Co-Living / Hostile Discussion

[David Roe]

Co-Living…

I have seen a few posts here on this method but not as many as I would have expected. Most of the ones discussed here are house based not a building.  I have seen start ups in NY, LA ect of large buildings and rented by room, free laundry, free wifi, free corp cable, free common areas, free electric, gas, water, sewer, and trash; designed to be cost savings to high cost living areas. 

Here’s my spin on it, The area I am looking at is next to a major Military Base, 27000 employees with an addition to constant inflow and outflow of TDY personnel and people traveling for meetings and such. For Foreign Military Sales, Reps of those countries come to America for 12 month cycles of living/working here full time.

The Co-living idea excites me a little for this market, 30 to 360 day contracts can be developed for the incoming and outgoing of personnel from other countries, bases, and Contractors. These people are not going to furnish an apartment and sell it all off in 11 months when they pack up to leave.

So what am I gumming my mouth about here? I found a closed Assisted living complex (single building) with Kitchen, game room, Common living room, full finished unused basement, Laundry room, 23 bed rooms and 6 bath rooms. The building inside and out is in great shape just a snapshot of a 1970s home designs lol. The building is Listed @ $225,000 and the average rent for a 1 bed room apartment in the same town is $530 a month. Let’s say we pay asking price (never do it but) and we update the rooms, common areas and bathrooms. Then we furnish the whole thing, plan for maintenance cost and hire a property manager to operate it. I’m going to aim at an all price of $350,000 with $4,000 total operating costs per month

Local 1 bed rent is $530. Traditional furnishings of a 1 bed room apartment including kitchen can average $5,000 or more, Water/sewer $70 per door, electric varies but let’s aim for $75 per door, gas at $45. Average single bed apartment could expect $860-900 cost of living for rent and utilities and buying furnishings ect…

So we charge $950 a bed per month with 10% vacancy rate your still at $18,000 a month minus the $4,000 a month in expenses. AirBNB rate of $30 a night for a bed if you needed to rent for 30 days would be $900 a month. But a Co-living place like this with full kitchen, game room, Living room and more would go at a much higher rate.

I have a total of 3hours of looking at this concept, so what’s the big things I am missing here?

Dave Roe

[Lynnette E.]

Well, the one bedroom apartment that is $530 a month include a bedroom, private bathroom, private living room, private kitchen, maybe private dining room.  

You are not going to get someone paying for a group living situation when charged based on private unshared space basis.  No one will want to pay that.

I do have a friend that buys single family residence near a military base.  He furnishes them with a top of the line mattress, huge screen tv in the living room, medium ones in each bedroom, best wifi/internet/cable package the area has, etc.  The kitchen is fully furnished, each bedroom also has a small refrigerator.  

He pays a maid to clean the main areas, including the kitchen, generally Friday and Monday as the houses get trashed over the weekend. The renters can have the maid clean their rooms for additional cost paid directly to the maid.   They are used by the military folks as love nests / hangouts on the weekends.

BUT the rent is reflected in the fact that it is NOT a private apartment.  He gets about 1/2 what a one bedroom apartment goes for.  But he also makes more than twice the net that a house rented to one family would get him.

This person has changed what he offers, and tweaks it often to meet demand and to keep his customers happy and referring his next customers.

You need to realize that your customers have options.  They will not pay you top dollar for shared space.  If you want them to rent shared space, more like a boarding house, you will not get the same as total rent for a single private apartment, including full utilities.  You will have to offer the things they want, usually tv and bed related.  For shared space its easier to offer maid service than to hear the bickering about whose mess it is.  These things will cost you extra over the cost of just giving a key to an empty apartment.

With military nearby, you can justify the model for supply and demand, but need to look at the price vs. privacy from the renter's view.