Co-living is a property asset class than can offer an attractive yield if you can manage it properly. Like all start-ups, you’ll need to do things step-by-step as you scale up your co-living property investment portfolio. In this article, we will describe the steps you’ll need to take to build your own co-living success story under the rent-to-rent model.
Whether you have your own spare funds, taking a bank loan or using Other People’s Money (OPM), you will first need to have capital in order to start a co-living business. There are certain start-up or upfront costs you’ll need to factor in, such as the security deposit, cost of furnishing the unit and marketing costs.
2. Hunting for property
The next step is to look for suitable properties to rent so you can, in turn, rent them out as co-living spaces under the rent-to-rent model. You’ll need your landlord’s agreement that you can sublet the unit out to individual tenants.
3. Furnishing the unit
Once you’ve secured a lease, you’ll need to prep the unit so that it’s ready for marketing to prospective tenants. This would involve cleaning it up, furnishing it with essential furniture pieces such as the bed, study table, dining able and so on.
4. Marketing the unit
Common methods of marketing your co-living space include listing it on property portals or working with property agents. You’ll also need good pictures of the unit so that it appears attractive to prospective tenants. An important aspect of marketing the unit is staging. This involves putting nice decorative touches to the unit so that it creates a positive impression during viewing.
5. Signing the lease
Once a tenant has provided an offer to lease a room in your unit, you’ll need to draw up a tenancy agreement. Be sure to have this important documentation prepared in advance with the help of a lawyer to protect your interests as well as your tenant’s interests.
6. Ongoing tenant and property management
Once your tenant has moved in, you will have to assume the responsibilities of a landlord. You’ll need to look after both your tenants, as well as the property. As a landlord, you’ll need to arrange for regular maintenance such as aircon servicing or pest control. You’ll also need to be prompt to attend your tenant’s queries or resolve issues promptly whenever they arise.
Here, tech-driven solutions or mobile apps can play an important role in tenant management. If you don’t have the time to invest in such solutions to manage your tenants, you can consider working with a co-living property operator which already has the technology and resources to do so.
7. Scaling up
Once you managed to accumulate positive cash flow from your first few co-living units, you can consider scaling up your portfolio. Join our co-living investment workshops to find out how you can do so!