Approach to multifamily shared laundry rooms?

Question

Multifamily investors, how do you handle shared laundry rooms? Specifically, do you outsource to a third party the maintenance of the machines (and split profits) or is this something your property manager oversees? I’m looking into Mac-Gray as a potential servicer the laundry room, as well as a local company in the Phoenix, Arizona area where our 22-unit multifamily property is located. I’m new to multifamily investing and I’m the project manager for this cap ex project so any input is appreciated.

Mark OGara · Answer

We have a buy, renovate and hold strategy for our multiunits.  Where we can, we install a stackable washer/dryer in the unit and moved the old machines out of the basement.  The tenants love have a stackable in the unit and we get to charge a higher rent.

Marcel Theisen · Answer

I only have a 4-Plex but even so found that dealing directly with laundry was a hassle and the maintenance on the machines (tenants tend to overload them) was costing too much so after the first year I outsourced it to a 3rd party. They put in the machines and do all service calls for 50% of revenue.

Before signing contract make sure you negotiate. Many companies want a long lease (they wanted 7 yr lease). I negotiated down to 2 yrs and got them to buy and haul away the my broken washer /dryer. Also careful with auto-renew clause that some sneak into contract. Best to get two bids and counter offer on  terms and revenue split percentage to get best deal.

Oren K. · Answer

Went through this in the Cleveland Ohio area about a year back (see link below). A little bit of searching with Google will show you any number of horror stories with various vendors. The biggest one is the auto renewal that they try to include. Basically if you don't time the notification of NON-renewal in a small window, they lock you in again.

https://www.biggerpockets.com/forums/432/topics/18...

There are only a couple of national service providers (Coinmatic, Wash) and then there are regional & local players.

There are several good points in the thread. If you contract out, I would highlight not getting locked into a long term contract, no negative option renewal and keeping in mind that the supplier has to make money as well.

The contract I signed was for 3 years, explicit renewal after the initial term with an out clause if they do not respond to 2 emergency call outs in a row within 24 hours, flat monthly fee for all servicing and emergency call out and a laundry card based system (reverse ATM) included. My PM picks up and deposit all the cash in the building account. I also wanted counters on the machines to track actual usage but that would have required an more sophisticated set up that I was not willing to pay for.

In the 8 months since the room was finished and in regular use, income has more then covered servicing costs and utilities which is all I am looking for. Also, when we started, the building was only ~ 50% occupied and I only put in 2 washers and 2 dryers. Occupancy has  improved (~75%) and as we cross 80-85%, I will likely put in a 3rd washer and dryer.

Hopes this helps.

Christina L. · Answer

Agreed @Gino Barbaro. We're taking the approach to outsource where it makes sense so we can focus on growing our business vs. handling all the minutia.

Gino Barbaro · Answer

@Christina LaBorde

Hi Christina

We use coin mach on our properties.  We started out with 60 them 40 us, but got that flipped.  They come in, give us new machines (pre conditioned) and they maintain the machines.  We normally take the machines that were on the property and sell them on craigs list.  I like using the service.  Some landlords will balk and not want to give up revenue. They are right.  I just think it frees up our maintenance crew to serve the tenants and leaves the headache of fixing laundry machines to an outside company.

Gino

Anna Marie A. Ehia · Answer

Where I used to live the washers and dryers were operated using a laundry card, much like a prepaid credit card.  The tenants would buy the card from a machine in the managers office and there they would also refill the laundry card.  If there were any problems with the machines the tenants would call the owners of the laundry machines directly.  This took the burden off the Landlords.  It works out pretty well, especially because no money was in the Laundromat it all went in the Managers office.

Christina L. · Answer

Oren K. - thank you for this great information. Yes, this absolutely helps. I'll be working on researching terms with vendors this week and next so this is perfect timing. Auto renewal is something I will definitely include as part of the research. Mac-Grey is another national provider I'm familiar with so I'm planning to get a quote from them as well.

Gino Barbaro · Answer

It really is a mindset.  Do you want to collect every last nickel or grow your team and your business.  It feels as if years ago the first approach worked and you could create wealth that way.  But nowadays you need to grow and expand your presence and your ability to add value

Gino

Christina L. · Answer

@Gino Barbaro - thank you for the input. I added Coin Mach to my list and just submitted a request to them for a quote. We're leaning toward a service vs. having our crews handle the laundry. True we give up a portion of the profits, but from what I've found so far, it'll save time and money in the end to bring in a service.

Melissa Gittens · Answer

Thanks!

Approach to multifamily shared laundry rooms?

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