For Investors, Co-Living Spaces are Often Overlooked

Co-Living For Investors

More than ever, investors are interested in investing in co-living spaces.

1. Co-living Spaces Outperform Traditional Rentals

Co-living spaces have a higher revenue per unit than traditional one unit per family/tenant rentals. Some assessments say co-living offers 30% net rent premium compared to traditional apartments

According to the Financial Times, “The number of people living in cities is expected to increase to 68% from 55% over the next 30 years. With increased urbanization and longer lifespans young and older generations are looking for new ways of living to suit their lifestyles and budgets. This is driving a new move towards co-living in the US and the UK.”


2. Home Ownership is on the Decline

Purchasing a home is no longer the American Dream it once was. According to research by the Urban Institutes Housing Finance Policy Center, only 1 in 3 millennials under the age of 25 owned a home by the end of 2018. This number is 8-9% lower than we have seen in previous generations. 

Gone are the days when there are only two options: buying or renting. Millennials prize flexibility and community over a 30-year mortgage. They value the sharing economy, and the philosophy behind co-living fits into this new lifestyle quite nicely.

3. Sharing Economy and Sustainable Living Reign

People are less interested in owning stuff, both for minimalist reasons and environmental reasons. As we see more people share their bikes, rides, and homes through various sharing platforms, people will become more interested in the idea of sharing the co-living space. 

The new philosophy is owning experiences over things and preserving the planet.

In fact, sustainability aligns with an investor’s business model. Many investors opt to purchase and existing property and turn it into a co-living space. This is often more cost-effective than purchasing a more expensive, new development or building a construction from scratch. Some apartment buildings may already have existing communal spaces that can be fixed up to meet the needs of your co-living tenants. Even if they don’t have existing communal spaces, you should look for properties that have space to flip into these communal areas.

Co-living Investment

4. Fewer Vacancies with Co-Living Spaces

Co-living spaces are often in urban areas near employers, parks, museums, and nightlife - precisely the neighborhoods that millennials want to live. As such, it’s easier for investors to fill vacancies because people are looking for more affordable living accommodations in popular neighborhoods.

5. Timing and the Market:

Many developers see co-living as a viable living alternative for many different generations, not just millennials. As many boomers approaching retirement lack the funds to retire comfortable, co-living offers a way for older Americans to stay engaged in their community and enjoy the amenities that they may not otherwise afford living on their own.

6. Tax Benefits from Co-living Investment

​There are many tax advantages for investors of co-living spaces, including business paper losses and “pass-through” deductions.

7. Passive Monthly Income

Co-living real estate investors often enjoy passive income each month, with consistent cash flow.

8. Real Estate Appreciation

As most co-living properties are in desirable, urban centers where residents want to live, the property itself stands to appreciate. On the whole, investing in co-living properties is less risky than other investments.

9. Asset Control

Real estate is an actual real asset vs. paper asset you’d get from other investments. For investors, it’s ideal to be able to control the revenue streams - in contrast, stocks an investor must rely on a company’s management.

`10. Good Leverage

For lenders, a stable real estate asset is one of the easiest assets to borrow against.


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How to Manage a Co-living Successfully?

Although this industry is young, there are a few principals I standby in terms of how to manage a co-living successfully. These include the following:

  • Have a mission and vision for the space.

  • Choose quality residents whose values align with the community in your space.

  • Leverage social media to advertise events, drawing potential residents (this can help you stave off vacancies).

  • Schedule time to build rapport with your residents through roundtables or family dinners.

  • Implement smart tech to streamline processes.

There are many ways investors can attract, secure, and maintain their co-living properties - and the best way is through proper management.

To Recap

If you’re an investor eager to seize the next terrific real estate investment opportunity, I encourage you to take a deeper look at co-living investments. We just scratched the surface. You can find more information here on my blog, where I dive deeper into common questions we just touched on here. 

Co-living apartments and co-living spaces are a fabulous way to break into this surefire trend as well as trailblaze an exciting new path of passive income.

Co-Living Spaces

Delphine Nguyen, Investor

Delphine Nguyen is a real estate investor and a licensed real estate broker in Illinois. She learned to be successful from a variety teachers, including her own mistakes. Real estate investing is her passion. Helping others to achieve their goals is another passion that she has. She does what she knows best, therefore, her focus is solely on multifamily and co-living investment types.

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