Making Multifamily Money - Jan 24th 2024

Real Estate Updates

Let’s talk about outsourcing laundry units vs buying your own laundry units.

Outsourcing is usually easier (i.e - CSC or Jet) since you don’t own the machines and don’t have to deal with maintenance. Maintenance adds up over time especially if you have 26 units doing laundry 1-2 times per week. If the machine breaks down, you just put in a service request then the outsourced company should fix it (hopefully timely). You pay for the electricity and water then split the profits 50/50 with the outsourced company. I don’t expect to make much money from laundry. It’s just more for tenant convenience.

Downside of outsourcing is it takes forever to fix the machines. It took CSC 3 months to fix 1 washer and you have to wait on the phone for at least 1 hour to get ahold of somebody. While I am big on outsourcing laundry when possible, this poor customer service made me consider insourcing laundry.

2 sets of washers and dryers cost around $3,000 at home depot. I can raise rents by $15-20 per unit for those who want laundry service. Leasing contracts will need to be amended to include this and each tenant will have their own exclusive code to the laundry unit. Assuming 20/26 units sign up for this laundry service at $15/month, that would be $300/month in extra income. The washers and dryers would pay for themselves in 10 months. Assuming no maintenance, all money made after 10 months is profit. If you make an extra $3600/year in laundry income, that will increase your NOI by $3600 which will increase the value by $45,000 assuming an 8 CAP. This is best case scenario.

The reality is these laundry units are made for residential use only, not for commercial use so these machines will need lots of maintenance, especially if tenants are overstuffing the laundry units and washing multiple times per week.

I am going to try owning my own units for the next 3 years and see if it was worth to own my own machines or will I switch back to outsourcing. Stay tuned…

What I Learned

The longer you can delay gratification and continue to do the boring work without much reward, the more likely you will be successful.

Weekly Self-Reflections

The first 10-15 years to achieve financial freedom is the most difficult. Long days. No weekends. Not much social interaction. Living like a poor college student. Grinding. Questioning why you are doing it constantly. Friends and families not relating to your ambitions and goals.

Once you achieve financial freedom after 10-15 years, that’s when it gets easier. Can leave W-2 job and do investing full time. More experienced now so can continue to find better and better deals. Getting the first 51 units was the hardest, but once financially free, buying real estate will get easier and easier.

The key is to start the clock now on your 10-15 year financial freedom journey. The best time was to invest yesterday. The next best time to invest is today.

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