Urban millennials in places like New York, Chicago, and San Francisco have started to see the many benefits of co-living, where individuals share a large home and each renter has his or her own lease, a separate bathroom and bedroom, but shared living spaces. Savvy investors can take advantage of the trend to rent their next property.
What Is Co-Living?
Co-living spaces create a community environment, yet allow residents to maintain autonomy. Just as co-working spaces give young entrepreneurs the tools and space they need at a fraction of the cost of a traditional office, co-living helps reduce the tenant’s cost of living while giving him access to a supportive environment of like-minded individuals.
How can a real estate investor like you benefit from the arrangement? Today’s millennials are driving the rental market, but with student loans and a competitive job market, many can’t afford the most coveted areas. A co-living floor plan can help savvy landlords fill those apartments while building a customer base of future homeowners.
Less Overhead and Higher Rent Equals Increased Profits
The kitchen is a big-ticket item in a renovation project, and one where high-end appliances can yield big profits. Today’s discerning renters want well-known brands and high-tech amenities. In a co-living rental, you can upgrade one kitchen to satisfy multiple renters.
Most co-living spaces come pre-furnished, so that cost will have to be added to your renovation expenses. However, newly renovated, pre-furnished space with all the latest technology will also yield higher rent than if you were to rent a basic apartment to one person, who then brought in a roommate through an online ad to split the rent.
Better yet, some co-living spaces in the trendiest of areas go for as much as individual apartments—tenants are willing to pay more to live with others yet maintain autonomy.
Reduce the Risk of Sub-letting
In high-rent areas, tenants sneaking in a roommate without telling the landlord is a common occurrence. You haven’t had the chance to run background or credit checks on this individual, yet they are living on your property. Co-living all but eliminates the common risks associated with sub-letting, since tenants don’t need to find their own roommates.
Co-living also lets you cultivate a desirable environment in your building based on the programs and services you offer, which can range from a large, flexible fitness center to a co-working space in the building.
Make Co-Living Work in Your Next Rental Property
If you have a property conducive to creating a co-living space, you could boost your profits by doing so. Remember to include the high-end amenities that will appeal to millennials, including housekeeping services, fun communal spaces such as a rooftop deck, and—of course—the fastest WiFi connection available.
You may want to hire a property management firm to handle many of the details in these unique MDUs, and talk to successful investors who are already managing co-living spaces. With the right attention to detail, the pay-off can be well worth it.
Co-living Builds a Sense of Community—and Your Profits!
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