#198: Co-Living: A New Era of Rental Income
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Welcome back to another episode of The Richer Geek Podcast! Today, we’re diving deep into the transformative world of co-living with Grant Shipman, a leading authority in this booming real estate niche. As the founder of Livingsmith, Grant has achieved an extraordinary 97% lifetime occupancy rate and an average tenant stay of 25.2 months. He shares how a chance discovery and lessons from intentional living communities catapulted him from delivering pizzas to achieving financial freedom in just 15 months.
Discover what co-living truly means, why it’s not just "renting by the room," and how this model combines the best of single-family and multifamily investments. Plus, learn the essentials for creating healthy, thriving shared spaces and how you can turn your properties into cash flow powerhouses.
In this episode, we're discussing:
The Basics of Co-living: Understanding the concept and its advantages over traditional rentals.
Building a Thriving Co-living Community: Tips for fostering positive relationships among residents.
Maximizing Your Investment: Strategies for selecting the right properties and optimizing rental income.
Navigating Legal and Regulatory Hurdles: Staying compliant with local laws and regulations.
Leveraging Technology: Tools and platforms that streamline co-living operations.
Resources from Grant
LinkedIn | The Livingsmith Podcast | LivingsmithPro.com | Co-Living 5 Day Challenge
Resources from Mike and Nichole
+ Read the transcript
Mike Stohler
Everybody, welcome back to another episode of The Richer Geek Podcast. Today we have Grant Shipman. He's the leading authority and co-living property manager. We're going to get into all the details of what co-living means. Doesn't it mean living in the basement of your parents house? We're talking about something else. He has over two decades of hands-on experience in this. He's the founder of Livingsmith. Grants propelled the company to exceptional heights, maintaining this 97% lifetime occupancy rate.
Mike Stohler
Man, all of us would love to have that. He has an average of 25.2 month average tenant stay. Innovating the industry, he's launched his first ever co-living course. We'll talk about that, courses, books and all that sort of stuff. Grant, how are you doing?
Grant Shipman
It's really great to be on your show. Before, when we were talking how you know your combined skills of not only crushing it in real estate, but also among other things, but like, what a fantastic show. So anyway, thank you for having me on, Mike.
Mike Stohler
Absolutely. You're exactly what we want, what we need, what we look for. As far as diversifying on our show, all the different types of asset classes. There are so many ways. We all say real estate is the way to go, right? And there's not just one cookie cutter way. So before we dig into co-living, give us a little bit of a background on yourself and how you got started in real estate.
Grant Shipman
Yeah, so I appreciate that. It's kind of weird, because it seems like a lifetime ago, right? With everything, but I was delivering Domino's Pizza, and I was renting a room, and then I got, I made the mistake of reading Rich Dad, Poor Dad, right? So I was like, "I need financial freedom." I need that rental property is the way to go. I found my financial freedom number, and I thought, "Hey, if I do this and I get everything right and I have no mistakes, then in 10 years, I'll finally be financially free." And that was a little bit of a bummer to me, but I was somebody who I really wanted to get married, be a dad, all of these things. So anyway, I'm delivering Domino's Pizza, in my crappy Prius, listening to great podcasts, right? Like yours, just sucking in everything I could.
Grant Shipman
Back then, there weren't many books on real estate and in business, but I was listening to all that I could on Audible.Anyway, what kind of happened by accident is I went to see a property, just a house. It was on Washington Street in Loveland, Colorado, and I was surprised, because in the backyard there was a second house. I thought, "How do I rent this house out?" I looked at, do I put them both on one lease, separate leases? Or I thought, "Heck, I guess you could run by the room then." So I just ran some dummy ads on Craigslist, and I got Mike, like over 10 times the response on these dummy ads. And so I went to my local real estate level investment network, and some people who had a lot of experience. Actually, it's not like when we were talking before, right? Like we both speak with our experience, but you just have, like, so much more. And they said, "Grant, this rent by the room thing is a great idea. You think so?" At the beginning of the month, you make a lot of money. The revenue is good, but by the end of the month, all your profits have dried up, and you're stressed out because of tenant conflict, turnover and property damage. But what happened right there was like the little epiphany angel had a baby in my brain, and to say it as weird as possible, what they didn't know was that early, early in my life because of a failed marriage, I had moved in with the hippies and did the unexpected. I moved in with the hippies, the intentional living community. And these people are the original gangsters of strangers sharing space. So they had just decades of how to do this, not because of people who have to because they can't afford to live alone, but because people want to anyway, I went from that day of seeing that house to 15 months later, I had financial freedom. It wasn't 10 years, I had $2 million net worth. I was ready to really date seriously. I met my current wife five months later. We got pregnant on our honeymoon. It's really weird to look back at because, holy moly, like But yeah, just to say it's almost, it's like it happened by accident, right? I didn't move in with the hippies because I thought this would help me be successful in real estate. That wasn't the idea exactly,
Mike Stohler
Wow, that's one of the most interesting stories from beginning to end that I've ever heard. But good for you. I mean, that is great. So we're talking about this co-living, and you can hit it on. It's like, "Yeah, if you have a house on the same lot, you could do that." But dive into the world of this co-living investment a little bit, and talk about maybe, the different types. And what you've settled on that you found is the right niche for you?
Grant Shipman
Yeah, that's a really helpful question. When I talk with people, it often gets confused and defining terms is so important when we're investing and making plans and asking people to trust us, asking renters to trust us, all this stuff. So co-living is actually, it's something that's new. Some people think that it's like, "Oh, I've got sober living houses, or rent by the room, or, kind of a rooming house, say like, housing for the poor, or halfway houses." But anyway, all of these transitional houses or group homes have been around forever, and if that's your thing, it's a great way to make money. You do need to have a special set of skills, otherwise you're going to have a nightmare. I have a few sober living in my house. Those things are transitional housing. They're important.
Grant Shipman
Co-living though, is something that has picked up speed over the last 20 years is kind of the last thing to emerge from the share economy. It's a normal house in a normal neighborhood, A or B neighborhood. I have renters who are college professors, HVAC technicians, teachers, civil engineers, all of that stuff. It's people who want to live in a house, and they would like to live with others and and when it's a wonderful environment, that's why they stay there, then they love it. So just to say it's like, for those who have properties out there, it's all the benefits that single family home investment brings. But like multifamily you've got multiple checks coming in on a month and all of that stuff. So it's like, you combine the best of both worlds. Anyway, that was maybe a mouthful. Mike, I don't know if you can break that apart.
Mike Stohler
No, I think it's great. You have a four bedroom house. You may have four different renters, tenants, and then you have a common space, right? Maybe the family. You can't say this like, "Hey, this is my living room, right?" You have to have people that get along somewhat, because they are co-habitating in these shared spaces, probably don't have four different refrigerators, there's got to be some cohesiveness within the test. So how much of that do you figure out? And it's like going, "Hey, you three of them gang up on one of them." They come to you and say, "You got to get rid of this person because he's...", do you get that? Or do you let other tenants also are in the process of saying, "Hey, do you want to interview this fourth person?" Do you do that or do you just kind of like, "Hey, here's your new roommate?"
Grant Shipman
Yeah, what you're hitting on, is so key, because this is a new rental strategy. And just like rental strategies, for instance, like we were talking before the show, my wife does Airbnb, you've got, hotels, multifamily, all of these rental strategies, if the wrong management strategy is used right, it is going to take something that should be a fantastic cash flowing asset, and you're losing money and you have no time anymore. So to say, everything that you said is the co-living property management is a new thing for this. It's also to say to ramp up. What you said is, typically, my houses are anywhere from seven to 10 rooms. So that means seven to 10 people are sharing a house. Now this is your typical 2,500 square foot to 3,400 square foot neighborhood house. If there is a suite bathroom, like a master bathroom, a junior suite, something like that, then there can be a couple there. So suddenly that eight bedroom house, there's 10 people living in that house. They share the kitchen, they share everything else besides the private bedroom. So just to say the getting along part is so big. In fact, already, to date, even though my company and other companies like mine that do this are wildly successful. There's been $226 million of failed startup capital put into co-living because they haven't got tenants to get along. They actually the in 2012 this company called Ali, $30 million to make a software that was like eHarmony for tenants trying to match them together, right? But to say is our answer. And really, what I just learned from the intentional living community, the hippies are part of that there's all kinds of groups, if you don't need similar personalities. What you need is a healthy household. So we have household systems set up, and then anybody who's reasonable or responsible is going to thrive. They're going to love it. As far as the residents getting along, it worked quite fantastic. One person gives a tour, and they'll tell the property manager a thumbs up or a thumbs down, and in the tenants, they just really trust the property management company. And it all works out well, it's pretty. Fantastic. It's astounding to see these kinds of non-traditional households or little families work, right? Because people don't want to be in apartments or in a house by themselves, if they can actually get along, right? So that's what a healthy household does.
Mike Stohler
I'm thinking that housing costs are through the roof. There's a lot of people that can't afford homes, especially the younger generations, and it seems like I've been seeing a trend, if it's not the millennials, probably the millennials, some of the Gen Zs, they're more likely to want this type of a cohabitation because they don't want the responsibility of maybe owning a house. Number one, they can't afford it, but they don't want the debt, and they'd rather do this because they're more social people, right? "I'm a Gen X like, "leave me alone." But the younger generations, they're more social. They grew up in a social type of network. You're seeing a lot of the younger ones. Or am I wrong with that?
Grant Shipman
I would say the majority of people are 35% to 65-70 % there will be a younger person here or there. Something that surprised me, and it's actually what real estate investors will challenge me the most , is that in 2003 the most popular lease was the one person lease. And so housing, apartments, houses that had 2,3,4, bedrooms before, people sharing before we're now only one person. I mean, that kind of started the whole housing shortage, right? That was in 2003 right? In 2008, 59% of buildings slowed down, but to say what's surprising is this isn't like, oh, student housing or senior housing. It's like, it's cross generational. People will move in there. One gal was homeless. Nobody knew that, right? And somebody else is a pretty high paid civil engineer. And why do I know that? Because we're the property managers, we know everything right? It's anybody who's reasonable and responsible. They move into a place with good, healthy systems. The house just runs itself, and it turns into a cherished home, and those people don't want to leave. It's weird to say there's actually a number of people I just made into Generation X. They just made it in there, right? Like, but there's a number of people in our generation who are, are there, and they love it. They love being with younger people. They love people being people their own age. It's pretty fun. It's quite the grassroots movement that's happening.
Mike Stohler
So let's talk about what it really involves. So we have some listeners here. It's like, "Oh, I'll just go buy a house and put eight people in there." They're thinking, "Wow, that's eight times the rent." What does the management really involve? We've talked a little bit about how you find the person and you want to make sure they get along. Listeners are sitting there going, "What are the things you've learned?" It's like, "Oh, man." It's like, if you were to talk to someone who's going to go buy a house, or they already have some rental houses. Say, "Hey, maybe I'll turn them into co-living." What are some of the gotchas and what are some of the things that you would like to tell our audience?
Grant Shipman
First off, with a property, it has to fit the rental strategy. So if you have rental properties, I would say that 40% of properties don't fit the co-living strategy. So when somebody comes to our property management company says, "Hey, I've got 200 properties." I'm pretty sure that 40% of those at least, are not going to work. However, the 60% that do, we take a house that's making $2,900 in rent, and we turn it into a house that's making $6,300 in rent. But as far as the what to do with that? So if somebody is in a place where, like, they don't have much money, they don't have a lot of resources, they're younger, and they're just getting started out, or they're starting over, right? That's what's really bad about. This is they can buy a house with owner occupant financing, right? So say somebody has a VA loan, they're going to get zero down and put $15,000 into furnishing it, and maybe putting some lock let some locking knobs on the doorknobs, right, to set it up. And then they're going to rent out the rooms, and they're going to have a management system in place where it's an enjoyable experience. So just to mention, what does that look like? That's looking at, getting a $420,000 house, like I've got under contract in Jacksonville, Florida, and it's going to cash flow, net profit, $3,003 a month, right? So that's really awesome. However, if somebody says, "Hey, I don't want to mess with that. I've got money." That same house is going to cost them $99,000 for the down payment, the 20% down payment, and furnishing the house, maybe painting a wall, all of that stuff, they're still going to cash flow $3,003 a month. The return on investment is going to be 20% cash return, rather than 134% Percent. So to say is, there's ways to do this. The biggest thing, I would say is just like, if, early on Airbnb, you got to treat it like that if you want to do this, either you or somebody that you trust needs to learn how to do it, because there are plenty of gotchas. But once it's down, just like the people who nailed it early on with Airbnb, they got in during that window, and they made tons of money. So that question you asked is so key, because there's people who are wildly succeeding, and then there's the other people who are not, right?
Mike Stohler
It's like, everyone watching an episode of on HGTV, it's like, "Oh, I'm an expert. I can do that."
Grant Shipman
I can flip that house.
Mike Stohler
I flip that house on an hour. We're kind of joking around, but hey, look, I failed miserably when I first started, in with the rentals, and I'm the first one to either learn from it or you run and hide from it, right? But I got started before the PG days, which is pre-Google, pre-internet, I didn't have a podcast.
Grant Shipman
Even before I asked Jeeves, right? It's like a chief...
Mike Stohler
I had to thumb through the yellow pages, to find the help. Is there an excuse? Now, come on, ladies and gentlemen, you have podcasts? You have mentors, you have business coaches, I mean, my God, try living in a small town with the Yellow Pages talking about mentorship and what you do. You have some do your own guides, and you have some property management type. You have education out there. So let's talk about what you have and what you offer. And then we'll talk about what happens when people go to livingsmithpro.com they click on it and what happens?
Grant Shipman
Yeah, well, and actually, Mike, your listeners like they tend to be, I mean, more serious, more educated, more going to take action, right? They're not just like recreational consumers of knowledge.
Mike Stohler
They're too busy for HGTV.
Grant Shipman
Right?
Grant Shipman
It's like you need to know what to happen. So here's what I did. I've made a link just for you guys. So with livingsmithpro.com/richergeek. I have three things for people who are interested in this. The very first is we do a free five day training, a co-living challenge, and you can jump into that, and we just go at it, and we cover we get into real basics, like what houses work for this? How do you set up the property management so the house mostly runs itself. How do you do this where tenant conflict is not an issue at all, like I learned that from the hippies, it's actually really easy. Actually, tenant conflict is a helpful thing, because it's how we build trust, and why, why people don't want to leave a house, right? Because now they live with people they respect and appreciate, but it has all of that stuff that being the case is, if there's people who are a lot more serious, they can book a free call on their 45 minute discovery call just to say, "Hey, they've got these properties." What would be helpful, and that's going to be with me or my team. It's not something that is not even available on our website, so make sure to go to that link. But the last thing is this, my tenants, there's a book called Welcome Home. There's only 30 pages in this book because each page is written by a different co-living renter, sharing their best advice on living in a co-living house and what's read. So this is a $28 Amazon book, but anybody who goes there can download this for free. And what's incredible is reading, reading these stories. And it's fantastic. All I did was compile it and put it out there. So those three things, I would say is, if your listeners, if anybody has found, "Hey, the multi family market, it's awesome, but it's so oversaturated." Now Airbnb, there's a gal in Tennessee whose Airbnbs are getting regulated to debt, and so that's getting harder, while at the same time, legislation for co-living is working the other way around. It's something that for people getting started, the cash cushion is so large you can make lots of mistakes and still not lose money. And at the same time, when you get dialed in, you make lots of money. So as far as anybody, being able to help people learn, if this is a fit for them, I can say confidently that I think the numbers show that this is the best market option in real estate right now. If that option is best for a person. Mike, like you and I were talking about it, it depends on the person, right? If me and my team can help with any of that stuff, our podcast is, is simply just me sharing, for seven minutes on for instance, how much parking do you need, right? Or these different little value ads, right? So it's just a small scale podcast to help people understand. So it's a really awesome thing. I can't say enough about it, but I just wanted to have something that your listeners could really connect with.
Grant Shipman
Yeah, and thank you so much everybody to hear that we always love the freebies. Especially when they're knowledge-based. I'm going to download because I just want to walk home of what these people are looking at, thinking about. So before we leave, a couple things. All these percentages probably won't fit. So, what is it? Is it four, three? We kind of dance around it a little bit. But I'm curious.
Grant Shipman
Now, this is a thing that I was just working on for notes with our training coming up so real. Specifically, you're searching for a 2,500 to 3,400 square foot house in an A or B level neighborhood with five plus bedrooms. It's typically going to be on a corner lot, because that's what works best for parking, and it's not going to be on septic, and then it's going to have other things, like you want to have climate controlled. That's really the setup if you have more than five bedrooms. Hey, awesome. But once you find something like that, really great things are going to happen. And in most areas, these houses are absolutely everywhere. If you drove by one of my rental properties, Mike, the only thing that would stick out about it is that the lawn would look better than the others in the neighborhood, because when you have seven people sharing a house, there's always two guys that are fighting over who can take care of the lawn, right? So it's really cool.
Mike Stohler
One of the notes that I love down here at the bottom is co-living also reduces emissions, because you're sharing the resources, and that's always good. But I was thinking, okay, so now that you have five bedrooms and we can leave after this, because I was thinking, because I'm a big multifamily guy, I was like, how does he get around, the health and safety, as far as the occupancy,the different jurisdictions, because you can only have so many people in a house before it becomes a safety issue, right? But if you have five bedrooms, I'm thinking, you can't have a three bedroom or four bedroom with eight people in there.
Grant Shipman
Our smallest house that we have is a four bedroom. And here's the reason why one is that the four bedroom doesn't make as much money when you have turnover, you're only getting three checks instead of four. But for the renters, each time they have turnover, 25% of that little non traditional household has just changed over. So actually, the houses that renters like the most, the houses that make the most money, the houses that are easiest to manage are the houses that we're looking at at least seven, if not eight, nine or 10 people. And then, yeah, like the meaningfulness of it, like nothing takes a punch at the housing shortage more than taking a five bedroom house and, you know, turning the co-living house, as far as admissions, holy moly, as far as like, people in the Denver, Colorado area can get a whole nice home for the price of a bedroom 700 bucks. Like, holy cow, right? Like it's so it's skyrocketing rents. It's a thing. Even last year, the Surgeon General announced, loneliness is an epidemic in the USA, it equals smoking 15 cigarettes a day, which is hard for me to believe, but they've got the data. And so he really encouraged this kind of housing. So you don't want to get it in places where there's restrictions, if there's zoning, if there's HOAs. So it's doing the due diligence there. But like in July 1, Colorado just said, all laws within our state that limit co living are now outlawed. It's this growing and I mean, Washington, Oregon, Iowa, Austin, Madison, Wisconsin. It is the spreading trend. So just to say it's part of due diligence. But also it's shocking how available this is. Don't get any house for it, but when you get the right house, it's a huge win.
Mike Stohler
Well, that's why we need your help, Grant. Ladies and gentlemen, don't do it yourself. Go to livingsmithpro.com/richergeek. Find those freebies. And again, I always say, just don't go out of the zone. Reach out to Grant.
Mike Stohler
Grant. Are you on LinkedIn?
Grant Shipman
Yes, I am. Grant Shipman or livingsmithpro.com. And I'd also say, if anybody hasn't heard, if they just stumbled upon your podcast and got lucky like crazy, there's a lot of stuff out there that doesn't get you anywhere this podcast. I was so looking forward to this because of the quality information out there, and this podcast is one of those. So thank you again for putting that out, Mike.
Mike Stohler
Well, thank you, Grant. Appreciate the kudos.
Mike Stohler
Ladies and gentlemen, this wraps up another episode of The Richer Geek Podcast. And we thank Grant Shipman, at livingsmithpro.com check him out, everybody. Thank you Grant for coming on the episode.
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ABOUT GRANT SHIPMAN
Grant Shipman is a trailblazer in co-living property management and investment, with over 20 years of expertise shaping the industry. As the founder of Livingsmith, he has achieved remarkable success, maintaining a 97% lifetime occupancy rate and a 25.2-month average tenant stay. In 2019, Grant revolutionized co-living education by launching the first-ever co-living course, complemented by DIY resources, collaborative consulting, and full-service property management.
An accomplished author of two books, podcast host, and weekly blogger, Grant is also a sought-after speaker and mentor in the co-living space. His dedication to innovation and excellence has cemented his reputation as a thought leader in the field.
Grant lives with his wife Sarah and their children between Estes Park, CO, and El Paso, TX, where he continues to inspire and advance the co-living community.