Author AMA: What questions do you have about co-living strategy??

Question

How much more can you make from a co-living strategy versus a whole-house rental for a SFH?

What additional terms do you need in your lease for co-living versus other strategies?

How much more time does it take to find tenants and how often do they turn-over?

These are questions I have about co-living!

@Miller McSwain replaced his high-earning rocket scientist salary with real estate using the co-living strategy for his rentals now he's published a book about it you can find here so you can learn about it yourself!

Next week he's going to be doing an author AMA (ask Miller anything) about co-living. So what questions do you have for him about co-living? Drop your questions now and Miller will answer them for you!

Luke Tamez · Answer

How did you find out what would be the going rate for rents per room.  Was there other people around you who were doing the same?  Also for the houses you purchased and your not living in them did they have to be non restricted houses?  Wouldnt it be a multi family and if its a deed restricted community they may say something,  How did you get around it ?

Miller McSwain · Answer

You cannot legally have "all guy" or "all girl" houses. That would violate fair housing laws by gender discrimination.We've had a few instances of what we call "homewreckers": tenants who make the experience so terrible for everyone else that people want to move out. It doesn't happen often though. I can think of 2 people out of the ~100 residents we've had.In every case, we've been able to get them out without eviction though.We shoot them an email listing their lease violations. Attached, we include any hard evidence. The best is camera footage, although it could be something else like screenshots of messages that another tenant shares, etc. We do have cameras in the shared areas though (kitchen, living room), and I'd highly recommend it. We aren't watching them 24/7, but they are great to reference in scenarios like this. At the end of the email, we ask them to voluntarily agree to mutually end the lease and leave within X days. If they don't agree to do so, then we'd start the eviction process the next day.But in every case, they've just agreed to leave. With such hard evidence, they know they'd lose any sort of eviction case (not to mention the cost/stress for everyone involved).

V.G Jason · Answer

When did you buy the properties? At what interest rate(if levered)? And at what average house price? What's your net income per tenant(after the nonsense) per month?

Miller McSwain · Answer

Lower is better as it usually increases your cash on cash return. So when we have house hacked and rented the rooms, we always put 5% down. On the properties that we didn't live in at all, we've done anything from 15% to 25%. We'll usually just do the lowest that the lender will allow!

Miller McSwain · Answer

~12-18% management fee is what I've seen. People do make the numbers work with that fee included. Personally, I self-managed and then hired a virtual assistant to follow the sytems/procedures I created. I just did the math and that works out to be around 2% of gross rents that I pay to them for their time ($10/hour)

Miller McSwain · Answer

The first was in 2022 and am closing one this week. Over that time, 4% interest was my lowest, with some 8.5% as my highest. The one we are closing now is 7%.

In my market, our avg purchase price is ~$500k.

The cash flow (after the nonsense 😂) is typically ~$2000/month, which is usually around 12-14% cash on cash! This new one is $3000/month though (projected) :)

Miller McSwain · Answer

Yes! Stoked to answer anything and everything Co-Living!!!!!

Denise Supplee · Answer

Hello @Rene Hosman, There are two ways to look at this.

First, having someone move in and collecting rent in your residence (while you live there) referred to as House Hacking. This is very beneficial in reducing your living costs. However, there are downfalls, such as living with someone who is uncooperative.

Second, is renting rooms out in a house you purchased. Usually this is done on a short-term basis. It is imperative to check the location thoroughly to be sure of many items. Some of these include: 1. Checking your location for any restrictions and 2. Does the location warrant this type of rental. 3. There is more work in room prep, cleaning common areas, etc.

Be sure to weight out these options thoroughly. And be very realistic. Al Williamson, an expert in short-term rentals and rental arbitrage is a great expert in these areas. I have learned much from him.

Miller McSwain · Answer

PadSplit is mostly a listing service (like AirBnb). They charge 13-25% of gross rents, and in exchange, you get to list on their platform. They do have some management features like rent collection and agreement signing too.But instead, we have been able to pretty easily find applicants on FREE services like Zillow, FB Marketplace, and Roomies. Then we do the rent collection and lease signing through Innago (also free). You could use something else like RentRedi though, they are all pretty similar.

Author AMA: What questions do you have about co-living strategy??

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