Many new condos and HOAs offer in-unit washers and dryers as an enticing amenity, but for those living in older building or high-rise apartments, more than likely residents will have to share a common laundry room.
In most cases, laundry rooms in condos and HOAs are managed and maintained by outside contractors, who install the machines, service them when necessary, and collect those countless quarters or the more modern methods of digital currency you feed into them.
Two of the biggest laundry providers in the South Florida market merged in early 2014, so Coinmach and Mac-Gray together now own more than half the market share of condos and HOAs. CSC ServiceWorks, the parent company, owns a family of businesses, including Coinmach Corp., Mac-Gray, ASI Campus Laundry Solutions, Sparkle Solutions Corp., Appliance Warehouse of America, AIR-Serv, AirValet, Service Directions Inc. and Super Laundry.
When it comes to laundry facilities, today's condos and HOAs have an abundance of options, any of which can add value and lower costs for all sizes of communities and ownership types. Technology is driving owner and user convenience features and allowing higher levels of preventive maintenance and improved service.
Tony Regan, senior vice president of sales for American Dryer Corporation, a national distributor based in Fall River, Mass., says the overall appearance and amenities offered to laundry users has come a long way from years’ past. Larger capacity equipment with additional features and benefits—including simplified payment options that have made those endless rolls of quarters largely obsolete—have made the laundry experience faster and simpler.
Newer-model washers are also more efficient than ever before, as new federal mandates for water conservation have come into effect. “Modern top-load machines are almost as water efficient as front-load washers from five years ago with almost 40 percent reduction in water usage vs. the older machines,” says James A. Wigfall, executive sales manager for Mac-Gray, CSC ServiceWorks in Miramar. “Modern front-load machines are still the most water efficient. All high-efficiency machines require changes in soap usage by residents. Low water and high soap are incompatible, which requires residents to change some old habits.”
Wigfall says that the efficiency of dryers is largely dictated by that of the washer, because it's the washer that extracts the rinse water during high-speed spin and drain cycles. The dryer the clothes when they go into the dryer, the less work the dryer has to do in order to dry them.
Carlos Sessarego, district sales manager for Mac-Gray/CSC in Miami, says the biggest area for technology change is in Internet connectivity, which opens up options for bank card payment, and self-diagnostics of equipment for speedier service.
“When a laundry room is Internet-connected, residents can see machines in use, and get notices for cycles completed without ever leaving their home,” he says. “Additionally, email and text notices allow residents to know when it is time to remove clothes promptly and allow next user convenient access.” Connected machines also self-monitor 24/7, enabling repair personnel to be on the scene to fix the issue before it inconveniences residents.
Change Point from Mac-Gray is a system that allows residents to submit a service request without ever picking up the phone, and Coinmach offers an app in which service requests can be submitted by smartphones just by taking a picture of the laundry machine ID plate.
“For service and maintenance, modern commercial equipment has digital controls and self-diagnostics which can be monitored online,” Wigfall says. “A 24-hour heartbeat of the machine is maintained, and when a hiccup occurs, the system auto-generates a service notice.” He adds that much like the credit/debit card systems that are ubiquitous at gas stations, similar card-based payment systems can be integrated with laundry equipment and provide users a choice of either coins or bank cards as method of payment.
A Sound Relationship
According to Regan, there are a few routes a building or HOA can take regarding the management of its laundry facilities. Option one is to buy all the necessary equipment outright and maintain and collect payment (usually on a monthly or per-use basis) in-house. Option two is for the association to rent the equipment, and then maintain and collect the profits itself. Option three is to have an outside, multi-property operator place equipment on the premises and then handle all aspects of the operation, including maintenance and collection.
Option three, says Regan, “is normally done on a shared revenue agreement between the operator and the HOA. The benefit of this is that the entire process is left to the experts, and if there are issues with machines, the operator is on call for repairs at no cost to the property.”
The benefits of going this route is that it typically offers the owner/HOA the highest cash return and net present value vs. buying/managing their own laundry room. Wigfall says these programs appeal to association administrators, who want to focus on resident satisfaction and provide modern equipment with modern technology features. The laundry company will provide just about anything and everything needed for the laundry room, tables, chairs, coin machines, soap dispensers, big screen TV, laundry carts. Depending on the arrangement, there may be no capital investment on the part of the building.
“It just all has to be factored in and paid for within the laundry agreement, similar to adding options to a car purchase,” Wigfall says. “In some cases, laundry service companies are able to provide decorating allowances and incentives or signing bonuses. Those are more common with larger communities in which residents are not the owners.”
“The laundry partner provides all equipment, service repairs, preventive maintenance, and the owner/HOA provides and pays for utilities and housekeeping,” Wigfall says. “Internet fees and bank fees are typically deducted from gross income. Typically, the laundry provider pays sales or use tax on behalf of the owner, and deducts those taxes and fees from rent paid. This allows the HOA to focus on managing the property overall while leaving specialized services to the experts whether it is landscaping, HVAC, plumbing, electrical, payroll, or laundry room services.”
Sessarego warns that a management company needs to understand the contract in a split revenue situation, as terms such as “cycle minimum” and “wash minimum” can be misleading. He suggests comparing all contracts and proposals to understand what the true split will be.
Rental agreements are more common in buildings that don't charge for laundry, and thus there is no monthly collection or disbursement of money. This is a pure cost to the HOA/owner, since the equipment generates no revenue, yet must be maintained. Meanwhile, a straight purchase program with or without a service plan may be the best option when the number of residents in a community is very small.
Each laundry service provider has different terms, but normally, a contract with a laundry vendor will last somewhere between 3 to 10 years. The laundry partner is making a sizable capital investment and must generate enough income over enough years to pay for machines and pay for ongoing service and maintenance, especially as the equipment approaches the end of its service life.
Wigfall says that no two contracts are alike because they vary by the number of residents, how many residents have in-unit hookups and the number of machines required or desired in the common area laundry rooms. “A driving force of the program and the relationship is the investment in equipment provided by the laundry partner. Commercial grade equipment, which can handle most repetitive use, commonly costs over $1,000 each machine and the ongoing service, collection and repairs can add hundreds of dollars of annual costs,” he says. “Most laundry partners are going to ask for a seven-year commitment to allow the machines to be paid for over an extended time.”
Shorter agreements are more expensive to owners on a monthly basis, no different than financing a car for 36 months versus 60 months. And just like cars, used options are available.
“Contacts usually last seven years before showing signs of a profit,” Sessarego says. “In Florida, there are certain communities that are seasonal, with people only using the space half a year. In those situations, sometimes contracts go as long as 10 years.”
The longer the contract, the more inclined an operator will be to make upgrades to the equipment and laundry premises.
The revenue share and the usage of the equipment are key components to ensure both sides are getting a fair return on the investment. The owner/HOA should receive a monthly statement indicating monies collected and how revenue is shared or disbursed. Also, at least once a year, they should have a business/service review, which provides a summary review of activity for the community and quality of service.
Renegotiations mid-term are not very common, and negotiations are certainly called for during the renewal time period. “Everyone should be careful about contract language that includes auto renewal terms, and Right of First Refusal. Those terms can create a relationship that's difficult or impossible to untangle if the owner/HOA is unhappy with service or the status of an agreement,” Wigfall says. “Renegotiating is different than holding a provider accountable for performance and service. Owners should strongly pursue a provider who is not living up to the agreed service terms.”
A Clean Slate
Once a laundry partner is leaving the premises, it is going to remove its provided equipment—washers, dryers, tables, chairs belong to the provider, etc.
“On a multi-housing agreement, once a contract is finished and the decision to not renew has been made, the operator will remove their equipment and the newly-assigned operator will place their own equipment on site,” Regan says. “If leased, the equipment can either be removed or a buyout might be negotiated if the property prefers to own the equipment outright.”
Condos and HOAs should be very careful and avoid contract language which requires them to reimburse a laundry provider for room betterments and improvements.
“There are several examples of providers making inflated claims for cost of room betterments and repairs which HOAs are contractually obligated to repay seven years or more after installation,” Sessarego says. “This could include lighting, plumbing, electrical or other repairs or upgrades made to a room.”
The laundry business is a competitive landscape and there are a number of different ways buildings and associations negotiate contracts with laundry vendors. Subsequently, there are many options when it comes to the type of machines and services a community can choose from.
Keith Loria is a freelance writer and frequent contributor to The Western & Central Florida Cooperator.