Evaluating Laundry Room Proposals

Multi-Family and Apartment Investing
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Evaluating Laundry Room Proposals

Oren K.
Rental Property Investor · Toronto, Ontario · Member since 2012 · 538 posts · 298 votes

Among other things, I am in the process of remodeling the laundry room in a 3 story, 39 unit property I purchased last year (25-2B & 14-1B = 64 Bedrooms). Currently, the building is set up with 3 laundry rooms, one on each floor (one set of machines per room). Only one is operational but has been sufficient as the building was less then 50% occupied. As it is now starting to fill up, I do need to provide this amenity at reasonable level.

Also, I 'lucked out' in that Coinmach canceled the previous contract / lease several months before I purchased the property (I have that in writing) so I am starting with a clean slate.

My intention is to consolidate the machines into one room on the ground floor and go with a card system. There is more then enough space for the 6 machines, folding tables, already has a gas line, minimal plumbing changes required but some electrical to accommodate the 6 machines.

The proposals I have received vary in a couple of different ways; Shorter vs Longer term, New Machines vs Rebuild Machines, Different Share Ratios, etc.

My challenge in evaluating just the $ aspect of the proposals is determining what utilization rate for the machines will be for a property of this size. Assuming the building gets to 85% occupancy. I have to make some assumptions: # People / Bedroom & # Loads / Person / Week (or month).

Anyone track the utilization rate of the machines in their building; What is it?

How many people / unit are in your building?

Using the above, how many loads are done each week or each month?

What are reasonably numbers; 1.5 people per bedroom & 1 load per person per week?

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Adam Johnson
Rental Property Investor · Holley, NY · Member since 2011 · 507 posts · 347 votes
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We have coin ops in smaller buildings, so I am interested in hearing from others as well.  Do you have the ability own and keep up with your own machines? They aren't that expensive and, at least based on our experience, they are low maintenance, especially if purchased new.  Do you have someone (or can you) empty the coin boxes once per week and check on them? Will also need somebody to watch for cleanliness in the room a couple times during the week. In our buildings, we put it on the tenants to clean up after themselves.  This was an issue one time and we left a message on the machines that if they weren't used responsibly, they would be removed and they would be hauling laundry to the laundromat.  Problem solved

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  • Adam Johnson
    Rental Property Investor · Holley, NY · Member since 2011 · 507 posts · 347 votes
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    We have coin ops in smaller buildings, so I am interested in hearing from others as well.  Do you have the ability own and keep up with your own machines? They aren't that expensive and, at least based on our experience, they are low maintenance, especially if purchased new.  Do you have someone (or can you) empty the coin boxes once per week and check on them? Will also need somebody to watch for cleanliness in the room a couple times during the week. In our buildings, we put it on the tenants to clean up after themselves.  This was an issue one time and we left a message on the machines that if they weren't used responsibly, they would be removed and they would be hauling laundry to the laundromat.  Problem solved

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  • Jassem A.
    Investor · PA · Member since 2013 · 1k+ posts · 602 votes
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    It would probably cost less in the long run to just provide a hot and cold spigot, a drain pipe, and a dryer receptacle in each unit so the tenant can hook up a washer and dryer.  I stayed in an apartment one time that worked with a company that leased washing machines that connect to the kitchen sink and also dryers that run on 120V. I think it was under $50 a month but I would rather have had the option to connect my own washer and dryer.

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  • Oren K.
    OP
    Rental Property Investor · Toronto, Ontario · Member since 2012 · 538 posts · 298 votes
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    @Adam Johnson - Yes I have the option of purchasing and I am considering it but everything hinges on how much the machines will get used which in turn depends on how many people live in the building and how much laundry they generate.

    As well, it depends on how you look at the laundry room. If the room is an 'amenity' then there are enough other things to deal at the property. Peace of mind that someone else is responsible to deal with any problems does have value. I am willing to give up a bit of income to take it off my plate. If the room is expected to be a profit center (and there is enough to make a difference), then I am more willing to 'spend' my time and effort dealing with it and making sure it is operating at the best possible level.

    With respect to coin vs. card; I have had tenants come up to me and ask if card system will be installed. They actively want it and there are a number of benefits from a landlord perspective; No/reduced vandalism of the laundry machines, Only one location has to be secured, Audited reporting from the machine that adds value to their cards.

    @Jassem A. - I am not inclined in that direction for several reasons:

    • Building is Landlord paid water, tenants would do much smaller loads and to much higher water bills
    • Higher risk of overflow causing unit (if not more) flooding
    • May need electrical work in each unit even if washer / dryer run on 120V to make sure breaker can support the added load
    • Units not built with in unit laundry in mind so dryer exhaust is an issue

    Anyway, I am sticking with a laundry room.

    I know that we have a lot of analytical people here and I am sure some of them have either done this analysis and / or tracked their laundry room metrics. Anyone care to 'Share'.

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  • Adam Johnson
    Rental Property Investor · Holley, NY · Member since 2011 · 507 posts · 347 votes
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    The less scientific approach is to simply run with what you have and add a second set of machines when needed.  Maybe have one card set and a second coin set?

    A good friend of mine has a 19-unit building with only 1 set of machines.  When I asked him why he didn't have more, he replied that it maximizes his return, he lets the tenants figure out when the machines are available.  His machines run almost non-stop and he has no complaints.

    This might be a bit extreme, but it supports the argument that if tenants have ANY option besides hauling laundry to the laundromat, it is an amenity and adds value.  It seems like you may be trying to "reverse-engineer" whether the previous owners decision to have 3 sets of machines was the sensible solution.  I like your idea of 1 laundry room as opposed to 3, that makes a ton of sense.  You may find that it is much more efficient for your tenants and therefore saves buying the 3rd set of machines.

    Consider this - 3rd floor tenant walks to the 3rd floor set of machines, finds them in use, and never goes to the 2nd floor to see if those are available.  That's the old way.  With your way, same tenant goes to the 1st floor laundry (only choice), finds one machine in use, but the other 1 available. Now you have a happy tenant and better utilization of fewer machines.

    I am a "ready-shoot-aim" type of manager.  I like the 1 laundry room idea a lot.  In your shoes, that would be a no-brainer choice.  I would then run 1 set of machines until it becomes an issue.  That is easy to figure out by how fast the coin box fills and/or when you get complaints or you ask tenants whose feedback you trust.  At that point, add a second set of machines.  I would wait a long time before adding a 3rd set.  It might seem to be an inconvenience, but ask your tenants and I bet they will say waiting for a machine still beats lugging laundry to the laundromat and sitting there bored out of your mind waiting for it to finish. 

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  • Giovanni Isaksen
    Investor · Bellingham, WA · Member since 2010 · 308 posts · 230 votes
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    Great discussion. I've see usage all over the map. Some properties you'd swear that tenants had a side business doing other people's laundry to tumbleweeds in the laundry room. Looking forward to the replies.

    One thought about consolidating the 3 laundry rooms; is there some amenity that you can provide in the former laundry rooms? I would think that tenants would appreciate having laundry on their floor and would take more ownership in them but if the rooms are large enough to serve other purposes (yoga room, conference room, lounge, etc.) you could increase the competitiveness of the property.

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  • Oren K.
    OP
    Rental Property Investor · Toronto, Ontario · Member since 2012 · 538 posts · 298 votes
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    @Giovanni Isaksen Yes - I have thought about both topics; Room on each floor and what to do with the now available space. 

    There are pros and cons to having a room on each floor. The pro for having it is primarily less of a walk to get to the laundry room for most tenants. I do not think they will take any 'pride' in the room but who knows. If anyone can make more of an argument for keeping things the way they are, I would like to hear it.

    On the other hand, by putting them all in one room:

    • Simplify Security
    • Simplify Cleaning
    • Less chance of all machines being busy when tenant wants them
    • Reduced number of units directly beside laundry room (Noise concern)
    • All 'decorating' goes into one room

    I'm sure there are others but you get the idea.

    As to what to do with the other rooms, I was playing around with the following idea; Turn one into a 'study' room / lounge with a few inexpensive chairs / tables, perhaps some bookshelves with paperbacks (You can literally buy them by the pound), some limited guest WiFi (I have internet at the building already).

    Open to other suggestions.

    Still looking for some actual numbers regarding Small/Mid-size (20-80 units) building machine utilization rates. Anything would be useful.

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  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
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    @Oren K. voiced the question that immediately came to my mind when I read your original post at the top of the thread.   Do you have a higher and better use for the rooms on each floor?  Storage lockers?  Bicycle Room (ground floor would be best for that), vending machines, etc.

    Does the building have (an) elevator(s)?

    If If you are going with a card-based laundry system {which I would highly recommend} are you key-passing the doors as well?    If so, you have an option to keep laundry on each floor and restrict access to tenants on that floor.

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  • Oren K.
    OP
    Rental Property Investor · Toronto, Ontario · Member since 2012 · 538 posts · 298 votes
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    @Roy N.  As I said in my last post, turning one of the rooms into study room / reading room is one possibility. Storage room is another possibility. While I do not believe there will be any demand, it would be inexpensive to set up and who knows.

    Yes I am going with a card system for the laundry machines but do not plan on restricting access to the room. Interested in your thinking on why this might be a good idea for the cost of installing a strike plate & reader?

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  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
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    Originally posted by @Oren K.:

    @Roy N.  As I said in my last post, turning one of the rooms into study room / reading room is one possibility. Storage room is another possibility. While I do not believe there will be any demand, it would be inexpensive to set up and who knows.

    Yes I am going with a card system for the laundry machines but do not plan on restricting access to the room. Interested in your thinking on why this might be a good idea for the cost of installing a strike plate & reader?

     We always keep the laundry rooms locked to restrict access - mostly it keeps kids from playing in them - but it does keep vandalism down.  However, my reason for mentioning it above was in the instance you decided to keep all three laundry rooms.  You could restrict access to only tenants from that floor - this could be particularly attractive if it is a building without an elevator ... even with one, if someone on floor three does not need to run to the ground floor to do laundry.

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  • Oren K.
    OP
    Rental Property Investor · Toronto, Ontario · Member since 2012 · 538 posts · 298 votes
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    @Roy N. I have spoken to several people about the value of multiple rooms vs. 1 room; property managers, laundry people, etc. The overwhelming opinion is  that having multiple rooms has some marginal additional amenity value but very little. Also, the vast vast majority of buildings have only one room (or 1 room per building at best).

    It is a matter of mind set; If tenants move into a building with only one room, that is all they expect. Older tenants may be more of an issue in they are loosing the convenience of having the room on their floor.

    At this property, only one room has been operational for at least 3 years (if not longer) on the second floor. While moving the room to the first floor will cause some inconvenience to 2nd floor tenants, they will see improvements in terms of machine quality, wash card, room decor, etc. Overall, I believe a net improvement.

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  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
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    @Oren K.

    I tend to agree with you - but we've only every had a single laundry room, so I was wondering if you had explored the value of maintaining all three.

    Would there be any value to your tenant population if you maintaining the laundry room on the second floor and used the ground floor space for bicycle parking/storage?   Having a secure storage room for bicycles saves having them lugged up elevators and stairs.

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  • Oren K.
    OP
    Rental Property Investor · Toronto, Ontario · Member since 2012 · 538 posts · 298 votes
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    @Roy N. - Keeping it on the 2nd floor was my original intent and I still may do it. 

    On the one hand the 2nd floor room is just above the boiler room and just below the electrical room; simplifies any plumbing, electrical and gas work that needs to be done, as below electrical is the only real concern. Also avoids any 'inconvenience' to 2nd floor tenants due to a change.

    On the other hand, the 1st floor room already has enough water and gas going in there, just like the 2nd floor room, to accommodate 6 machines so the only real work is the electrical to make sure it can handle the load. The big plus of the 1st floor room is the concrete slab which will minimize vibration transfer to other units and noise. Also, if there is ever a flood (suds, faulty shutoff etc.), it will not spread to other units or cause any real damage to the room.

    I have not seen one bike at the property since fall of last year when I took possession. Also, from what I have seen of the tenant base, they are mostly older and not the bike riding demographic. That may be because they don't have anywhere to park it but still.

    Keep coming back to my original question; What is 'normal' utilization of a machine in a buildings of 20, 40 or 60 units and how many machines is this spread over?

    Roy - How big are your properties (units, people, whatever measure) and what do you see?

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  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
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    I would consider the noise factor for any room where people can congregate like a reading room.   I don't have personal experience for apartments but I do know that teens tend to find these places and any place where people hangout can become a noise issue. Not sure your pool of renters. 

    Also to me the second floor would be pretty even for everyone to get to but you know the rooms and there are probably other factors. First floor might also be the quietest for adjacent tenants.  Let us know what you wind up doing.

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  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
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    @Oren K.

    At the moment we have nothing larger than 16-units.   We are dancing on two 25+ unit deals, but the sellers still expect too much.   On our smaller properties (<=6) we have done away with laundry rooms in favour of en suite laundry.

    The only time we have studied "utilization" is when we were trying to develop ratios for machines to tenants/units.  We found that we needed a minimum of 2 laundry pairs, but only needed three for 16 units.   In the 30-unit we are dancing around, we would plan to start with only 4-pair and see if that would handle the demand.

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  • Oren K.
    OP
    Rental Property Investor · Toronto, Ontario · Member since 2012 · 538 posts · 298 votes
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    @Roy N. - Been a long time since I've actually done the math but this makes perfect sense from a queuing perspective. As the number of sets of machines (stations) grows, the number of units (people, loads), that can be serviced grows at a much faster rate. The math behind this depends on population, arrival rate and servicing time at each station. The same applies to bank teller lines, call centers, computers, the internet, and any other place where you line up for a service.

    For apartment laundry rooms, you would also factor in that the arrival rate is not constant. There is probably one peak in the morning and a higher one in the evening. Also, I would suspect that weekends would have the highest peak usage.

    I remember, back in the day, when studying this, not understanding why supermarkets do not use a 1 queue lineup as it would be better for customers as they would no longer have to 'guess' which line would be 'faster'.

    Thanks for the numbers. 

    Anyone else care to share?

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  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
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    @Oren K.

    Yes, it is a classic queuing theory problem, much like service lines at the bank or supermarket, border crossing or sizing an email server for an ISP.

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  • Oren K.
    OP
    Rental Property Investor · Toronto, Ontario · Member since 2012 · 538 posts · 298 votes
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    @ken barrett - Just ran across your posting in thread 

    http://www.biggerpockets.com/forums/52/topics/1089...

    and that is exactly what I am trying do. Can you provide any hard data on 'typical' utilization rate for a 40 unit / 64 bedroom apartment building? Also, how many machines do you think would be needed; 2 sets, 3 sets, more?

    Any information would be helpful.

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