Anyone investing in Co-living?

Question

No one really talks about co-living but it is a great way to increase rental income by 25%+ and turn your house into purpose. I have been doing it for the last year and it has had great results! It is fairly easy to set up, solves a great problem of loneliness, and generates more income than the average property. It feels full-filling to see my tenants building relationships because of the space we created.I think co-living is the future and it is way overlooked.

Keith Mintz · Answer

Yes LA, NYC, the expensive areas, they can do well in because it solves affordable housing and creates more space for people to live by sharing a home...etc.I have been testing it out here in Sacramento & now in San Diego, and it has done very well financially as an investment and really solves many problems for tenants. A big one that makes me passionate about this, is contributing to solving loneliness... A lot of tenants I get will vent to me about their lack of social life because they work and are mainly focused on career, that the only chance they get to socialize and make friends is with their new roommates at home. And of course rent is cheaper than an apartment. With so many STR popping up and house prices rising especially in places like San Diego with such an on-going demand to live in, co-living makes a lot of sense, I believe it is the future of real estate and housing.

Didier Bizimungu · Answer

What @Keith Mintz said, Joe. Also, zoning only counts for property setup - not necessarily the # of residents.

That's usually covered under a separate code for how many non-related people can live in one home. But that's usually a double figure number like 10+.

Keith Mintz · Answer

You don't need to have separate entrances. For my co-living spaces, I typically put a smart lock on the front door, every tenant knows the code, there's a different code for guests. Everyone has their own room with a lock and key, everything outside their room is shared space. Feel free to message me if you need any guidance!

Joe Fish · Answer

Does anyone know if this strategy (rent by the room) is typically considered ‘multi-family’ for zoning purposes? I have a SFR in a HCOL area that could be a good candidate, but zoning regs prohibit multi family. My interpretation is that I couldn’t legally convert it to have separate entrances, but maybe with everyone sharing the space it would be okay. Any experiences with this issue would be appreciated!

Kenneth Donaghy · Answer

The many options manage expectations and home dynamics, mostly depends on the property owners preference. Most of my clients are in SD, yet have clients househacking across the county, a few throughout the state.

Keith Mintz · Answer

Awesome! Definitely the way to go in these markets. And yes I was referring to rent by the bedroom. From my experience, having a system in place that regulates the community space/household is important, otherwise it can fall apart fast. Everyone try to put the responsibilities of house maintenance on each other.Where are most of your clients buying these spaces?

Kenneth Donaghy · Answer

@Keith Mintz when you say co-living, are your referring to Rent-by-the-room househacking strategy? If so, yes I have many clients where this is their strategy, some on their 3rd property in 3 years. It's a strategy I recommend often for people who want to get started, don't qualify for a high LTV on a small multifamily, and comfortable with housemates. It works with condos, townhomes, single family, and small multi families.

Joshua Bautista · Answer

@Ray Hage

It will be very systematic

Ray Hage · Answer

I have seen it done in very expensive markets like LA, NYC and Toronto. I find it strange to be honest but who cares about my opinion if the landlords and tenants are happy.

I remember watching a show a few years ago that detailed 3 couples (all were already friend with each other) in Toronto that bought a 4 bedroom house to share. Again, I think it is strange on a social level but I know Toronto was/is an absolutely insane market so it makes financial sense.