As housing expenses surge across most US markets, renters (and would-be renters) are getting creative about living arrangements. US Census data shows that over 7.6 million Americans between the ages of 25 and 34 live at home with their parents. This represents an increase of 87.4% since the turn of the millennium. And those who want to move out of the family home are seeking roommates to split the rent with.
But it’s not just young adults struggling to pay rent. Many members of the Baby Boomer generation are now seeking “boommates” to share the cost of housing with. This is where shared living comes in.
Shared living allows adults to split the rent while maintaining a level of comfort and privacy.
In this article, we’ll examine the shared living model and answer frequently asked questions, such as:
What does shared living mean?
How is shared living different from co-living?
What are the pros and cons of shared living?
We’ll also explain how real estate investors are boosting the supply of shared living units to help ease the housing shortage while earning solid returns.
What Is Shared Living?
In general terms, shared living is when two or more adults live together as roommates, each contributing to the rent and daily maintenance of the unit.
However, as more renters are living with multiple roommates, the term shared living is evolving to have a more specific meaning. Real estate insiders are now using shared living to describe a roommate arrangement in which three or more roommates live together in a space intentionally designed for multiple roommates.
This intentional shared living design includes features like:
Three to five bedrooms to comfortably accommodate multiple roommates.
Similarly sized bedrooms. This allows roommates to split the rent evenly, without having to factor bedroom size into their rent split calculations.
En suite bathrooms for each bedroom to provide more privacy.
Larger kitchens and living areas to fit more people.
Enough parking so each roommate can have their own space.
How Does Shared Living Work?
Shared living works like a traditional roommate rental situation. All roommates are screened in accordance with the landlord’s (or property manager’s) tenant screening procedures and included in the Lease Agreement.
The roommates are jointly liable for the unit. This means they are all responsible for making sure the full amount of rent is paid, and the terms of the lease are upheld. If one of the roommates fails to pay their share of the rent or otherwise breaks the lease terms, all roommates are held responsible.
Shared Living vs. Co-Living
Co-living is different from shared living. In a co-living arrangement, each roommate has their own lease for their share of the unit. Under co-living, if one of the roommates fails to pay their share of the rent, the other roommates cannot be held responsible. The landlord could evict the roommate who fails to pay their share of the rent without evicting or penalizing the other occupants of the unit.
The Pros and Cons of Shared Living for Renters
The renter’s advantages of shared living include:
Lower rent than they would pay for a studio or one-bedroom unit alone.
Comfortable accommodations that provide more privacy than traditional rental floorplans.
Comparable spaces for each of the roommates, which eliminates the need to negotiate different rent splits based on bedrooms of different sizes or conditions.
The potential disadvantages of shared living for renters include:
Joint liability, which means one renter could be held responsible for the actions of their roommates.
Less privacy than one would get living alone.
The Pros and Cons of Shared Living for Investors
The investor’s advantages of shared living include:
Higher rental rates than one could command for units with traditional layouts.
Higher sales price potential than traditional apartment buildings.
Lower vacancy rates than units with traditional layouts (due to the high renter demand).
Roommates will hold each other accountable for paying rent and adhering to the lease, knowing that they are jointly liable.
The potential disadvantages of shared living for investors include:
Finding buildings with units designed for shared living can be difficult.
Developing shared living properties requires time, high upfront costs, industry connections, and specialized knowledge.
How Real Estate Investors Can Capitalize on Shared Living (With No Prior Experience and Comparatively Little Capital)
Shared living is a smart investment, and you don’t have to purchase or develop a shared living building on your own to get in on the action.
Real estate syndication allows investors to buy into a professionally managed shared living development deal. You simply choose the specific project you want to join, wire the investment funds, and track the progress until the project is complete and you can collect the returns.
Shared living syndication projects are a good fit for investors who:
Are looking for strong return potential.
Want to help ease the housing shortage and create more affordable options for renters.
Don’t have the knowledge, time, or capital to develop a new shared housing complex alone.
Qualify as accredited investors.
California-based Gatsby Investment specializes in shared living developments in the in-demand Los Angeles market. We focus on smaller buildings that cost less to construct and can be completed comparatively quickly. This allows investors to buy into a deal for less than $25k and cash out in as little as 14 months.
With Gatsby, investors can own an equity stake in the property. You’ll be made a member/limited partner of the project’s ownership entity, meaning you own a share of the underlying real estate. This stable ownership structure makes Gatsby’s syndication projects lower risk than generic real estate crowdfunding projects.
Plus, Gatsby has a proven track record of success. From 2017 through 2023, Gatsby earned average annualized returns of 23% for investors!
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