Chicago Investors — Anyone Here Running Co-Living Successfully?

Question

Hey everyone, I’m Miles. I co-own and self-manage two multifamily buildings on the northwest side. Both are stabilized long-term holds. My business partner and I are now exploring ways to maximize cash flow in our next investment.

The model that interests me most is co-living / renting by the room. I’ve seen it executed well in other markets and I’m curious how it translates to Chicago’s unique legal, zoning, and neighborhood landscape.

Is anyone here successfully running co-living in Chicago?I'd love to get a high level understanding of what is leading to success with this model. Would also love to connect with anyone currently operating or interested in this space.

Appreciate any insight or connection.Cheers, 
Miles

Jonathan Klemm · Answer

What's up @Miles Mac!  You've got a great resource with Victor.  I've got a couple other connections who mess with it.  Another website for listings and likely other good knowledge is bungalow - they were the original rent by the room platform.

If you haven't been out to any of the local Chicago meetups definitely make some time.  You can for sure network in person with some investors who are renting by the room. https://www.biggerpockets.com/forums/521-real-estate-events-...

Ultimately, it's a lot more work with a much greater potential for issues.  Personally, the only reason I'd recommend it is if you were going to go all in and make that your sole strategy - Systems and process will be VERY key...or just keep buying long-term holds.

Henry Lazerow · Answer

I have had two clients do it, as @Jonathan Klemm mentioned it can be more issues. One did it themselves and said was profitable over LTR but way too time consuming managing so they switched it back to LTR. The other subleases to a company that does co living which pays slightly over market lease rate and been there a few years now. They provide all the furnishings and handle all the operational management so easier then doing it yourself. The company is called June Homes.

Victor So · Answer

Thanks for the mention @Aaron Zimmerman! @Miles Mac I own and manage 11 units (+ a couple non-conforming basement units) and most of what I do is rent by room/ co-living stuff. I’m happy to answer any questions you may have! Feel free to reach out anytime!

Robert J. Rhodes · Answer

I have to echo @Jonathan Klemm here. It’s very systems and process driven.

I’ve been operating a shared housing property for several years, and what I’ve found is that the difference between something that performs well and something that becomes management heavy usually comes down to a few underlying variables.

The property itself, the location within the city, and how the day-to-day operations are structured tend to matter more than the high-level concept.

The model can work well, but it’s much more sensitive to those inputs than most people expect going in.

Curious how others here have seen that play out in Chicago specifically.

Robert J. Rhodes

Miles Mac · Answer

What's up Jonathan! You probably don't recognize me but I've been to your Cashflow Breakfast Club a couple times. I've made some great connections there and definitely need to start coming back.When you say much greater potential for issues what comes to mind? Legal? Mainly  Operational? Exit Risk?

Chicago CashFlow Breakfast Club

Aaron Zimmerman · Answer

@Victor So does co living/rent by the room in Chicago. I'd recommend reaching out to him!

Jonathan Klemm · Answer

My fault @Miles Mac - We've had a couple of people pass through the Chicago Cashflow Breakfast Club since you...either way you've got a good looking picture so I should recognize you lol

Risks mainly lie in the time commitment required to manage &lease, and in the actual management of the people within the property.  VERY CLEAR EXPECTATIONS and Rigours vetting requirments have to be in place.

I'm not worried about the legal or exit risk - it's really just the people and the time.

Miles Mac · Answer

Hi Victor. Thanks for the response. Would love to dive in deeper here. Going to shoot you a text to connect!

Miles Mac · Answer

Thanks Aaron!

Chicago Investors — Anyone Here Running Co-Living Successfully?

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