City citations with padsplit/coliving

[Jaskanwal Preet Singh Chhabra]

Hello, I am an investor focusing in coliving/padsplit model in the Austin metro area. Recently I have been hearing about multiple hosts in Texas that are getting citations for operating a coliving facility with occupancy greater than the permitted number of unrelated occupants. It all stems from an angry neighbor filing a complaint to city and calling the home a boarding house.  My understanding is the Padsplit’s member agreement model is to avoid such situations. I feel the padsplit model might not be that sustainable if it is that easy for the hosts to have legal troubles. I would love to hear some thoughts on this and what are the recommendations to make this a sustainable investment strategy. Thank you!