Podcast Host, Andrew Schultz, explores the idea of coin-operated laundry machines in rentals. Is it a good idea? Would it turn a better profit?
Also in this episode, what happens when you’re trying to do renovations on a multi-unit property, but it’s disrupting your tenant’s sleep schedule?
Last, but not least, what do you do when you see an amazing investment opportunity, but the catch is that you’ll be stuck with bad tenants right off the bat? Find out in our latest podcast.
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Andrew Schultz: (00:00)
Hey everyone. Welcome back to another episode of the Rent Prep for Landlords podcast. This is episode number 346, and I’m your host, Andrew Schultz. On today’s episode, we’re going to be talking about coin-operated, laundry, and rentals renovating around a tenant schedule and good money, but bad tenants is the deal still worth it. We’ll get to all that right after this.
Voice Over: (00:23)
Welcome to the Rent Prep for Landlords podcast. Now your host, Andrew Schultz.
Andrew Schultz: (00:27)
Before we jump into today’s episode, don’t forget to check out the Rent Prep for Landlords Facebook group. It’s a great free resource for you to network with housing providers from around the country. And if you have a question or a situation that you’ve never dealt with, chances are someone in the group has been there before and can lend a helping hand. As of this recording. We’re at over 11,925 members, and we need your help in the push to 12,000. Check it out today, over at facebook.com/groups/rentprep. And don’t forget to mention the podcast when answering the questions. So we know how you found us
Voice Over: (00:58)
Water cooler wisdom, expert advice from real estate pros.
Andrew Schultz: (01:06)
This week, we have two water cooler wisdoms for you. Our first one comes to us from the Rent Prep for Landlords Facebook group. This is a housing provider that’s considering adding a coin-up laundry to their unit. And they’re just looking for some advice on what others have done in the past. Let’s go ahead and jump right in dear landlords, I operate a small rental company consisting of four studio or efficiency-size apartments. I’m considering creating a laundry room space in the building or on the property with coin-operated, washers and dryers. I’m wondering if the investment will be worth the benefit or profit with four tenants on the compound. Would this be a profitable endeavor? All landlords who have a laundry room space, how profitable or beneficial do you think it is after considering the cost to construct the space and the increased water and electric bill, do you think it would be a worthwhile thing to do?
Andrew Schultz: (01:51)
And again, this one comes to us from the Rent Prep for Landlords Facebook group. So I think that there are a couple of different ways to look at a situation like this. First of all, coin-up laundry is a great opportunity to generate additional revenue on your units, but you have to have enough units for it to be a worthwhile venture. And that’s kind of what the root of this question is. So essentially what you’re going to want to do is run the math on this, to see if it’s going to be worth your while, once you factor in the costs of either purchasing the machines or leasing the machines, what the additional utility is going to cost. And it sounds like you actually have to build out some kind of a space gear to make this a possibility. So that obviously is going to factor into the cost of the entire project as well.
Andrew Schultz: (02:31)
This is going to be a multi-year payback for sure. This is not the type of situation where you’re going to install washer and dryer. And in six months, you’re going to find that they’ve paid themselves off. That’s not going to be the case. This is definitely going to be a longer-term multi-year payback, especially when you’re talking about a small number of units. Like for obviously, as I’d mentioned, the more units you have, the easier it is for this to be a profitable venture, but the more units you have, the more equipment you’re probably going to need as well. So that’s something to keep in mind as well. I recommend as you’re going through and trying to determine what you’re going to be making as a, what you’re gonna be making on the actual units themselves, I would recommend going to some of the local laundromats in the area and see what they’re charging and for what capacity for how long the machine runs in the case of a dryer or something like that, you know, kind of understand what’s going on in the local market so that you know how to price yourself, such that it’s a benefit to the tenants to actually stop and do their laundry there onsite as opposed to hauling it off-site, to use a laundry mat somewhere else.
Andrew Schultz: (03:30)
Something else to keep in mind is that there are places out there that will do leased machines. But typically they’re going to want a chunk of the profit, or they’re going to want them in a busy area. They may say, all right, it’s not worth it for us to place machines. If you only have four tenants or whatever the case may be. They’re definitely going to have some interest in either the they’re either going to want a chunk of the profit of every machine, or they’re going to want some sort of a monthly fee for having the machines on property. The nice thing is with the leased machines, typically speaking, you’re not going to wind up being responsible for the repairs on them, which does occur more frequently than you would expect. You know, coin-up machines, they see a lot of abuse, so you’re, you’re going to wind up doing some maintenance on them, for sure.
Andrew Schultz: (04:12)
So you might be in a situation where if you do leased machines, you don’t have to pay for that maintenance, which could be a benefit to you as well. And I know that I’d mentioned it earlier, but it does. Weren’t repeating, you are going to need to have separate utilities for the machines. It’s not like you can run this off of a tenants, gas and electric, or something like that. You’re going to need to have a house meter more than likely a house gas or a house gas and electric meter, depending on what kind of an area you’re in. And if you have gas or if everything runs electric, you’re going to have to account for that. You’re going to have to have a house meter that you’re paying for as the housing provider that the that these machines are running off of.
Andrew Schultz: (04:47)
So that it’s completely separate from the tenants’ usage. Obviously, that makes sense. It’s, it’s very easy to say, but sometimes it’s easier said than done when you’re talking about running additional lines and things like that. So that’s definitely a consideration to take into account as well. So over the years, we have had a couple of buildings that have had coin operator washers and dryers in them. We’ve had great luck over the years with the speed queen equipment. Their commercial line of equipment is really good quality equipment. We’ve had very few, not very few, but we’ve had fewer issues with the speed queen stuff than some of the other things that are out there. They just seem to be built to last they’re built for the commercial for the commercial market and as such, they can stand up to the abuse of having a ton of laundry run through them over the course of over the course of time.
Andrew Schultz: (05:32)
So they also make coin-up devices that basically sit between the outlet and the machine to add coin-ups capabilities to any washer or dryer. One thing that I would caution you on when it comes to that would be you are going to destroy a residential washer or dryer. If you’re trying to use it for a commercial purpose, such as, you know, a coin-up laundry or something like that, they’re just not going to hold up the way that a commercial unit would. So if you are considering that route of just using a normal washer and dryer and adding a coin-up function to it, you might want to reconsider it. I have not used them, but it just seems like the wear and tear on the machine is probably going to be too much. You’re probably going to wind up destroying the washer and dryer before you ever, ever see any kind of a return on it.
Andrew Schultz: (06:15)
So that’s something to keep in mind as well. Flipside on this is if you’re doing coin-up laundry, you do have the opportunity for theft. Obviously, coin-up machines do get targeted for people that are looking to commit petty theft crimes and things like that. Generally speaking, the, you know, the the amount of effort put into robbing a coin-up machine of its coins is worth less than the amount of coins that people will get out of the machine, but it happens pretty frequently. So that’s something that you’re going to want to keep in mind is the frequency with which you’re emptying if you’re using coins, or if you want to just skip the coins all together and sell either like a prepaid laundry card or allow people to use like a credit debit card, something like that. There are some options out there to avoid the use of coins altogether.
Andrew Schultz: (07:01)
Some of these newer machines could even be controlled by apps. I can remember. I don’t remember what the college was. It certainly wasn’t my college because we were nowhere near that. Cool. But there was a college out there and there’s probably a bunch of them at this point where you could actually check the status of the laundry machines on the web before you actually went down to do your laundry, which was great because then you weren’t walking down and finding out that all the laundry machines were tied up or whatever. But the point of what I’m saying here is there’s been a lot of development in the world of laundry if you will. So let’s talk about this from the tenant perspective for just a second. Having laundry onsite is a huge plus for a tenant because it means that they don’t have to run to a laundromat.
Andrew Schultz: (07:38)
It’s a huge, huge convenience, and it will definitely be one of those conveniences that tenants consider when they’re thinking about moving or something along those lines is having the convenience of that laundry mat, right there onsite again with four units, it might not be quite as financially feasible, but it might be from a convenience standpoint, one of those things that keeps tenants in your place for longer. So even if it’s not generating a huge profit, or if you’re just breaking, even it might still be worth it to consider a coin-up system, just for the purpose of having that convenience for your tenants. And obviously, as I’d mentioned, the more units, the more profitable, the easier it becomes to make decisions like this. So it’s, it’s definitely something to consider. It is a benefit to tenants. It can be a benefit to landlords as well. It can be a profit center to landlords as well.
Andrew Schultz: (08:25)
If it’s set up properly and if you have enough people using the system, essentially, so no matter how you slice it, whether it’s a profit center or not, I definitely think that it’s worth considering, just make sure that you do your math and understand what you’re walking into before you jump in our next water. Cooler wisdom also comes to us via the Rent Prep for Landlord Facebook group, this one centers around a landlord. Who’s trying to work on a unit while trying to deal with a tenant living next door. Let’s go ahead and jump right in. We’re having issues with a tenant who lives next to a vacant apartment, a multiunit complex. The apartment has been vacant for some time prior to acquiring the building. And all current tenants were inherited. The apartment is also in the process of being remodeled. Next door tenant works the third shift and keeps complaining about his lack of sleep from the workers who are there from 8:00 AM to 4:00 PM, Monday through Friday.
Andrew Schultz: (09:12)
Now there’s also another vacant apartment that will also be remodeled, but it is not being focused on currently. It was decided that one apartment would be completed first instead of jumping back and forth. And the tenant pretty much demanded that work stop at 2:00 PM on the unit next door to his and that the other apartment located further away from him could be worked on instead. What do you guys think? I’m even thinking if there wasn’t another apartment to Renault the contractors, wouldn’t be leaving at 2:00 PM anyway, not to mention what happens when new tenants are approved and move into the apartment next door to this guy. So I’ll preface this by saying that noise issues are tough to deal with, especially on third shift workers who are trying to get sleep during the day, I’ve lived that life. It’s not fun. I’m a lot happier now that I’m not working a third shift type of job.
Andrew Schultz: (09:58)
That said if I needed to sleep during the daytime, I had blackout curtains. I would throw a pillow over my head. I would use earplugs if it was loud. I think that there’s some empty empathy to be had here. But at the same time, you do have to be able to get work done. So if the contractors are working from 8:00 AM to 4:00 PM from Monday through Friday, is their work that they can be doing in the last couple hours of the day. That is quieter. Maybe something like painting or whatever the case may be something that’s a little bit lower noise that could help, you know, keep you on target, get your, get your renovation work done while also trying to be at least a little bit accommodating to this tenant that is just trying to get some sleep before his, his overnight shift.
Andrew Schultz: (10:37)
That’s a relatively simple accommodation. And I think that that’s something that most people could probably get behind with minimal headache or minimal disruption to the project as a whole. So another perspective on how to look at this is that if there were, for instance, road crews outside repaving a portion of the road, they’re not just going to reschedule because somebody has a day sleep schedule. You know, if it’s a condo complex and a neighboring condo that you don’t own, they want to renovate their kitchen. For instance, not only would your tenant have zero control, you’re not going to have any control over that situation either. So sometimes things are literally just unpleasant for a little bit. This is one of those situations where if you want to be a champion on this maybe offer your tenant some sort of an upgrade to their unit to accommodate for the inconvenience.
Andrew Schultz: (11:24)
You know, it benefits them. They’re getting an improvement to their apartment. It benefits you because you get to do an improvement to the apartment. It shows the tenant that you’re aware of the situation and that you’re doing what you can within reason. But as far as going too far in, in moving around all of the, the renovation schedule and stuff like that, the work does have to get done. I think that there’s probably some sort of a middle ground there where you can try to accommodate the tenant a little bit, but ultimately this is a very temporary situation. It doesn’t sound like this is going to be a six-month renovation project or something like that. It sounds like this is going to be probably a couple of weeks, maybe a month, something like that. And I’m betting that the bulk of the project is not going to be swinging hammers and running drills and saws and things like that.
Andrew Schultz: (12:07)
This is a very temporary situation that your tenants experiencing. So it’s, it’s something where I would encourage you to find some sort of a middle ground if possible, but ultimately at the end of the day, the work does have to get done. The tenant’s going to have to understand that you’ll try to accommodate if you can, but if you’re unable to accommodate, unfortunately, that’s one of the downfalls of, of living in multiunit housing, where, where work needs to be done during the daylight hours. And they’re just going to have to understand that. So I think that there’s probably some opportunity there to work with a ton of, and the one thing that you did mention is what happens when new tenants move into that unit as well. Your tenants going to have to understand that part of being a good neighbor is recognizing that there is more than one tenant in the building. You are dealing with a multifamily property and that while everyone also has the right to quiet enjoyment, everyone also has the right to use and enjoy their space. So, you know, it’s not an easy situation to deal with. I think that this is one of those types of situations, where there is a compromise that can be made if people are willing to make a compromise. And ultimately, I think that this is a temporary situation that’s going to resolve itself pretty easily over the course of time that the project is being completed,
Voice Over: (13:21)
Forum quorum, where we scour the internet for ridiculous posts from landlords and tenants.
Andrew Schultz: (13:29)
Our forum quorum this week comes to us from the real estate investing subreddit. This is an interesting one talking about a deal that someone’s looking at and the money’s good, but the tenants are bad and how to deal with a situation like that. So let’s go ahead and jump right in. I made a post yesterday about trying to close on a three-unit home that has a really bad tenant and didn’t want to go through with the deal without them being removed after sleeping on it, I’m thinking the deal is too good to pass up. Even if I had to take on the bad tenants. Initially, the seller was trying to remove the really bad tenant before my interest in the home. The other two apartments are rented as well with not exactly the most desirable tenants either, but all three apartments do need to be renovated.
Andrew Schultz: (14:12)
The cashflow is really good and will obviously be even better after renovations with better tenants. Moved in the verbal agreement on the home is currently $120,000. And the mortgage with Texas and insurance will come to about eight 40 a month, all three apartments. Plus the detached garage are being rented at 2360 total. Currently, it’s in a good area, probably a B plus market. And after renovations, I should be able to get closer to $3,000 total a month for just the apartments, which is a really good return, in my opinion, is taking on the bad tenants now worth the headache for a deal like this. So there’s a few pieces of information that are missing here that would really help me to give a, a really good answer to the question. We don’t know, you know, what state are you in? What are the current eviction protections in your area?
Andrew Schultz: (14:58)
How long is it going to take for you to kind of regain control of the asset? That’s going to be a massive factor when you’re looking at any deal right now. It doesn’t matter if it’s, you know, a single family with one tenant in it, or, you know, a 25 unit multifamily with a bunch of tenants, the current state of legislative affairs in whatever area you are in is going to factor into every deal that you’re analyzing right now, because it’s going to have an impact on your, on your finances, on that deal. From beginning to end, you know, it, it can really have a severe impact on your finances. If you buy let’s use our 25 unit building. As an example, you buy a 25 unit building. You find out that seven of those tenants haven’t paid rent in coming up on a year.
Andrew Schultz: (15:39)
That’s definitely going to change the course of the course of action on your, on your property, and how you analyze that deal. So my first recommendation here is tread lightly understand that every deal needs to be analyzed a little bit finer in, in today’s market. That may be in the market of yesteryear if you will. So as for analyzing the actual deal itself, we’re kind of missing some information here as well, such as what kind of a down payment are you putting down? Or are you buying this thing cash? You know, what are the actual taxes? What are those insurance costs? What are the renovation costs going to look like? You know, the cost of utilities, et cetera. It doesn’t sound like if you really factored anything in for, you know, ongoing maintenance management or vacancy either. So the, the deal analysis here, I just simply don’t have enough information to really analyze the deal on any sort of a level.
Andrew Schultz: (16:29)
Also, understand that the condition of the property when you purchase the property is not going to be the condition that you received, those units back when you do eventually get those tenants out of the units so that you can get in into your renovation work. The tenants are very likely going to do more additional damage on their way out. And that’s obviously going to increase the cost of your renovation budget. So that’s something that you’re going to need to take into account as well. From a management perspective, I can tell you that we’ve taken on several new clients in the last couple of months that have, you know, quote-unquote troubled tenants, if you will. It’s a very, very slow go trying to work with trouble tenants right now. It’s definitely going to be challenging. It’s definitely going to be trying. And it’s up to you to decide if that management headache is something that you want to take on.
Andrew Schultz: (17:12)
And if that deal is still going to be worth it to you, you know, we’ve talked about on the show before everybody has a little bit different investment criteria. If you’re looking at this deal as a, you know, a value, add a flip, if you will, you’re going to come in, buy it at 120 repair the units, rehab the units, put new tenants in and sell it for two 40. Okay. I mean, just for, just for the sake of using that number for math you’re in a situation where, okay, you might be planning on a six-month to 12-month turnaround on that project. Okay. If you have a situation where you can’t remove a non-paying tenant for another six to 12 months after you acquire the building, your timeline is now 18 to 24 months to do that rehab times three units in this instance, and who knows how long it’s going to take to get each one of these units turned over if you will, and ready for the flip.
Andrew Schultz: (18:04)
So if you’re looking at it as a, as a potential flip project, I think that this is probably one of those things that might kill the deal. If this is going to be a 20 year buy and hold for you, I think that in the longterm, if you’re getting a good deal, now, it probably does still make sense to, to take on those management headaches, knowing that you’re going to hold this property for the longterm. And what you’re dealing with is essentially, you know, I use the term, we’ll use air quotes here, but a short-term problem, if you will. So we don’t really know how much longer eviction moratoriums and things like that are going to go on. We also don’t know truly what the legislative landscape is going to look like at the end of everything that’s going on right now. So that’s definitely something to consider when you’re analyzing your deals and trying to decide if, if you want to move forward with something that, eh, maybe it’s borderline, maybe it’s, you know, maybe it’s borderline, maybe it’s not quite the perfect deal for you, but it might still be worth pursuing.
Andrew Schultz: (18:57)
If you have a long-term outlook run prep recently released their guide on how to prepare for an eviction hearing, which includes what to bring, what to ask, what to wear and so much more if you’re currently gearing up for an eviction hearing, be sure to take a look at the eviction guide today, by visiting the blog over at rentprep.com slash blog, that pretty much wraps things up for this week’s episode of the Rent Prep for Landlords podcast. Thank you all so much for listening. We truly do appreciate it. Our goal with the podcast is to help as many people as possible make educated decisions when it comes to real estate. And you can help us to reach that goal. If you heard anything in this week’s episode or any of our other episodes that will help someone, you know, please do us a favor and share it with them.
Andrew Schultz: (19:37)
If you’re looking to get in contact with me, I can be reached over at whatsdrewupto.com from there, you’ll find links to everything going on with me over at ownbuffalo, as well as other projects that we’re working on. We recently had a tenant move out in the middle of the night and they left behind some real treasures for us to discover in their apartment. You’ll find that video over on ownbuffalo YouTube page, which is linked from whatsdrewupto.com. Take a look and don’t forget to subscribe. If you’re looking for top-tier tenant screening services, head on over to rentprep.com, there are multiple products to choose from including a tenant paid option. If you’re over 50 doors, ask about enterprise-level programs and pricing. We’ve been enterprise users of Rent Prep for years now, and it’s definitely changed the way that we screen our tenants. Check that out today, over at rentprep.com. Again, thank you all so much for listening. We’ll be back in two weeks with an all-new episode you won’t want to miss until then. I’m Andrew Schultz with ownbuffalo.com for rentprep.com. And we’ll talk to you soon.