ROI: In-Unit Laundry

I walked past a fancy laundromat + café place today. As a business, I think it’s a great idea (although somewhat indulgent as well), but it got me thinking (as one does) about the economics of laundry, especially in apartments that have laundry on-site. My current apartment has a washer and dryer in every unit. It’s an amazing amenity, and makes doing laundry tolerable. My previous apartment had a laundry room on each floor. Turns out, based on some rough numbers, the former is a better setup for everyone. Here’s how it breaks down (at least in the San Francisco rental market):

  • Rent in my neighborhood is between $6–$7 per square foot, per month. Let’s call it $6.
  • Each floor in both my current apartment and my last apartment has 10 units. Everything below is on a per-floor basis, since many apartment complexes copy the same layout on each floor.
  • Each laundry room in my old apartment had 2 washers and two dryers, and the rooms were a little larger than 6ft × 6ft — say 40 sq ft.
  • Assume $2400 for a washer and dryer — that’s a reasonable retail price for front-loading units, and doesn’t factor in any potential volume discounts.
  • A laundry room would represent $240 per month in opportunity cost.
  • By allocating those 40 sq ft. to rental units, it would take 10 months to pay back the cost of an additional washer and dryer.
  • The cost of eight additional pairs that would be needed to provide a set in each unit would therefore be recouped in 80 months (less than 7 years) — they would probably still be under warranty!

Assuming that, on average, washers and dryers need to be entirely replaced less often than once every 7 years, in-unit laundry provides a better ROI for the owners. Of course, they get to market it as a perk, and it makes laundry much more convenient (and free) for residents. Everyone wins!

One thought on “ROI: In-Unit Laundry

Add yours

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

Create a website or blog at WordPress.com

Up ↑

%d bloggers like this: