Do you believe that Co-Living investment is the fastest way to financial freedom?

Question

I’ve been exploring the benefits of Co-Living investments and am curious to hear your opinions! Have you tried Co-Living or know someone who has? What are your thoughts on its potential to deliver financial freedom quickly compared to traditional real estate investments?

Let's discuss and share our insights!

Grant Shipman · Answer

I  appreciate hearing all your comments.  By exploring the benefits of co-living, I don't mean that I don't have experience with it.  It is actually the only thing I do.  We do co-living for the main stream.  I live in Estes Park, but haven't offered co-living up there yet.  We run a special kind of co-living property management that has houses mostly run themselves, 97% occupancy, and over 2 year average tenancy.  A fulltime property manager manages 140 leases.  My current thoughts on it is that co-living is the king investment compared to other investment strategies, but the investor must be using the right tools: co-living property management system, asset management system, and a great team.  Otherwise, like any investment, profits get eaten up and headaches balloon.  Are any of you currently investing in co-living properties?

Grant Shipman · Answer

@Andrew C. It's works most anywhere- but not everywhere that rental real estate works well in.  I like strong MSA's, high rents, & low purchase prices, to maximize cashflow & cash ROI.  I'm all over areas with at least 50k people (Loveland, CO), but also places with a 1M+ (El Paso) and Large Areas like The Greater Denver Area.  Co-Living, when done properly, should be less work per lease than LTR.  For example, one $27/hr FT property manager of mine can manage 140 leases. I hope that helps! @Marie Thomas: Yes, it's like selling pizza by the slice, so both renter & investor get more for less.  Each room will have a separate lease on it with a separate deposit following normal property management practices, and like you said, the leases have different start dates.  For example, most anywhere will get $700 room, $75 fixed rate utilities, $700 deposit, and then offer a 36 months, 12 month, or month to month lease ($350 fee if ending lease <90 days).  Also, co-ed is better.  Single-gender homes are only for transitional housing (like soberliving houses, halfway houses, etc).  I hope that helps!

Grant Shipman · Answer

That's awesome- I'm glad successful REI's like you are keeping their minds fresh & strong and open for new ideas :)

Grant Shipman · Answer

Howdy everyone- I love these follow-up comments. I cannot believe I missed them for so long! I apologize and I appreciate your patience. I post a lot to help people with co-living, and my wife is pregnant with twins- do I get a pass? (hahaha)@D. Dee: yes please DM me anytime, and I will do my best to get back to you :) @Kim Scheid: fellow Coloradians!  Where are y'all at? We live in Estes Park and have a 2nd house down in El Paso.  @Sue Burriss: We were all newbies once- welcome. Please DM anytime, and I will do my best to get back to you :) You can do this! @Marie Thomas: Think 5x3 (or bigger) 2500sqft (or bigger). Normal neighborhood house on a corner lot for a lot of parking.  Yes this is probably the best strategy for brand new people, but they need to study well and apply (like anything).  Please feel free to DM me anytime.

Spencer Cornelia · Answer

Rent by room / house hacking / co-living should deliver significantly higher cash flow than a traditional rental.  in my experience doing this in Vegas - the gross rental income is about 50% higher.  i have much higher expenses and more headaches of course, but cash flow is higher.

most major tier 1 or tier 2 cities should have significant enough rental demand to be able to implement this strategy pretty successfully.  You better be prepared to handle the management though..

Account Closed · Answer

I think the zoning laws are iffy and it's a risk that many investors are taking - and getting away with. But enforcement and the nosy neighbor (or noisy tenants) could ruin it all. There's a huge demand for it - it solves a problem in the housing market - but I'm just getting started and too skittish of the zoning personally.

Jeff White · Answer

@Grant Shipman Great stuff, I'm a big fan of co-living/rent by room strategy, and I do it here locally in Denver metro, and it is the best strategy in today's market for any house hacker to live for free or make money while living there, but they have to sacrifice personal space.

As a rental strategy for non owner occupants, it absolutely is a fantastic way to generate the highest return, that's true.....but also, and most importantly, your screening has to be on point, and without that, it won't be as effective because one bad roommate can ruin the environment for the other roommate tenants.  Also, you need to have plenty of parking, if you rent a 6-7 bedroom house out to 6-7 roommates, it needs plenty of parking for that.

Most importantly, no HOA. An HOA can easily restrict someone trying that strategy.

Also, there is a need in the marketplace for a co-living PM company that doesn't charge too high of rate.

Lotus Eli · Answer

Hey Grant,

I co-lived in Estes Park and several other places during a travel mission I undertook as part of a personal journey to get more in touch with myself. Co-living investors make a significant profit. For example, if the typical rent per unit is $1,500 (3bd 2ba), my landlord at the time would have one unit with three rooms and four people within the unit (one person per room and one room with two people), each paying around $500. The people with single rooms even paid a bit more. Ultimately, he was making $2,100+ a month per unit! He ensured that the structure, HVAC, plumbing, and electricity were well-maintained, and rarely had anyone coming in for maintenance fixes. If there were any, they were minimal, meaning not much maintenance was needed. He had about 10+ units, and when I tell you he was making bank, he was making bank! 20K a month and he had several buildings!

In all, when you invest in co-living properties, you have the opportunity to double, and depending on your location and how you structure your investment, potentially triple your income per month! I have a bit of experience with co-living investors, having been involved in several co-living investments for five years. I would love to give you more insight, and I really think you should consider obtaining at least one co-living investment, especially because you are in Estes Park, Grant! Throughout my investing journey, I definitely want a co-living investment!

Marie Thomas · Answer

@Andrew C.I have the same questions about it as well.. for example, you now have say 5 leases that likely are all for different date ranges/terms and deposits etc. do you do all males or all females together - I'm assuming this depends on the state you're in?

Do you believe that Co-Living investment is the fastest way to financial freedom?

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