House Hacking / Coliving
Has anyone considered coliving as a real estate investor strategy?
Hi Johnny, yes, I think there is a growing group of real estate investors who invest in coliving. The returns are great, but as I'm sure you know, these properties are often not easy to operate. Creating community is hard.
I enjoyed your podcast episode on Christine's Coliving Code show. Being located in the Denver and the Rocky Mountain markets, I think you are the closest coliving investor/ operator to us. Currently coliving is technically illegal in Denver because of antiquated and racist group housing laws, so we can't do much more until that changes.
But in the meantime, we are slowly expanding into the high cost mountain markets. I would love to chat or meetup sometime if you're passing this way.
Best Regards,
Lia
I'm watching from afar Denver's co-living ordinance. You must have a stake in this. Are you involved in this? How do you see this going?
I'm also interested in your take on the "non-profit housekeeping unit" provision. It would seem to outlaw a lot of so-called house-hacking, rent-by-the-room investors in Denver. I'm torn because I think there is a big demand for rooms to rent in Denver due to the high cost to rent your own place. And not everyone knows a group that they gather together to form the housekeeping unit as defined in the proposed ordinance. Seems like the last thing we want to do in the middle of a recession is outlaw lower-cost ways of living.
On the other hand, I understand some arguments that allowing the rent-by-the room model just creates boarding houses and is the opposite of community building.
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Boulder has many coliving communities that have shown long term success (Wild Sage, Silver Sage, Nyland, Nomad, Washington Village, Boulder Creek) as well as cooperatives (Masara, Ingram, Ostara among others). I really like the concept. All of these communities have been in extremely high demand historically, with long multi-year waiting lists. However, I have noticed a steep uptick in units becoming available in these communities since Covid.
Boulder has occupancy limits but allows exceptions for coops and cohousing communities (that go through the proper channels for approval). It's looking like the occupancy limit is going to be changed here in the near future anyway (from a maximum of 4 unrelated persons living together, to potentially 8). Hopefully that will happen and more cohousing communities will be developed, as they are really cool in my opinion.
@Johnny Wolff
Yes. I run a real estate investment company and have a few properties that we've purchased and converted into coliving spaces. I'm in the process of building a coliving property management company to scale and test our model. Definitely exciting times. Lots of disruption and forward-thinking happening in real estate.
Go for it @Antwon Davis.
How does your current portfolio looks like?
@Erwin Groenendijk - Thanks! Our portfolio is currently comprised of 4br fully furnished single-family homes.
@Antwon Davis, the start is always the hardest and you got over that step. Once you got this one operating the next one will be easier, and after your tenth, the economy of scale is more and more kicking in.
@Erwin Groenendijk - So true. Thanks! This is definitely our year to scale.
@Lia Martinez:
Would be happy to chat anytime. Sorry for the delay. I'm on BP pretty sporadically. There is definitely a lot of value in slow, local and steady for sure. That's how I got started in Austin, in 2015.
Here's one of my biggest questions and concerns as a new Coliving operator:
How do you handle a situation when a landlord decides to cancel your lease and you have furnished their property and have tenants who are renting rooms?
Hi @Antwon Davis, this completely depends on the lease you will be having with the landlord. In normal circumstances the rentee stands stronger than the renter in the sense that the renter doesn't have the permission to be cancelling a contract during the length of the contract if it isn't for any force major reasons (for example, he/she is selling their apartment). In fact, Even if the rentee is managing the apartment in a really bad way (or in some cases not paying the rent) it will be hard to get the rentee out.
Keep in mind that I am talking from the perspective of being an operator in Spain, Europe, and that other regulations or rules may be in place in the US.
So, knowing this, the real concern should actually be more for the landlord than for you as a rentee.
However, although the chance is small, it might sometimes still happen that the landlord is selling their apartment and you would have to leave. What we do in these cases is negotiate a leaving period of X amount of months to be able to manage an ending period with your coliving tenants too.
If you grow to a bigger portfolio like us it also helps having multiple apartments to be trying to move around tenants (always proposing them a better than they had option so that they will consider moving quicker) and using the furniture in other or perhaps new coliving apartment projects.
Thanks Erwin! I think the suggestion to include a "leaving period" in the lease and the option to offer tenants a deal to move is something we'll consider.
Quote from @Antwon Davis:
@Erwin Groenendijk - Thanks! Our portfolio is currently comprised of 4br fully furnished single-family homes.
@Antwon Davis , Are all of your coliving houses single occupancy per room?