How I learned what NOT to do in coliving.
Loan brokering allows me to see dozens of deals every week and understand which deals actually get to the closing table.
Coliving is one of the most complex strategies that often fail to meet lending requirements.
So here are the 6 most important things I’ve learned if I invest in coliving:
1. An enormous amount of lenders do not lend on rent by the room rentals.
You have to find the small amount of lenders that do and HAVE to check with them before executing.
2. Add extra bedrooms and bathrooms AFFTER refinancing.
The value is based on the appraisal and if there are no comps, there may not be an appraisal or a loan.
3. Adding more bedrooms does not inherently increase the value of the property.
In many cases, the value is lower than homes with fewer bedrooms. Usually because those houses with lower bedrooms sell more quickly and often.
4. Have a US Citizen or Permanent Resident Alien as the guarantor of the loan if the rooms are already rented out.
More loan options available.
5. Once rooms are rented out it's best to get a bridge loan for 12 months and then refinance into a DSCR— then you can use your coliving rental income for the DSCR.
Lenders won’t take 1 month’s rent on a coliving like they do with long term rentals. Like a short term rental, they’ll want to see the average of 12 months rent.
6. If you’re going to build a coliving property either make a maximum 5 bedroom single family or a 2-4 plex with that same max bedroom count.
Coliving is a more strategic strategy and, therefore, requires some forethought.
Hope this helps!