Laundry services in large multifamily buildings are a key amenity that can boost tenant satisfaction and property profitability. On-site facilities equipped with modern washers, dryers, and payment systems not only meet renter demands but also generate consistent revenue. Property owners typically choose between three main business models: revenue-sharing agreements, equipment leasing, or direct ownership - each offering varying levels of control, investment, and income potential.
Key Takeaways:
- Why it matters: 93% of renters prioritize laundry access, and properties with on-site laundry see up to 15% higher retention rates.
- Revenue-sharing: Providers install and maintain equipment at no upfront cost, splitting revenue with property owners.
- Leasing: Low upfront costs with fixed monthly payments, but maintenance is often included.
- Ownership: High initial costs but allows full control and 100% of revenue.
- Modern features: App-based payments, real-time machine tracking, and energy-efficient equipment enhance usability and convenience.
Choosing the right model depends on your property size, budget, and operational preferences. For buildings with 300+ units, revenue-sharing is often the easiest and most effective option.
Revenue-Sharing Agreements: How They Work and Their Benefits
How Revenue-Sharing Works
Revenue-sharing agreements create a win-win partnership where both parties benefit as usage grows. Here’s how it works: the laundry service provider installs high-quality washers and dryers at no upfront cost to the property. In return, the revenue generated from residents using the machines is split between the property and the provider. A common split is 50/50, but this can vary depending on factors like property size, equipment needs, and contract specifics [2]. For example, if the monthly revenue from the laundry room is $1,200, both parties typically receive $600 each [2].
These agreements usually last about ten years, providing long-term stability. This timeframe allows the laundry provider to recover their investment in the equipment while giving property owners a steady and predictable income stream [3]. Payments are made monthly, along with detailed reports showing usage and revenue.
As residents use the laundry facilities more, both the property owner and the service provider benefit, creating aligned incentives. Let’s take a closer look at the specific roles each party plays in these agreements.
Who Does What in Revenue-Sharing
In revenue-sharing agreements, responsibilities are clearly divided to ensure smooth operations.
Property owners provide the physical space for the laundry equipment and cover utility costs like electricity and water [2]. They’re also responsible for keeping the laundry area clean and notifying the service provider when equipment issues arise.
On the other hand, laundry service providers take care of the heavy lifting. They install the commercial-grade equipment, manage payment collection - often through cashless systems - and handle maintenance, repairs, and customer support. If a machine breaks down or a resident requests a refund, the service provider resolves the issue.
"We take over management of your laundry rooms at no cost to the owners. With revenue sharing, we actually pay the property owner."
– Matt Miller, President of Coin-O-Matic [3]
Pros and Cons of Revenue-Sharing
Revenue-sharing agreements come with a mix of benefits and trade-offs compared to owning laundry equipment outright. Here’s how they stack up:
| Advantages | Disadvantages |
|---|---|
| No upfront costs – Property owners don’t need to invest in equipment or installation | Shared revenue – Owners only receive part of the total laundry income, typically around 50% |
| Comprehensive service – Providers handle equipment, maintenance, and resident support | Long-term commitment – Contracts often span 10 years, limiting flexibility |
| Consistent income – Monthly payments with detailed reporting make revenue predictable | Utility expenses – Property owners are responsible for electricity and water costs |
| Enhanced resident experience – Modern machines and cashless payments improve usability | Limited control – Owners have less say over equipment choices and service policies |
| Reduced management workload – Providers handle maintenance and customer issues | Contract limitations – Switching providers or renegotiating terms mid-contract can be difficult |
For many properties, the benefits outweigh the drawbacks. Large properties, in particular, see fewer maintenance headaches since the service provider handles repairs and refunds directly [2]. This not only saves staff time but also boosts resident satisfaction by ensuring a more reliable laundry experience.
The detailed income and usage reports provided by the service provider are another big plus. These insights help property owners understand how residents use the facilities, making it easier to plan budgets and improve amenities.
For properties with 300 or more units, revenue-sharing is especially appealing. Managing multiple laundry rooms across a large community can be a logistical challenge. Partnering with a professional laundry service simplifies operations and ensures a more efficient setup.
Is it Worth it to Add Coin-Op Laundry to Apartments?
Equipment Leasing vs. Ownership: Financial and Operational Differences
When it comes to acquiring laundry equipment, property managers generally face two options: leasing or purchasing. Each approach comes with its own financial and operational trade-offs that can significantly influence cash flow and daily management. Let’s break down how these models work and the impact they can have.
How the Leasing Model Works
Leasing laundry equipment allows properties to sidestep hefty upfront costs. Instead of spending $1,000–$3,000 per machine plus installation fees, leasing offers access to commercial-grade washers and dryers with just a small initial payment - typically a few months’ worth of lease payments. This model comes with fixed monthly costs that cover maintenance and repairs, making budgeting simpler. Plus, these payments are fully tax-deductible [5].
"Leasing requires minimal upfront capital (often just a few months' payments), freeing up your cash flow for other critical business operations, investments, or emergencies." [5]
Another perk of leasing is the ability to stay current with technology. With commercial laundry equipment lasting around 10–14 years [8], leasing gives properties the flexibility to upgrade to newer models when needed. Additionally, when equipment breaks down, the leasing company typically handles repairs, sparing property managers the hassle of coordinating with multiple service providers [7].
Why Some Properties Choose Ownership
For many properties, outright ownership of laundry equipment is the preferred route. While it requires a significant upfront investment, ownership eliminates the need for monthly payments, potentially saving money over the equipment’s lifespan [8]. Owning equipment also provides full control over maintenance schedules, repairs, and any modifications. On top of that, purchased equipment is a depreciable asset that can offer tax benefits, although bonus depreciation is set to decrease to 40% in 2025 and will phase out entirely by 2027 unless extended [6].
Jason Downey, Executive Vice President of Business Development at Southeastern Laundry Equipment Sales, emphasizes the importance of understanding all available options:
"I think people probably need a better level of education on the different options offered. I would say the majority of our customers go right down the financing funnel and probably don't get as versed in it. I think the industry as a whole is finance-heavy and that we distributors have more options that people need to be educated on." [6]
Leasing vs. Ownership Comparison
Here’s a quick comparison of the two models:
| Factor | Leasing | Ownership |
|---|---|---|
| Initial Investment | Low (a few months' payments) | High ($1,000–$3,000+ per machine) |
| Monthly Costs | Fixed lease payments | No payments after purchase |
| Maintenance | Included | Owner's responsibility |
| Technology Updates | Easy upgrades to newer models | Limited to purchased equipment |
| Tax Treatment | Operating expense (fully deductible) | Depreciation schedule |
| Long-term Cost | Potentially higher over 10+ years | Lower if equipment lasts full lifespan |
| Cash Flow Impact | Preserves capital for other uses | Requires significant upfront capital |
| Control | Limited by lease terms | Full control |
| Risk | Equipment obsolescence handled by lessor | Owner bears obsolescence risk |
The choice between leasing and ownership often depends on a property’s financial priorities and operational needs. Leasing is particularly appealing for properties with limited upfront capital or those seeking predictable monthly expenses. It’s also a practical option for large properties (300+ units) where managing maintenance across multiple locations can be overwhelming.
On the other hand, ownership may be better suited for properties with strong cash flow and the ability to manage maintenance in-house. It can also be a smart choice for properties with a stable, long-term outlook, as it often leads to lower costs over the equipment’s lifespan. For properties planning expansions or renovations, leasing’s flexibility may align better with their evolving needs.
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Common Laundry Service Models for Properties with 300+ Units
For buildings with over 300 units, laundry service models must strike a balance between operational efficiency and resident satisfaction. Choosing the right approach ensures facilities meet the needs of a diverse resident base while remaining easy to manage. These models build on previously discussed financial considerations by focusing on how residents interact with laundry amenities.
Self-Service Laundry Rooms
Self-service laundry rooms are the go-to option for many large multifamily properties, offering residents direct access to washers and dryers in shared spaces. Industry standards suggest one washer and dryer pair for every 15 units [9].
Payment options for these facilities typically fall into three categories:
- Coin-operated machines: These use quarters or tokens but can face issues like coin jams and vandalism.
- Card-operated systems: Prepaid cards eliminate coin-related problems but can be inconvenient if lost or damaged.
- App-based payment systems: These allow residents to pay via smartphone, check machine availability, and receive notifications when cycles are complete. Speed Queen machines, for example, integrate mobile apps to provide these features [1].
For properties with 300+ units, scalability is a major advantage of self-service models. Multiple laundry rooms can be strategically placed throughout the property to minimize wait times and ensure convenience for residents, whether they live on different floors or in separate buildings. Staffing needs are minimal, limited mostly to maintenance and occasional troubleshooting.
Full-Service Laundry Options
Full-service laundry takes convenience to another level by handling the entire process for residents. These services often include pickup and drop-off, where staff collect laundry from units and return it clean and folded within a set timeframe. Some programs even offer professional folding services to ensure clothes are returned in top condition.
This model appeals to busy professionals, families, and elderly residents who may find it challenging to manage laundry tasks. However, full-service options require significant operational planning. Properties must invest in staff, scheduling systems, and quality control measures to meet resident expectations. Challenges such as managing peak demand, securing storage space, and addressing liability concerns add complexity. Labor costs, usually passed on to residents through service fees, make this a premium amenity that can help properties stand out in competitive markets.
Technology-Based Services
Technology is reshaping laundry services, complementing both self-service and full-service models. Features like mobile payments, remote monitoring, and automated notifications enhance convenience for residents while improving operational efficiency.
- Mobile payment systems: These allow residents to pay for laundry cycles through smartphone apps, eliminating the need for coins or cards. They also provide property managers with detailed usage data and reduce cash-handling requirements.
- Remote monitoring systems: Property managers can track machine status, usage patterns, and maintenance needs in real time. This helps identify potential issues before they lead to downtime and ensures optimal machine placement and usage.
- Resident notifications: Automated alerts inform residents when their laundry cycles are complete, reducing the chances of forgotten or abandoned loads.
While implementing these technologies requires upfront investment in software, hardware, and staff training, the long-term benefits include reduced operational costs and streamlined maintenance. For large properties, the ability to monitor and manage multiple laundry rooms from a central system is a game-changer. By integrating modern technology with traditional services, property managers can deliver a more convenient and efficient experience for residents. Features like real-time monitoring and mobile payment options [1] are increasingly essential for meeting modern expectations.
How to Choose and Manage Laundry Service Partners
The right laundry service partner can make all the difference in your property's amenity program. For property managers, it's crucial to carefully evaluate potential providers and maintain strong partnerships over time.
How to Evaluate Service Providers
When assessing laundry service providers, start by considering their experience with large portfolios. Providers who have worked with high-unit properties are better equipped to handle the unique challenges of high-volume operations, like managing peak usage times and scheduling maintenance across multiple laundry rooms.
Technology offerings are another key factor. Modern machines, such as those from Speed Queen, often come with app integrations that let residents check machine availability and get notifications when their laundry is done [1]. Look for providers offering features like mobile payments, real-time monitoring, and automated notifications. These tools not only improve the resident experience but also provide valuable data for property managers.
Equipment quality plays a major role in resident satisfaction and cost efficiency. Choose providers that offer durable machines designed for heavy use [11]. Energy-efficient models are also a smart choice - they help lower utility costs and appeal to residents who prioritize eco-friendly options [1].
Maintenance and service capabilities are critical to minimizing disruptions. Ask about response times, the availability of local technicians, and preventive maintenance programs [11]. Providers with quick, reliable service can help you avoid turning minor issues into major complaints.
Finally, transparency in reporting is essential. Look for providers who offer clear reports on revenue, usage, and maintenance activities [11]. These insights can guide decisions about equipment placement, pricing strategies, and contract renewals.
Once you've evaluated providers, focus on securing favorable contract terms.
Contract Management Best Practices
Negotiating contracts effectively starts with understanding that most terms are flexible. Review every clause carefully with legal counsel. As Michael Arbus, regional sales manager at Mac-Gray Laundry Services, explains:
"More or less every part of the contract is negotiable although there are some standard clauses."
Whenever possible, choose a license agreement over a lease. Attorneys Adam Leitman Bailey and Dov Treiman highlight the benefits:
"The most powerful weapon for negotiating the most favorable agreement is to use a license agreement instead of a lease." [4]
A license agreement should include clauses that allow you to revoke "at will", retain full control of the premises, and ensure your property provides all essential services [4].
Be wary of hidden fees that can chip away at your revenue. Look out for administrative charges, extra maintenance fees, and CPI adjustments that don't reflect actual cost increases [11]. Carefully review all aspects of the operating agreement before signing.
Set clear service standards in your contract. For example, require providers to respond to service requests within 24 hours and handle emergencies within four hours [4]. Include clauses like "Best Working Order", which mandate the installation of new equipment if machines break down or fail to work properly [4].
Eliminate unfavorable clauses that benefit the provider at your expense. Avoid automatic renewal clauses, right of first refusal provisions, and mandatory arbitration requirements [4]. Instead, negotiate flexible termination terms, such as a 60-day notice period without cause [12].
Finally, ensure your contract includes key protections, such as commercial general liability coverage naming your property as an additional insured, and indemnification clauses to shield you from liability for the provider's negligence [4].
Attorney Dawn L. Moody emphasizes the importance of clear agreements:
"Engaging a service provider to handle your association's laundry facility is an important process, and your contract with your chosen vendor should outline the expectations of both parties during the time period of the contract - including maintenance, service and payment." [12]
Using Industry Resources
In addition to direct negotiations, industry resources can help you identify and vet qualified providers.
Platforms like Big Multifamily Vendors offer specialized directories for multifamily properties, letting you search for providers with experience in large-scale laundry operations. These directories often include client testimonials, service area details, and information about providers' technology and service models.
You can also tap into peer networks within the multifamily industry. Property management associations and conferences are great places to gather firsthand feedback about providers.
Request references from similar properties to get a clearer picture of a provider's performance. Ask about response times, equipment reliability, revenue reporting, and overall resident satisfaction.
Before finalizing a partnership, confirm that your building's infrastructure is ready for commercial laundry operations. Ensure plumbing, electrical systems, and venting are up to code to avoid costly delays during installation [11].
Once a contract is in place, monitor provider performance regularly. Use surveys, analytics, and maintenance reports to identify and address issues early. Keeping detailed records of service requests and resolutions will also help with future negotiations or provider changes.
Key Takeaways for Multifamily Laundry Services
Managing multifamily laundry services effectively can significantly improve resident satisfaction while boosting property profitability. Here’s a breakdown of the key points to consider:
Overview of Business Models
Revenue-sharing agreements are ideal for properties that want to minimize upfront costs and delegate operational responsibilities. These agreements offer predictable income streams without the hassle of daily maintenance, making them a convenient option for many property managers.
Equipment leasing strikes a balance between control and cost. It allows properties to access modern technology and provides flexibility for upgrades, though it does require taking on more operational tasks.
Equipment ownership offers the highest level of control and long-term savings. With proper maintenance, commercial machines can last 10 to 15 years and handle 5,000 to 8,000 cycles. This option works best for properties with solid maintenance capabilities and a focus on maximizing long-term value [10].
Each model comes with its own financial considerations, including service revenues, maintenance costs, and utility expenses. Energy-efficient machines, for example, can help reduce long-term costs, making them a smart choice for properties aiming to improve profitability.
Practical Tips for Property Managers
The success of your laundry services depends on aligning the business model with your property’s specific needs. Factors like resident demographics, available space, and maintenance capabilities should guide your decision-making process. Given that 92% of renters prioritize laundry amenities and are willing to pay up to $50 per month for the convenience, choosing the right setup can significantly impact resident satisfaction [14].
When selecting equipment, prioritize durability, reliability, and ease of use [15]. Many residents now expect features like digital payment options and smart notifications, which not only improve their experience but also simplify revenue tracking and reporting for property managers.
Space planning and safety are equally important. For smaller areas, stackable units can optimize efficiency, while good lighting and security measures enhance the overall appeal of the laundry space [13][15].
To find reliable vendors, explore resources like Big Multifamily Vendors. This directory connects property managers with providers who specialize in large-scale operations, particularly for properties with 300 or more units. These vendors offer tailored solutions, including advanced technology, responsive service, and financial models that match your property’s goals.
Lastly, keep a close eye on performance metrics to ensure your laundry services remain effective. Monitor usage trends, maintenance response times, and resident feedback regularly. This data will help you identify areas for improvement and make informed decisions when renegotiating contracts or evaluating vendor performance. For a detailed guide on vendor selection, refer back to the earlier sections.
FAQs
What should property owners consider when choosing between revenue-sharing, leasing, or owning laundry equipment for large apartment communities?
When choosing between revenue-sharing, leasing, or owning laundry equipment, property owners need to think about a few key aspects.
- Revenue-sharing agreements: These arrangements can bring in a consistent income with minimal responsibility for maintenance.
- Leasing: This option keeps upfront costs low and allows for flexibility when upgrading equipment.
- Ownership: While it requires a larger initial investment, owning the equipment gives you complete control over operations and the potential for greater long-term profits.
Beyond these financial considerations, other factors come into play. Think about tenant preferences, the size of your property, and potential tax benefits. For instance, a large property with over 300 units might thrive with a revenue-sharing setup because of its scale. On the flip side, smaller communities may lean toward leasing for its simplicity and lower commitment.
Ultimately, the best choice depends on your financial goals, operational bandwidth, and what works best for your building and residents.
How does modern technology, like app-based payments and real-time machine tracking, improve the laundry experience for residents in large apartment communities?
Modern technology has transformed the laundry experience for residents in large multifamily buildings, making it more convenient and efficient. With app-based payments, the days of scrambling for coins or cash are over - residents can now pay directly through their smartphones. On top of that, real-time machine tracking allows users to check which machines are available and get alerts when their laundry cycle is complete, saving time and cutting down on unnecessary trips to the laundry room.
These advancements not only simplify life for residents but also improve operations for property managers. By adopting these tech-driven solutions, communities can provide a hassle-free amenity that aligns with the expectations of today’s tech-savvy residents.
What are the pros and cons of using a revenue-sharing agreement for laundry services in large apartment communities?
A revenue-sharing agreement brings plenty of benefits for property owners. It can create a steady stream of passive income, enhance resident satisfaction by offering convenient laundry facilities, and even contribute to boosting the property’s overall value.
That said, there are a few challenges to keep in mind. Revenue can vary based on how much the service is used, and property owners might find themselves depending on the provider to maintain consistent service quality. Plus, disputes over revenue distribution or contract terms can sometimes occur, making clear communication and detailed agreements absolutely critical.
