People have lived together since the beginning of human existence, but the term “co-living” has only recently started to take hold. Co-living refers to more than simply living with roommates, though. It’s a unique style of communal living that focuses on building connection and community. You should know what co-living is, why it’s becoming popular, and how it’s affecting the rental market.
What Is Co-living?
Co-living is a community-driven style of living where roommates share a space and split the costs of living. Most co-living arrangements have a strong emphasis on community. The tenants aren’t just sharing a place to live to save money, but they’re also creating connections with one another based on similar life experiences or goals. For example, there are co-living spaces specifically for young artists, students, or long-term travelers.
Co-living differs from traditional roommate agreements in several key ways. Most importantly, a co-living space is intended by the provider to be shared among multiple people. In a typical shared housing agreement, you would find your roommates yourself. Then, you and the roommates would apply together for a home and decide how to split the costs and divide up the space. You and your roommates would also handle any interpersonal issues or disputes by yourselves.
However, with a co-living arrangement, the housing provider is the one to bring the tenants together. All of the roommates apply for spots in the home separately, and everyone is usually on an individual lease. This means that you’re only responsible for your own rent and won’t be held responsible if the other tenants fail to make their payments.
Co-living agreements are often more comprehensive than typical roommate arrangements, too. Utility costs are usually included in the monthly payment, so you and your roommates don’t have to split up the bills or reimburse one another. Sometimes, co-living agreements include cleaning fees so that the provider can outsource the cleaning of common spaces. Additionally, if you run into any interpersonal problems with the other tenants, the housing provider may step in to help.
Why Is Co-living Becoming So Popular?
Co-living may sound like an unconventional form of housing for adults who are used to living with family, friends, or significant others. However, co-living has been rapidly rising in popularity, especially among young people. Economic and cultural shifts in recent years are largely responsible for this trend.
Most notably, rent prices have skyrocketed in the last few years. Renters have found it increasingly difficult to afford homes on their own, so more and more people are trying to split housing costs with others. High mortgage rates have also made it challenging for young people to become homeowners. With so many renters in desperate need of affordable housing opportunities, co-living has become very appealing. Renting a room in a co-living space is usually less expensive than renting your own apartment, and it can often be cheaper than a traditional roommate arrangement.
Co-living offers more protection to tenants than typical roommate agreements, too. If you’re on your own lease with the provider, you’re only responsible for your monthly payment. You’re not at risk of being evicted if one of your roommates fails to pay their share. You’re also not at the mercy of the other tenants’ decisions. If one person wants to move out, you can stay without having to worry about finding a new roommate.
The rise of co-living also reflects a change in values and priorities in the younger generation. Many young people today are choosing community over individualism. They don’t feel such a strong need to have their own house or lots of belongings. Instead, they prioritize being around like-minded people. Co-living provides an opportunity to connect with a community of people with shared interests or experiences. This arrangement can help people find a “chosen family” that offers support, friendship, and connection.
The Impact of Co-living on the Rental Market
Because co-living is becoming so popular among renters, it can be a valuable opportunity for real estate investors. You may be able to achieve higher occupancy in a co-living space, which results in a higher monthly payment and a better return on your investment. Managing turnover is easier with a co-living space, too. When renting to a family or to a traditional group of roommates, everyone could move out at once at the end of the lease, leaving you with no rental income until you find new tenants. With co-living, one tenant may leave, but you continue to generate income from the other residents.
Co-living is much more popular in urban areas than in suburban and rural communities. In large cities, many existing properties are being converted into co-living spaces. In some areas, new properties are even being built for the purpose of co-living. However, building codes in some cities have not been updated to reflect the rise in popularity of co-living spaces. This has left investors unsure of legal requirements when building or converting a co-living home.
What to Know About Owning and Operating a Co-living Space
If you’re thinking about purchasing a co-living space or converting a rental home into one, there are several important factors to keep in mind. Providers of co-living spaces have to be much more hands-on than traditional landlords. You’ll be managing several individual leases, and you’re responsible for creating a positive, well-functioning community within the home.
Remember that the tenants in a co-living space are strangers to each other upon moving in. They all applied for their rooms individually, so they didn’t decide to live with one another. As the co-living provider, you must ensure the safety and comfort of your tenants. Set clear rules and agreements, and make sure you have the means to enforce them. Your residents should always be comfortable speaking to you if they’re having an interpersonal issue or if they have a suggestion for how the community can function better.
Because co-living spaces have a much stronger focus on community than traditional rental units, the common areas are incredibly important. If you’re planning to purchase a new property, look for one with a large kitchen, dining room, and living room. You also need to decide how these common areas will be maintained. You could hire a cleaning company and include the cost in the rent, or the residents could take shifts with cleaning. Setting clear rules and expectations for your tenants from the beginning is critical.
Co-living is a unique trend that provides an affordable housing solution and a sense of community for renters. This arrangement offers a number of benefits for both tenants and property owners, but it differs from traditional rental agreements in several key ways. If you’re considering creating a co-living space, start by carefully researching the norms, expectations, and responsibilities for co-living landlords so that you provide the best possible community for your tenants.