Moses Kagan on Real Estate

Adding washers and dryers to your units? Careful!

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One of the best ways to add value to an apartment building is to add washers and dryers to the units.

Why? Because tenants will typically pay $100-150 / month in rent in order to avoid using shared laundry rooms or, worse, going to laundromats. The math is easy: $100 / month in extra rent = $1200 / year x 10 grm = $12,000 in value added to your building. Even if it costs $1,000 to buy the washer / dryer, it’s a no-brainer, right?

Well, you need to be careful. Washing machines, in particular, put a lot of strain on a building’s plumbing system. Ordinarily, it’s not that big a deal, at least from a practical perspective. But it is a big deal from a permitting perspective!

If you don’t use permits when you put laundry machines into your units, watch out! When the SCEP inspection comes, you’re in jeopardy of getting cited for unpermitted work. They’ll ask you to get permits for the plumbing work to put the machines in or take them out. Here are your choices:

1. Remove the washer / dryers. This is, in some ways, your easiest option. No permits required; just pull them out. The problem is that your tenants are going to be pretty upset, and justifiably so. They’re going to demand a rent decrease commensurate with the service reduction and, if it gets to LAHD, they’re going to win.

2. Get the permits. This saves the units, but potentially at great cost. In order to put washer / dryers into a 16 unit building the right way, I once had to add an entirely new, separate plumbing system for the washer / dryers while tenants were in the building. The whole thing cost me around $50k. Was it worth it from a financial perspective? Yes. Was it extremely painful for me and for the tenants? Yes.

So, speak with a good plumber BEFORE you go ahead and put machines into your building. It’s almost always possible and usually profitable, but you need to go into it with your eyes open.


Written by mjkagan

06/18/2012 at 8:02 am

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