- Whether it’s worth it or not
- Who could most benefit
- How to handle the repair issue
I guess the first question we have to ask is what is considered useful? In our view, we prefer a standard ROI or return on investment assessment when possible. Here is the formula for figuring this return. What is considered a good return is highly debatable and usually centers around interest rates and their expected course, but I think we can all agree that these days it’s tough to find a safe, phenomenal investment. We commonly see rental properties that would likely pay back all cash invested within 3 years, so something noticeably better than that should be expected.
The return on investment formula…
ROI= (Gain from Investment – Cost of Investment) divdided by Cost of Investment
One of the common criticisms of using this measurement is that it doesn’t cover time exceptionally well. We feel that’s minor for most issues in our business, and is more than offset by the simple elegance. However, to keep things even simpler, let’s consider this question based on a 2 year outlook. In both major markets where we operate we’re able to purchase used units with a 6 month warranty for $350 delivered (about $29 a month for 12 months). For our purposes we’ll use these figures. Later we’ll discuss who might benefit from including those fancy new high efficiency units.
Now let’s talk return, or gain from this investment. It’s not an exact science to quantify this figure, but we’ll touch on some approaches.
The average furniture rental company would charge about $40 a month for a basic set, so if you pay $29 a month, and rent for $40, that would be an $11 return, or about a 37% return on your cash invested.
More to our subject is the potential benefit to your leasing situation. There are two main avenues for profiting from a washer & dryer.
- Does it increase your rental rate?
- Does it cause your home to be rented faster?