In this article, we’ll be shedding light on the decision property managers often face when it comes to laundry machines in residential buildings. Laundry machines are a common amenity found in basements or on each floor of multifamily properties, serving the needs of residents or owners.
These machines are typically managed in one of two ways:
1. Owned by the Building
When laundry machines are owned by the building itself, the property management team or association retains full control over its operation and finances.
Let’s explore some of the benefits associated with this ownership model:
a. Revenue Collection
One significant advantage of owning the machines is that all income generated from laundry services goes directly to the building. This allows property managers to maximize their earnings.
b. Modern Payment Systems
In today’s digital age, many buildings opt for card-based payment systems, making laundry payment and collection more convenient and efficient. This eliminates the need for handling coins and frequent trips to the bank.
c. Maintenance
Owning the machines means taking responsibility for their maintenance. Extended warranty plans and maintenance contracts can be purchased to ensure the machines’ longevity and performance.
d. Setting Fees
Property managers must carefully set the right laundry fees to ensure they cover operational costs such as electricity and water. Profit generation is essential, as it can offset maintenance expenses.
2. Leased Machines
Alternatively, some property managers choose to lease laundry machines from external companies. These companies typically offer contracts that can span several years.
Here are some aspects to consider when leasing laundry machines:
a. No Upfront Costs
Leasing machines involves no initial capital investment, which can be appealing for properties with budget constraints.
b. Revenue Sharing
However, leasing companies typically take a significant portion of the laundry income, often around 50%. This means that a substantial portion of the revenue goes to the leasing company.
c. Maintenance Responsibility
Even with leased machines, property managers are often responsible for maintenance and upkeep. It’s important to ensure that maintenance costs don’t erode your revenue.
d. Cost-Benefit Analysis
Property managers should carefully assess whether the income generated from leased machines is sufficient to cover operational costs and still provide a reasonable profit.
Choosing the Right Approach
The decision between owning and leasing laundry machines depends on various factors, including the size of the building, wear and tear on the machines, and the financial capacity of the property.
Smaller buildings or those with lower machine usage may find that owning machines is a cost-effective and profitable solution. The upfront investment may be relatively low, and potential tax benefits could offset the cost.
On the other hand, larger buildings with heavy machine usage and significant wear and tear may benefit from leasing machines. Leasing companies typically offer comprehensive services, managing everything from installation to maintenance, which can be a time-saving and hassle-free option for property managers.
Regardless of the chosen approach, it’s essential to closely monitor financials to ensure that the laundry machines remain a financially viable amenity for the property.
Owning vs. Leasing Laundry Machines
Deciding whether to own or lease laundry machines is an important consideration for property managers. Each option comes with its own set of advantages and drawbacks, and the choice should be made based on the specific needs and circumstances of the property.
Consulting with a financial advisor or CPA can provide valuable insights into the financial implications of either choice.
At Boston HOA Management, we can provide expert guidance on this decision and help you navigate the complexities of property management.
