Picture this: a housing trend that combines affordability, convenience, and community into one innovative solution. Coliving has taken the real estate world by storm, attracting professionals, digital nomads, and investors alike. For investors seeking high returns, coliving presents a unique and lucrative opportunity.
Let’s dive into what coliving is, how it works, and why it’s reshaping the rental market landscape. Read below to learn more.
As our Baltimore property management company can tell you, in simple terms, coliving is a modern way of sharing a home. Tenants get their own private bedroom, often with its own bathroom. At the same time, they share common areas like the kitchen, lounge, workspace, and sometimes even a rooftop or garden with other people. It’s kind of like living in a big house with housemates, but more organized and with added perks.
Unlike regular rentals, coliving usually comes with short-term lease options. That means people don’t have to commit to long contracts. The monthly rent often covers everything, like utilities, Wi-Fi, cleaning, and access to shared spaces. It makes life easier for the people living there–and for property owners too.
Since co-living spaces are so flexible and move-in-ready, they have become exceptionally popular with remote workers, office professionals, and other groups. Even big publications like Forbes have caught on. Thanks to that, coliving properties give investors the opportunity to squeeze out as many leases as possible from one, single property.
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As you consider investing in coliving, you should consider several business models. Each comes with its own set of pluses and minuses, depending on your goals and resources. Here they are:
In the owner-operator model, the investor owns the property and operates all aspects of coliving. They’re a one-stop-shop. For instance, they handle marketing, tenant management, utilities, and upkeep. While this model gives investors the ability to have complete control of their investment and to keep all the shares of the profits, there’s also a big downside: it requires that you have substantial money in the bank and all hands on deck, all the time.
In the lease arbitrage model, an investor leases a property from a landlord and reworks it so people can use it for coliving purposes. In turn, the investor rents out individual rooms to generate revenue. Setting up a coliving rental this way lets you scale your business faster, and it costs less than buying a property. On the other hand, your bottom line will depend heavily on your ability to get favorable lease terms and high occupancy rates. So, you should be sure you can get those.
Under the management model, an investor partners with a property owner to manage the property as a coliving space. As one half of the equation, the investor manages the property and tenants in exchange for a share of the revenue or a fixed fee. On one side of the coin, you can have less risk with this model because you don’t own the property. Still, with less risk comes less rewards here. Since you don’t directly own the property, you can’t reap as many profits from it.
As an investor, you should factor in your target market, property location, financial goals, and more when you choose between coliving and traditional renting. Be sure to keep these things in mind:
To summarize what coliving is, it’s a modern housing trend where individuals live in their own private rooms but share common areas with other renters. This arrangement allows investors to have multiple leases–and cash flow sources–from one property.
Source: Bay Property Management Group
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