Should You Add A Laundry Room?

“There is no reason that the universe should be designed for our convenience” John D Barrow

Although the universe is not designed for our convenience, providing a small convenience to others can result in dollars in our pockets, better and longer-term tenants, and thus a greater return on investment.

Today I am talking about laundry. Not an exciting subject, but one which affects each and every person that we come in contact with. I have personally owned and sold buildings with and without laundry rooms and they can be a plus in attracting good tenants.

WHAT IS YOUR UNIT MIX?
If you have a large amount of 2-bedroom apartments, your competition will most likely provide some kind of laundry facilities. With larger units or even 2-bedroom townhouses, you may want to consider laundry hookups in individual units. If you have a building with a room you can use, you may want to install your own equipment.

RENT OR OWN?
There are companies such as Web, WASH, and PWS that can provide service and install equipment for you. They will even collect the quarters. The larger companies have good monitoring and record keeping. Some of the smaller ones do not. Be sure to check out the company’s reputation with other owners and the Apartment Association before you sign a contract. The contracts are usually for 5 years, but I have seen much longer. Try to get a shorter contract that you can renew if you like, and move on if it is not a good fit.

YOUR OWN CONTRACT
This won’t work for everyone, but I had a client once who negotiated his own contracts with laundry providers. He had a large number of buildings and was an excellent negotiator. He was able to substantially reduce the percentage of the income that went to the laundry company and thereby increase his cut. He even used his own contracts. His feeling was that they were renting space, like any other tenant, although they were providing a service and that the price and terms should be set by the owner (him). If you own one or two buildings, this could be difficult.

YOUR OWN EQUIPMENT
I have a client who does syndications, or group investments in apartment buildings. He and his partner put offerings together for investors, they then operate the building until the group decides to sell, usually several years later.

One of the things he almost always does is install laundry in the individual units. He is able to get better rents which offset the cost of the machines and installation.

The client I mentioned earlier, who negotiated his own contracts, finally decided to do it all himself. He installed his own equipment in all his laundry rooms and took on the job of collecting and serving. His laundry income went up more than even he had predicted.

DOWNSIDE As with anything you do, you are taking on another responsibility. The companies will take care of most of that, but it will reduce your profit. Your water bill will go up. Also, somebody has to keep the laundry room clean and maintain the equipment.

I think that the added potential for better rents and the laundry income will add to your GROSS SCHEDULED INCOME, but you have to decide if it’s feasible, space- wise and if will it work for you.

“Life is about timing.” Carl Lewis

What we at PRS PROPERTIES CAN DO. We can recommend experienced licensed contractors who can perform the work and help obtain the required building permits. We can also discuss with you the current rents in your area and supply you with comparable rental prices for similar properties to make sure that your proposed changes will result in the return you are looking for. We can also look at your building for changes that might allow you to get a higher value in order to create value without huge expenses for your building. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We always have many investors who are looking for “as-is” properties and are willing to purchase with low rents, a moratorium, or even with a problem tenant in place. We have put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are in 1031 exchanges and need to identify a replacement property before their 45-day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted, and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.

Remember – KNOWLEDGE IS POWER!