Sounds good as long as there is room for it upstairs.

I'm wanting to do the same thing. Everyone says, "but what if your washer floods?" I'm willing to risk it. I'm going to make room for a new closet by moving my bed off the wall about 6 feet and putting up a new wall behind it. This will make a new closet that is the width of the master bedroom.

I would install a pan under the washing machine, similar to a shower pan, and install an auxiliary drain. It would be the same for a water heater in an upstairs location, as well, I would imagine.