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Co-Living

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Stan Crowch
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2:49p, 6/16/22
AG
I thought I would share my adventure in a unique asset class over the past year. In April of 2021, my partner and I started purchasing single-family homes to convert into 8 to 11 bedroom co-living spaces. The current portfolio is comprised of 15 single-family homes and 128 rooms. With another 10 homes (93 rooms) coming online. It certainly hasn't been a walk in the park, and we have faced every hurdle you can imagine in an undertaking of this nature. These are very operationally intensive to manage. As the active portfolio sits today we are at 75% occupancy and approximately a 9% unlevered yield on cost. Average rents are around $140/week. We have seen a spike in demand recently and if that trend continues, I think we will hit 90% occupancy within the next 2 months. We are targeting a 14% UYOC at stabilization. Happy to keep you guys updated as we progress if you are curious. There definitely hasn't been a dull moment. Here are a few examples of what we are doing.





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Howdy Dammit
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3:04p, 6/16/22
AG
No knocking your model at all, as the market dictates what it wants. But I can't imagine anyone over the age of 22 wanting this lifestyle.
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Stan Crowch
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In reply to Howdy Dammit • 3:09p, 6/16/22
AG
Most of our tenants are a good bit older than that. We are catering to the workforce housing demographic. These people are very price sensitive.
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Rustys-Beef-o-Reeno
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3:15p, 6/16/22
AG
I'm assuming these aren't in typical neighborhoods which usually have hoa regulations against this sort of thing.

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Martin Q. Blank
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In reply to Stan Crowch • 3:17p, 6/16/22

Quote:
These people are very price sensitive.
Is this a euphemism for slums?
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Stan Crowch
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In reply to Rustys-Beef-o-Reeno • 3:17p, 6/16/22
AG
Right no hoa.
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Stan Crowch
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In reply to Martin Q. Blank • 3:18p, 6/16/22
AG
No it's a euphemism for super hard working people that barely get by. There are a lot of them out there.
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Señor Chang
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3:39p, 6/16/22
AG
I have so many questions.

Do you have house rules or do the renters make their own rules as far as cleaning shared bathrooms, kitchen, etc.

How do 8-10 people share one kitchen?

What does the parking situation look like?

Do the police get called out to your properties often?
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Stan Crowch
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In reply to Señor Chang • 3:52p, 6/16/22
AG
Señor Chang said:
I have so many questions.

Do you have house rules or do the renters make their own rules as far as cleaning shared bathrooms, kitchen, etc.

How do 8-10 people share one kitchen?

What does the parking situation look like?

Do the police get called out to your properties often?
We partner with a co-living platform that markets the rooms, vets the tenants/does background checks, handles issues between tenants, and holds them to the house rules. They take a percentage cut off the top. Most of these people are working a lot and aren't home very often. Generally, vehicles are limited to 4 per household. Lots of our tenants use the bus for transportation. All of our properties are within .5 miles of a bus stop. Haven't had police get called but we have a few neighbor complaints and try to resolve them quickly.

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ChoppinDs40
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In reply to Stan Crowch • 7:22p, 6/16/22
AG
Stan Crowch said:
Señor Chang said:
I have so many questions.

Do you have house rules or do the renters make their own rules as far as cleaning shared bathrooms, kitchen, etc.

How do 8-10 people share one kitchen?

What does the parking situation look like?

Do the police get called out to your properties often?
We partner with a co-living platform that markets the rooms, vets the tenants/does background checks, handles issues between tenants, and holds them to the house rules. They take a percentage cut off the top. Most of these people are working a lot and aren't home very often. Generally, vehicles are limited to 4 per household. Lots of our tenants use the bus for transportation. All of our properties are within .5 miles of a bus stop. Haven't had police get called but we have a few neighbor complaints and try to resolve them quickly.

section 8 money?
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water turkey
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7:24p, 6/16/22
Interesting. Looks like you are filling a market need. Good luck.

BTW- are they all located in the same area?
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Stan Crowch
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In reply to ChoppinDs40 • 7:57p, 6/16/22
AG
No Section 8
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Stan Crowch
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In reply to water turkey • 7:59p, 6/16/22
AG
Thanks! They are spread out in multiple areas based on demographics, proximity to transit, areas of employment, hoa restrictions etc
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ChoppinDs40
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8:04p, 6/16/22
AG
Looking for investors?
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jagvocate
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8:58p, 6/16/22
AG
"Hell's Kitchen"

I kid, I kid

I'd call it the "Non-Mobile Home Park"
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FriendlyAg
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9:06p, 6/16/22
I find this interesting.
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Stan Crowch
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In reply to ChoppinDs40 • 9:08p, 6/16/22
AG
Maybe down the road but still trying to prove the concept for now.
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Diggity
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9:12p, 6/16/22
AG
The city needs more clean, safe workforce housing options that are close to jobs.

I commend you Mr. Crowch
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Stan Crowch
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In reply to Diggity • 9:15p, 6/16/22
AG
Thanks Diggity. I thought Texags would appreciate a market driven solution to the affordable housing crisis. No government handouts or subsidies here.
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swimmerbabe11
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10:05p, 6/16/22
do most pay cash?
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ChoppinDs40
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10:09p, 6/16/22
AG
I imagine this is like the entire kitchen staff at a Lupe Tortilla or something of that nature. Roofers?
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Ernest Tucker
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11:05p, 6/16/22
AG
Reminds me of the old boarding houses my grandfather would tell me about back in the day.
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QuantumNoodle
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11:31p, 6/16/22
Fascinating, thanks for sharing.
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FriendlyAg
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11:41p, 6/16/22
Stan, if you don't mind me asking, what are you aiming for as far as percentage of rent to their income? Or are you just trying to be below a certain real dollar amount? (I.e. $600/month)

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Stan Crowch
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In reply to swimmerbabe11 • 7:57a, 6/17/22
AG
No cash. Weekly dues are drafted from a debit card on file.
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Stan Crowch
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In reply to FriendlyAg • 8:18a, 6/17/22
AG
Trying to keep a healthy delta between our pricing and the market rate for class c apartments. We have some small rooms that rent for $120 and some suites that rent for $180+. As far as income requirements weekly room rate is generally no more than half their verified weekly income.
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Stan Crowch
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In reply to ChoppinDs40 • 8:23a, 6/17/22
AG
We have all walks of life. Young tech kids who want the lowest overhead possible, people going through life transitions, divorce, etc. We have refinery workers, fast-food workers, gig economy people, etc. We have people here temporarily for work. One of our homes is all women and they have become friends and a support system for each other and just love living together. It's a very wide spectrum.
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GoodAg84
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10:37a, 6/17/22
AG
Seems like what used to be commonly called a boarding house? Not to be confused with a flop house.
Gig Em!

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Martin Cash
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In reply to GoodAg84 • 11:41a, 6/17/22
AG
Mortgage Man aka 84CTSQ5 said:
Seems like what used to be commonly called a boarding house? Not to be confused with a flop house.
Yep. I had to google 'co-living.' Sounds right.
The heart of the wise inclines to the right, but the heart of the fool to the left. Ecclesiastes 10:2
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fka ftc
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12:29p, 6/17/22
Kudos on the efficient plans and the business plan. My comments below are not criticism and you may very well have vetted all this out, but if not in may be an area to look into.

In Texas and most other states, you cannot exclude Section 8 renters and other assistance programs. You may elect to not market to that group and you may not run across any, but you cannot decline based on Section 8 alone, to my knowledge.

Fair Housing Standards start to kick in on multi-family properties over 8 units. My experience with these standards is with government assistance programs and I do not know how they apply to properties available for rent and with rentals that are not for self-contained units but more of a sharing the rent of a 10-bedroom house. These standards apply at a national level, state and local requirements be damned.

Along the same lines, if this is considered a hostel or hotel, then ADA and other accessibility / visibility standards could apply.

You may have sorted through all this and if you have that is great. But if not, I would look into familiarizing with these areas to ensure you do not trip a wire.
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Stan Crowch
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In reply to fka ftc • 1:12p, 6/17/22
AG
Yes, let me clarify. We are not specifically excluding Section 8, it just hasn't really come up. Though I don't believe landlords are required to accept vouchers. I'll have to dig in further. The other issues you mentioned are on our radar. I appreciate your thoughtful comments.
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fka ftc
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In reply to Stan Crowch • 5:42p, 6/17/22
Best of luck. I think the idea provides a much better option than long term stay hotels and RV parks.
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GoodAg84
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In reply to fka ftc • 6:39p, 6/17/22
AG
I lived in my RV for 6 + months in an RV Park in DFW after selling out in Southlake while we moved our household to Cuero (wife moved down to Cuero and set up our new home and helped with new grandbaby while I finished up a job project pre covid). I was amazed by how many families were living there.
Gig Em!

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El Hombre Mas Guapo
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7:45p, 6/18/22
AG
Knowing how the commercial version of this works in gateway markets, I'm surprised there haven't been more issues.

This was a concept that was very en vogue before the Rona. The main issue is how do you get rid of that one guy that makes it unlivable for the other 7.

Like one guy who won't stop being creepy with female roommates, won't stop microwave cooking fish curry, or breaking/ hogging the bathroom. If you don't live somewhere where you can quickly remove the troublesome tenant, you end up with one dewsh paying rent for an 8-room unit.

I would also think you would want to include more common living space vs packing in those extra rooms, but if your demo is just using their room for a bed then you're probably spot on.

Go get some HUD financing, 40 yr amo and fixed crazy low rates.
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Stan Crowch
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In reply to El Hombre Mas Guapo • 9:06p, 6/18/22
AG
The tenants have to become members of the co-living platform. If they consistently violate the house rules they get the boot quickly and are banned from renting on the platform again. We purposely limit common areas to discourage fraternizing. No couches, no common area tvs and no big living areas. Just a kitchen and table to prepare and eat meals. So far we haven't come across any lenders who will underwrite these deals based on income but hoping that will change.
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