How Private Landlords can Compete with Co-Living Giants
Sometimes when landlords think about multifamily units and buildings, the next thought is squeezing as many bedrooms into that property as legally possible. An extra room is an extra paying tenant and in some instances, profitability has been chosen over humanity. It is extremely sad.
Real Estate Disrupted with New Challengers
There are some unscrupulous landlords and property managers out there. Some are overwhelmed from the workload (a more forgivable scenario), whilst others simply don’t care and view their tenants as cash cows. No one wants to live in those conditions and in a world where governments are cracking down on this rogue behaviour (example the UK) and news is spread quickly through social media; competition has begun with companies who are shaking up the industry.
In come the big co-living brands with a solution to a deepening problem. They offer immense quality in their product and service; quality that had previously only ever been given to 5 star hotel guests. Now we have both quality and scale. Technically this should tick all the boxes for profitability and a euphoric client base, wiping small landlords off the map, but the research suggests otherwise.
Over 100,000 People Say They Don’t Want Big Blocks
According to a long study done by Ikea called One Shared House 2030 (which you can still access and participate in), there are a lot of things that co-living spaces are not getting right. This will be welcome news for landlords as there is a gap in the market and they are in prime position to fill it.
Let’s look into some of the findings from the One Shared House study:
TENANTS PREFER PRIVATE BATHROOMS
No shocker here: only 3% of participants would enjoy sharing a bathroom and toilet, meaning a whopping 97% of tenants prefer private bathrooms. If you can put en-suite rooms in, do so. If not, ensure the ratio of bathrooms to bedrooms is optimised. That's an article within itself (noted).
HAVING A GARDEN & INCLUSIVE BILLS ARE A WINNER
Top of the list for long term shared items are a self-sustaining garden and inclusive internet and bills with 31% of respondents preferring these over other items. Our standard at Boost is to include cleaning, fast WiFi and kitchen essentials as a minimum. We’re also a fan of a garden and in Barcelona you can grow herbs on the window sill. That still counts!
GIVE THE OPTION TO SELF-FURNISH BEDROOMS
Universally, people prefer pre-furnished common areas and empty private rooms which they can furnish themselves. With 78% of respondents preferring this, why not give tenants this option for their bedrooms? Personally for co-living, I like to furnish everything, but if a tenant would like to stay for a longer period, giving them the option to make their space their own will make them stay longer.
The above three points offer great news for private landlords as they can capitalise in several areas, offering customers what they truly require in a shared home.
Landlords Must Act Now
Landlords however must make hay while the sun shines. Just as homeowners can change to offer a better service, the plethora of large co-living businesses can just as quickly change their strategies to meet the needs of their ever-growing client-base.
If you have no competitors (you lucky unicorn!), then what I'm about to say doesn't apply to you. But for the majority of investors, the rapid lateral growth of the co-living industry is relevant. To compete well in a high competition environment, branding, communication, digitisation and consistency in delivering the value your tenants expect are paramount to sustainable growth and success.
A few pointers for this are:
- Be as transparent as possible by verbally disclosing things that could potentially be construed as a 'nasty surprise', like early termination fees.
- Respond to queries quickly
- Be customer-focused by listening to your tenants and acting quickly on things that need fixing
- Make it a pleasure to live in your home, and to have you as their landlord/property manager.
If you want to learn more about co-living, stay tuned for more, connect with me or see our insights on boostinc.co/co-living