All Forum Posts by: Jeff Bridges

I think this is a lesson learned for not only Rehaan but also others considering foreclosure auctions in lieu of traditional real estate owned (REO) sale processes with title company handling the closing. When you have a traditional sale, the title company will be researching the title chain, liens, and get a worksheet from the HOA on any outstanding balance as well as future HOA fee obligations. You also get title insurance which will protect you against any lien claims after you close. With an auction, you need to do all of that due diligence on your own. No one owes you anything and as a result, its easy to miss something as a new investor. I only dipped my toe into auctions after sticking with foreclosure sales and short sales done which helped me understand what gets checked and how HOAs work. Even then, I still only buy bank owned properties (post trustee sale) on auction.com so I can get title insurance and have 30 days to for my title company to research all title history and liens. There is too much risk for my comfort level with a trustee sale/foreclosure auction that I can't mitigate with a title company to help with that due diligence because of how those auctions work.

They also recorded some webinars on the topic. The webinar recording link is shown in the 6th response in that thread for your viewing enjoyment. They dont let me paste that link for some reason. Those could be of help to you.

https://www.biggerpockets.com/forums/844/topics/51...

you're in luck! Really good guides with examples were created on the different investing strategies and all of the criteria lingo like 1%, cap rate, etc. Those will keep you busy and give you guidance on next steps:)

https://www.biggerpockets.com/guides

We dumped Coinmach/CSC once they added their mandatory "10% admin fee" to our profit sharing agreement, lowering our overall profit. I recommend getting a quote from FMB laundry, which has a strong presence in the mid-atlantic area. We have machines that are exclusively smartcard where each resident tops up their card using debit card on website or app, then they use an issued code to add that new balance back to their card using an onsite revalue machine. As a result, no money is accepted onsite, no machine coin bins fill up, no vandalism and tenants dont need to collect quarters to do laundry. I recommend trying to ask for a quote with no minimum vend revenue before profit sharing begins and 50/50 profit sharing or better (on all revenue) in your favor depending on how large your building is. We were fine receiving refurbished equipment in exchange for a 5 year agreement (vs 7 year) and better profit sharing ratio of 50/50.

see if upstairs resident can put in area carpets to reduce overall sound transmission in the rooms instead of bare hard wood everywhere. Additionally, tell tenant to purchase a white noise machine or run a fan in the bedroom to create white noise and drown out the small noises they will hear from upstairs owners. The white noise machine was pivotal when I lived in apartment with poor insulation between units. The Lectrofan White noise machine is great! $20-$50 white noise machine sounds a bit cheaper than installing insulation or doing rehab to fix the noise problems.

If you cant find competition to match or beat, I would suggest one last ultimatum saying your partners need to have 50/50 to make the deal work or you'll just keep using your old machines or whatever you already have. since they cannot remove the admin fee, that means they have to give you 60% profit share to get the 50/50 your partners minimum allowable terms to want to make such a long commitment. Then walk away and let them stew on it and see if that gets you the business. Tell them to talk about it with their management and let you know if they want to earn your business.

I think you've negotiated to a much more reasonable position with terms that are more equitable to the building owner. I'm still not a fan of the Admin fee. It's another way of saying I'm giving you 43% profit share and disguising it as 53% profit share on paper to you. Let's call it what it is , 43% profit share. That's still not 50/50. Is this the best of all vendors that provided you  with proposals? Have you shared the terms of this proposal with another vendor and ask them if they were interested in beating it to earn your business? This vendor will not be able to remove their admin fee, so in order to avoid it, you will need to select another vendor that doesnt require one.

Is your building a walk up? Is it wheelchair accessible to begin with? Mine is a walk-up only and the laundry is down the stairs in a basement, and therefore there is no one to accommodate ADA style. ADA style would not be relevant to my building. I'm sure it has to be incorporated into new construction for multifamily but not sure if its required for existing buildings. you'll need to check your local resources.  I dont know.

also, to be clear, some vendors will not budge with the monthly minimum. I had to find a proposal from another reputable but smaller regional company to get the contract terms that worked for me and had no monthly minimum per machine. It totally can be done and they are betting on you not wanting to shop around and take the first contract offer with terrible terms. I recommend you do the same if they are unwilling to give you good terms. You need to get multiple bids for sure.

 I think you are going to set yourself up for disappointment with allowing them to set a high minimum like that per machine. I got a proposal from coinmach for $17/machine for a 13 unit with 60% profit split. That was after I negotiated their their initial proposal down from $20/machine and 50% profit. Plus they dont advertise that they have a 10% admin fee so your profit is actually 10% lower than whatever is in the contract (not all vendors charge admin fees, but you need to check). You should easily be able to get a lower minimum with 20 units. so the number one takeaway is all terms are negotiable. The number two takeaway is don't accept B.S. minimums per machine. What you are saying is they need a minimum of $112 for all machines before you get ANY revenue, which by the way is split in half or 70% at that time. I think you might be in danger of not ever even meeting the minimum revenue, meaning you get nothing each month and there is no risk for the vendor. Instead we found a vendor who did a straight up 50/50 split on all revenue, with no minimums. Your building does not seem at risk of the machines not getting used and revenue not coming in. I think you should shoot for a vendor that can do without the monthly minimum per machine. Thats a sweethart clause for the vendor and not in your best interest. Tell them your bringing them lots of revenue with 20 residents and they should be fighting for your business with competitive contract terms. straight 50/50 or better is what you should shoot for.

 I have a few recommendations and opinions. get multiple quotes from 2-3 vendors and use that to get them to match or beat one another. There are alot more terms than just the term limit. But to start, I would only consider a 5 or 7 year term. Imagine being locked into a 10 year contract with a vendor with horrible customer service and you cant do anything about it for a decade?! you should expect for a minimum of a 50/50 profit split, but you can likely get better like 60/40 or 70/30 if you have alot of units and revenue. That should not be dependent on term length. Don't let them set a minimum monthly revenue before payout of the profit sharing, it should be a profit split for all revenue period. Anything else is in their favor. Ask for new machines only to be in your contract, otherwise they can put in refurbs and they are within their right. Find out if its going to be coin op or card operation and if they accept debit card etc. Mine is residents load their smart cards via debit card on an app, so vendor does not need to collect coins or any money from onsite. I like this as machines wont fill up with coins or we dont have to worry about machine break-ins in the laundry room. So be clear on the method of payment for the machines and what those options on. Make sure they offer monthly audit reporting on their contract with all payments.  Look at what the renewal terms are. are they automatic? do you have a tiny window to non renew? If so, ask to change it to go to month to month after the initial 5-7 year term. Those are the ones at the top of my mind.

Once you get some more quotes, share them on this thread and we can provide more feedback on if its a good or bad deal. I dont mind giving you an opinion either private message or on the board. dont make any commitments before checking with BP or checking with existing customer references to see if they are happy with the maintenance support and overall timliness of service. they need to fix the machines on a timely basis.

example of how smart card payment words (we used debit card payment, which does not have credit card fees for the vendor). They will charge alot more if they offer to place credit card readers. Not all vendors offer smart card/ value transfer machine vending, so you will need to shop around for vendors that can offer this.

https://www.laundryroomequipment.com/technology-so...

Here are some other reads I recommend to get ready to deal with the contract gotchas:

Negotiating Laundry Room Contracts

https://www.alblawfirm.com/articles/negotiating-la...

https://www.brickunderground.com/blog/2014/05/ever...