Article Of The Week

INCREASE CASH FLOW WITH COIN LAUNDRY MACHINES

We have all heard the prospective tenant call and ask if there is a washer/dryer in the apartment and if not, are there laundry facilities on site. If you answer no to both questions there is a good chance you are losing good prospective tenants. Why not consider giving them something they want while improving your cash flow at the same time.

One of the main benefits of installing a washer/dryer (in addition to the money they generate) is it will make you more competitive in attracting new tenants and keeping the existing ones happy. If tenants are happy, they stay longer which means lower vacancy rates and a better cash flow. It also improves the marketability of the property at sale time because the laundry income is added to the rental income which increases the value of the property.

My experience with coin operated washer/dryers shows a break even cash flow with as few as three units in a building. I have found on the average one washer/dryer will support eight units. Each unit will do an average of 12 loads of wash a month (more with 2 or more children) I try to charge the same or slightly more than a laundromat. I charge one dollar for a wash and 75 cents for a dry. Using these figures, the average tenant will spend $21 a month in your machines. A good commercial washer and dryer can be purchased for $800 which includes the coin boxes and keys. If 8 units spend $21 a month, the machines will take in $168. The cost of water/sewer and gas (always buy gas dryers) will be approximately 15% of the revenue for a net amount of $143 a month. (If you do not have gas to the building add an additional 8-10% to expenses for electric dryers) This means in less than six months the machines will be paid off, your cash flow improved $143 per month and you are providing a service to the tenants they really appreciate!

Do not enter into a contract with a washer and dryer leasing company. Why share the profits with them in return for supplying the machines and doing the repairs. Most coin operated leasing companies have two plans. Both will install the machines and guarantee repairs but the similarities stop here. One plan allows the leasing company to take the money out of the machines and send you a check for approximately 60% of what they take out. (I had this plan and always wondered how much was skimmed off the top before figuring my 60% ?) The second plan gives you more control because you have the keys and then pay them a monthly fee for the rental of the machines and repairs. Both options are big money makers for the leasing company and very expensive when compared to doing it yourself. Buy the best commercial machines (Speed Queen and Whirlpool are excellent) because they are made to stand heavy usage and require very little maintenance. I have machines I purchased new five years ago and have never had a service call. I have received phone calls for problems such as removing foreign or bent coins from the coin box, removing clogged lint from dryer hose's, and having to re-light a pilot light on a gas dryer but nothing more serious than this. All of these problems were solved in less than five minutes.

The only negative problem I have encountered is someone vandalizing the coin boxes. After replacing the coin box I put a large sign over the machines. - The next person to vandalize the machines will cause them to be removed or the price to operate the machine will be increased to pay for my expense to keep them in working order. The choice is yours. I have not had a problem since the sign was posted.

The positive benefits of coin operated laundry machines far outweigh any negatives. For me the best part of owning the machines is providing my tenants with something they want while rewarding myself - collecting the money from the coin boxes!

Don is author of Down to Earth Landlording and is a contributor to our "Tip-of-The-Week" segment.