ARE paying the utilities.
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.
Bumping this up.
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