NEXUS PROPERTY MANAGEMENT 101: The Truth Behind Coin Operated Laundry Machines And Storage Units

YES, THESE AMENITIES ADD SOME VALUE, BUT DON'T OVERPAY FOR HYPE

In a world of podcasts, email subscriptions, and Youtube, the loudest voices have a larger impact on perception than is ideal. With that in mind, we’re seeing and hearing more and more from the “real estate investment gurus” out there about the incredible value that comes with purchasing a property with storage units and the great financial advantage of coin op laundry machines. Nexus’ Jesse Mayo is here to add some much needed nuance to the conversation.

A BIT OF CONTEXT TO BEGIN

First off, we at Nexus are fans of coin op laundry for multi-unit properties. It creates convenience for your tenants and adds value to rental units as a whole. Being able to do your laundry on location is worth a couple bucks if it saves tenants the hardship of having to go to a laundromat. As a landlord, you set a price that is appropriate and it will help you cover the extra water and electricity usage, with a couple bucks left over that in time pays for the machines themselves. Typically the math works out in your favor and tenants are happy to pay for this convenience. It’s a win-win.

Similarly, offering space for storage is another perk that will attract high quality tenants to your rental property. In a rental market where so many people are priced out of buying a home themselves, more and more tenant candidates are coming to you with possessions they’ve compiled over their years as renters. Having a reliable place to store these can add great value for tenants.

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WHERE HYPERBOLE SETS IN

The reality is that offering these things is good for you as a landlord because it helps attract strong tenants. But…and this is a huge but…it does not lead to significantly higher profits!!! And this is where the problems arise. There are many talking heads out there targeting investors by touting coin op laundry and storage units as great opportunities for “additional revenue streams”, but that is a significant oversell.

Recently, in looking through potential investment properties for clients, we came across a listing that featured “GREAT ADDITIONAL REVENUE STREAM WITH 6-BAY GARAGE BEHIND BUILDING”. These types of listings are disingenuous because renting those units out individually is not nearly as easy as it might sound. The demand just isn’t there. Similarly, it’s rare that these storage areas are fully emptied. We’ve seen many investors acquire a property with extra storage thinking they were gaining an extra revenue stream, but it actually cost them hundreds of dollars to remove and dispose of left behind items.

On the coin-op laundry side, there’s the important consideration of how you’re going to collect the money. Unless you’re nearby and can collect the coins regularly yourself, your profits will be eaten into by the labor necessary to maintain this additional revenue stream. That’ll include collection, rolling quarters, and depositing at the bank.

LEARN MORE: YOU ARE NOT GIVE UP CONTROL WHEN YOU HIRE A PROPERTY MANAGER, YOU’RE GAINING A TEAMMATE

CONCLUSION AND NEXT STEPS:

Extra storage and coin-ops are not significant revenue streams for investors, but they are valuable conveniences for tenants. Don’t be misled by listing agents trying to prop up the assets of a property. If storage units or coin-op laundry do exist in a property you’re interested in, they should be viewed as icing on the cake, but really nothing more.

Jesse Mayo is the owner and general manager of Nexus’ Worcester, Massachusetts franchise office in addition to being an experienced real estate investor himself.

There is no doubt that having a professional in your corner, regardless of the arena, is the best way to maximize results. Reach out to the Nexus team closest to you.

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Mick Lefort is the General Manager of Nexus' New Haven County Franchise Office and the Vice President of Operations for Nexus Property Management®, a National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.

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