If I only had a roll of quarters for every time I heard that statement from an apartment owner interested in purchasing their own machines. After further research, they usually come to realize that the “agitation” of owning their own might be more than they think.
Before we get “soaked up” in our topic, let me “flow” a few fun water facts your way:
- Water expands by 9% when it freezes. Frozen water (ice) is less dense than water…which is why ice floats in water.
- The human body is about 60% water. An apple, pineapple and mango are each up to 83% water.
- In a 100-year period, a water molecule spends 98 years in the ocean, 20 months as ice, about two weeks in lakes and rivers, and less than one week in the atmosphere.
- It takes about 6,800 gallons of water to provide the average meal for a family of four!
Okay…back to the subject at hand. A large part of our new business comes from owners and managers who are tired of owning their own machines, and dealing with the hassles that go with it.
Their intention was noble going in: “Purchase my own machines and collect 100% of the income”. Based on a 50% split with a Service Provider, they think they are going to double their money.
As sweet as that arrangement sounds, that is just not the case. Let’s take a look at some facts, based on a 30 unit property with three washers, three dryers, a gross income of $400 per month, and machines lasting for five years:
Purchase Price: BANG! Right off the bat you are paying (or worse, financing) $7,500+ “out the door” for three sets of new, energy-efficient equipment. With a Laundry Service Provider, there is NO out of pocket cost to you!
Service: All right…you do get a three to five-year warranty on the parts, and 30 to 60 days labor. That’s great! Well, at least until the labor warranty is over. Labor for a typical service call is $145. Based on one service call per set of machines, per year (a conservative estimate), your service costs will pull $2,175 out of our pocket over a five-year term.
Overloading/Vandalism: Sure, you have great residents … ones that would never cram as much laundry as they can in a washer priced at $1.50 or more. When the machines are misused and/or vandalized, you: 1) Have to determine which parts are needed, find and replace them, and 2) Lose the income stream while the machines are down.
Laundry Service Providers dispatch well-trained technicians who have fully-stocked trucks to make repairs on the spot. They can repair minor vandalism the same day, and usually replace a vandalized machine (beyond repair) within a day or two.
Time, Time, Time: It is one of the few things in life we wish we could bottle up and save. “Un-Scientific” 13-day Study with the help of friends and family: Wrapping a roll of quarters and writing your bank account number on it takes an average of one minute and 22 seconds. You could add more time to wash your fingers afterwards (unless you simply lick them clean like my son did!)
With 40 rolls of quarters each month, you are looking at nearly 55 minutes. AND…that doesn’t factor the time waiting in line at the bank to turn in the quarters. Of course, you could run to the local market and use a Coinstar machine…but are you really willing to give up to 10% of your income to them? Hopefully, not.
Residents’ Happiness: Let’s face it…collecting rents is the main stream of income at your property. If the laundry equipment stops working, and is out of service for more than a day or two, problems can arise in more areas than just the laundry facilities. Residents may get so frustrated waiting for machines to be serviced that they will find somewhere else to do their laundry. This will directly affect your income stream.
Plus, if this becomes a factor in their desire to leave, you could be facing the additional expenses associated with re-renting the apartment.
Dependable Service Providers will repair machines within 48 hours, handle refunds directly with the residents, deal with damaged clothes claims, and have Liability Insurance covering the equipment they install. (Often times, laundry room upgrades such as paint, tile flooring, counter tops, etc., can also be provided at no cost to the apartment owner.)
Bottom Line Comparison
Though there are some advantages to owning your own, the amount of money you gain may not be worth what you ultimately could be losing.
If you own your own in our example mentioned earlier, and things go smoothly for the entire five-year term – you would gain an extra $200 per month x 60 months = $12,000. Subtract the $9,675 (Equipment and Service costs) and you are left with a “net gain” of $2,325. Divide that by 60 months and you have just gained $38.75 per month. Oh by the way…that is not including the value of your time dealing with all of the laundry related issues and duties.
And … if you use Coinstar, your gain goes down from $57.50 to a whopping $18.75 per month! That will buy you a bag of chips, a few music downloads for the iPhone, and 1 ticket to a movie (extra for a small drink and popcorn, of course!)
You just may want consider spending your time on other important things, like purchasing more apartment buildings!
John Cottrell, General Manager for All Valley Washer Service, (a Coin, Card-op and Phone-app Laundry Service Provider servicing multi-family properties for over 60 years) has been with the company for over 30 years. Please feel free to send questions/comments to him at firstname.lastname@example.org.