Maximizing Rental NOI with Coliving

Cole Nastasi · 11/5/20

Maximizing Rental NOI with Coliving

Changing lifestyles

Modern living is defined by two things: freedom and flexibility. 

Americans are increasingly demonstrating a preference for nomadic lifestyles and as a result, demand for housing is shifting and difficult to pinpoint.

There are many underlying reasons for this change. It is helpful to use US Census data as a way to make sense of the current shifting sociocultural landscape. 

Median age at first marriage is increasing steadily over time, therefore illuminating how people live and work in their 20s and 30s.

According to US Census data, marriage has been delayed by nearly a decade. This isn't indicative of any one variable, but you can see this anecdotally talking to groups of young professionals.

This trend is only growing. 

Shifting demand

In addition to this change in family households, there are some shifting macroeconomic conditions that are directly relevant to anyone in the business of real estate. 

More US Census data can help to tell us that story. 

Housing costs are on the rise while median income has stayed relatively the same over the same time period, causing a shift in demand for more shared living arrangements.

US Census Bureau data reveals that national wages are stagnating, while housing costs are continuing to rise. This, in turn, has created an affordability crisis unmatched in history. And while interest rates live below historic lows, frankly, people can't afford to be homeowners.

With COVID-19 compounding this issue even further, more and more people are allocating more money than they can afford to their largest housing cost - rent. It was only a few weeks ago that ⅓ of New York renters defaulted on their rental payments. 

Based on the data above, more renters than ever are looking for more affordable solutions. The days of high-priced studios in city centers is changing, and new models are coming into play.

A modern solution

The coliving, per-bedroom model allows landlords to capture this population that have been displaced due to the current, antiquated rental model. 

Breaking single family homes into bedrooms allows you to cast a much wider net to a larger applicant pool because the per-bedroom allows for optimized leasing and lower rent costs. Assuming tenant quality is controlled, occupancy will be maximized and NOI will increase. 

In a traditional household the entire rental payment is dependent upon one to two incomes. Using the coliving model also allows owners and property managers to eliminate eviction risk by spreading housing-related risks across multiple, income earning tenants. 

The strong influx of young professionals looking for roommates coupled with the spreading of housing risk across tenants are benefits of the per-bedroom leasing model to an asset owner or property manager.

You may be wondering, “Is my property overpriced?” The reality is, it is more likely you are just dealing with an illiquid market. The fit between supply and demand is off and there is a lag in filling your property as a result. 

Alcove leasing ensures higher NOI than traditional leasing with our per-bedroom model

The per-bedroom model is perfectly tailored to accommodate these modern professionals looking for like-minded roommates, often after relocating to a new city. 

It is important to acknowledge roommates are not a new concept. People have really always had roommates and they always will. Alcove provides the systems and technology to make the experience of finding roommates and maximizing real estate NOI one and the same. 

Get started with per-bedroom leasing today.