What I Learned After Running a Coliving Property for Nearly Five Years

Question

I’ve been running a coliving property for nearly five years now, and it has been one of the most interesting real estate experiments of my investing career.

When I first started, I didn’t think of it as “coliving.” I simply had a large house and realized that renting by the room created far more income than renting the property as a traditional single-family lease.

Over time the property evolved into something more structured. What began as a simple shared house turned into a system with defined leases, house expectations, and a consistent tenant profile.

Along the way I learned a few lessons that might be helpful for other investors considering this model.

1. Room rentals are fundamentally different from traditional rentals

Managing five or six tenants in one property is not the same as managing a single lease. Communication, expectations, and house culture matter far more than most investors realize.

The financial upside can be significant, but the operational approach has to change as well.

2. Tenant selection becomes the most important variable

In a coliving setup, the tenants are not just renting space. They are sharing an environment.

Choosing tenants who are stable, respectful, and compatible with shared living makes a massive difference in how smooth the operation runs.

3. Location matters in ways that traditional investors sometimes overlook

Proximity to jobs, hospitals, universities, and transportation can make or break a room-rental model.

Many of my best tenants have been professionals on temporary assignments or people relocating to the city who needed flexible housing.

4. Systems make the difference

The first year involved a lot of trial and error. Over time I built systems around leases, expectations, maintenance, and tenant communication.

Once those systems were in place, the property began to run far more smoothly.

5. The income potential is real, but it requires thoughtful execution

Room rentals can significantly outperform traditional leases in the right situations, but the model is not simply “rent every bedroom and hope for the best.”

The most successful setups tend to be intentional about property layout, tenant profile, and operational structure.

I’m curious if anyone else here has experimented with room rentals or coliving properties.

What worked for you? What challenges did you run into?

Robert J. Rhodes · Answer

Howdy Ann. Thanks for sharing that experience.

I’ve followed PadSplit casually for a while as well and came close to trying the platform early on. Ultimately I decided to build the model independently and focus on creating the operational systems for the house first.

For the first year or so I actually managed the property myself while figuring out what expectations, screening standards, and house structure made the environment work. Once those pieces were in place, the property became much easier to operate consistently.

One thing I eventually realized is that not every property or location works well for this type of setup. After a few years of trial and error I started evaluating opportunities using what I think of as an “anchor” approach. At a high level I look at four layers: the city itself, the specific locality within the city, the neighborhood dynamics, and finally the house layout.

When those pieces line up, the shared housing model tends to run much more smoothly.

Running this property over the past few years has taught me a lot, and I’ve started documenting many of those lessons and systems as I continue refining them. I’m always happy to share what I’ve learned with anyone here exploring the model.

Curious if you’ve found certain property types or locations work better than others with the PadSplit model.Rob

Ann Mclean · Answer

I currently use Padsplit but I prefer to do it alone because the last time I had a nonpaying tenant, I had to go through eviction process by myself, padsplit doesn't help with that. If you can recommend your PMC, I will greatly appreciate it. Thanks

Robert J. Rhodes · Answer

That's a fair point, Drew. I can absolutely see why a traditional property management company would find this model frustrating.

Managing multiple houseguests under one roof creates a very different dynamic than a standard single-lease property. The tenant interaction and house culture pieces become much more important.

In my case I actually ran the property myself for the first year or so while figuring out the systems and expectations that made the environment work. Once those were in place, I started interviewing property managers who were comfortable with the structure.

I was fortunate to eventually find a PMC that understood the model and was willing to operate within that framework. We've been working together for almost four years now and it has been a great partnership.

I think a lot of the friction people see with shared housing comes down to whether the operational systems are in place before management steps in.

Robert J. Rhodes · Answer

Howdy, Jay. Great question.

Interestingly, competition hasn’t been the biggest challenge for me. Most of the “competition” I see in Houston tends to be informal room rentals or short-term setups rather than structured coliving environments. PadSplit has a presence here, but I don’t really view them as direct competition.

Where I’ve found the real differentiation is in the overall value proposition. Things like location, amenities, price point, and most importantly tenant compatibility make a big difference in whether a shared house runs smoothly.

One dynamic I’ve noticed is that many people initially arrive as mid-term renters while relocating to Houston or working temporary assignments. If the environment is stable and the price point is right, a surprising number eventually convert into longer-term tenants. One tenant originally came for a NASA internship and ended up staying almost two years after landing a full-time role.

Pricing also plays a role. I intentionally keep my nightly rates slightly below some nearby listings, which helps keep occupancy high while still maintaining a healthy margin.

Curious what markets you're seeing this model emerge in.

Drew Sygit · Answer

It's NOT fun for PMCs to run these!

Too many tenant friction issues.

Jay Toluganti · Answer

How did the competition affect your property?