If your building has old, outdated washing and drying machines, or if it doesn’t have in-unit laundry, you’re in luck. Choosing to invest in on-site vended laundry can present building owners with surprising, substantial benefits.
In this blog, we explore how laundry can generate revenue, improve the resale value of your property, and improve your cash flow. Before getting into the numbers, you'll first need to understand the benefits of vended laundry for multi-family residential properties, why it is so important to consider laundry as an excellent business opportunity, and what revenue could potentially look like for you.
Apartment building owners work toward increasing the overall value of their properties by adding income and decreasing expenses where they can. Investing money into a business opportunity without having to do much direct work is the dream for many building owners.
Surprisingly, the majority of people don’t initially think of laundry as being the low-maintenance option for this—but it is. Investing in vended laundry units is an underappreciated way to provide major financial benefits for you and your property.
Having the convenience of laundry in your building will provide you with a constant stream of additional income because tenants will always have laundry to do. This additional and reliable stream is made that much more lucrative because not much work needs to be put into the investment. Laundry machines are low maintenance and don’t need to be serviced that often. This can lead to a decrease in your expenses while also adding resale value to your property.
Along with increased resale value, an investment like this increases your net operating income, which ultimately improves the capitalization rate of your property. Despite being underappreciated, investing money in vended laundry equipment has excellent benefits and it's a business opportunity every apartment or multi-family housing facility building owners should consider.
When someone buys an apartment building, they’re usually not thinking about the other opportunities of revenue that can be generated through that investment. Depending on the size of your units and how many beds and baths are in them, you can generally expect tenants to complete up to four or five laundry cycles per month (in this case, cycles are utilizing both washers and dryers). With the help of vended laundry units, you could potentially be sitting on a huge opportunity to generate substantial revenue that equates to or exceeds the cost of a single unit every month!
When an apartment building owner partners with someone like A.L.L. Laundry, here’s what they can expect:
The beauty of a business opportunity like this is that the building owner doesn’t need to put in much work or capital. The two most important things they will need to do are collect their commission check and pay utilities when required.
In the section below, we outline two scenarios to clearly illustrate the revenue potential for building owners who are considering investing in vended laundry.
In order to fully understand what kind of revenue you could potentially generate from investing in vended laundry, it’s helpful to break down the numbers and illustrate the steps used to calculate what you could earn. When you hire a laundry equipment service provider, you will learn that a percentage of commission and a valuation of capitalization rate are calculated into your revenue total. For example, assuming a 50% commission along with a capitalization rate of between 5. So, how would this affect your revenue if you were a building owner with, let’s say, 100 apartment units? We break the numbers down for you below.
Now that you’ve seen a breakdown of how the potential revenue is calculated and how capitalization rates are calculated, it’s also important to know that buying, renting, or leasing laundry machines from a different company can sometimes lower your gross revenue. Some companies will add on additional fees like a 10% gross fee commission split that is taken out of your annual gross revenue before the usual 50% commission is applied. To better explain, we will break down the same numbers as used in the scenario above, but we will apply the potential fees to show how they can substantially lower your revenue.
Hopefully, both example scenarios clearly illustrate the general process used to calculate the potential revenue you could earn, how capitalization rates are applied, and the fees you may run into when hiring a laundry machine service provider.
An unnoticed and underappreciated form of investment, vended laundry can have endless benefits for you and your apartment building or multi-family housing facility. Improved capitalization rates, an additional stream of income, and an increased property value are only a few of the positive results that come from investing in laundry.
Decreasing expenses is something that all multi-family housing building owners strive toward, and vended laundry can serve as the low-maintenance solution. For more information on investing in on-site vended laundry machines and if it’s the right choice for you, contact A.L.L. Laundry today.