CoHousing can be a better way to live for many people.
CoHousing: living in self-governing, responsible, groups with a combination of private and shared spaces and facilities. This is often associated with shared ownership of a village of homes. Rental CoHousing is a similar social organization among residents, but in a suitable rental property so that cost of entry is much lower while the benefits are just as great.
If CoHousing is a natural and happy way to live, then Rental CoHousing provides access to an improved life for tenants also, without the high commitment and, for many, the unachieveable threshold costs required of ownership. If you have to buy a house just to join a community, few will. But since shared costs are lower costs, and since shared living is better quality of life, since community-supported lives are longer, since social isolation predicts early death, since community improves safety, since supporting community can help in innumerable ways, a great fraction of people will live better in a cohousing situation than in isolated rentals.
With higher density comes reduced cost to residents. Sharing the cost of shared facilities allows improved quality and quantity of shared facilities. Everyone could have a kitchenette, or none, but share a large, well-equipped, even commercial kitchen, at a lower overall cost than giving every unit its own full-size private kitchen. Instead of multiplying single-family playspaces for zero or 1.8 children per isolated family, a shared playground costs less overall and enables shared childcare for parents and playmates for the children. The benefits of sharing are obvious, compelling, and general.
Therefore, only as an aid to the imagination of possibility, and not by way of constraint or stereotype, here are offered some scenarios of possible rental co-housing success:
Rental CoHousing also benefits rental property owners by reducing turnover, marketing, management, maintenance and repair costs. The landlord benefits of Triple Net leasing are often achieveable in Rental Co-Housing. Resident responsibility and pride-of-participation is likely greater resulting in partly self-maintaining, as well as more attractive, units that are easier to fill and keep at market rates. A community of tenants can provide mutual support including helping each other: normally, with finding a replacement when one wants to leave; and even with job networking to avoid or minimize unemployment and financial problems including defaults, evictions, late and unpaid rents. Rental Co-Housing enables proportionally higher density; avoids duplication of shared facilities, enables more units and lower cost per unit, thus higher return on investment. With many-year tenancies both typical and likely, the substantial, even terrifying, costs of turnover including vacancy losses and re-marketing and lease-up costs, not to mention post-move-out repairs and pre-move-in tenant improvements, can all be substantially reduced, even eliminated. The returns on a rental co-housing approach for landlords can thus be very significant; however, it can be a win/win for owners and residents both.
RentalCoHousing.org Community
This site is intended to be a virtual space for advocacy, shared learning, networking for tenant/resident groups and owner/investor groups, mutual support, and useful information for renters and landlords interested in the cohousing subtype of multifamily residential property.
Breaking it down
I have a vision of a happy future for a lot of people. People like people. They like to live together, some of them. They like the benefits of living together. The company, the entertainment, the wisdom, the food. The lower cost.
Now not everyone likes to live with other people, lots of people want to be in the farthest wilderness where noone else can be seen or heard. But many people like a supportive and close community. It's a natural way for some people to live. Not nobody as is assumed in the American monoculture of single family dwelling limited zoning districts throughout the country. Some people do like to live with other people. Extended families, young people, and older people, all have strong reasons to benefit from togetherness.
Below I describe this vision in some detail and try to make a case to support this new category of residential real estate: rental cohousing. While housemate groups can incidentally form, jointly rent a house, and perhaps survive for some time, I do not know this to be a category in the existing real estate market, considered from the investor's or landlord's perspective. I don't know of landlord's associations or groups to support this concept, for example. Nevertheless I believe this is a valid, profitable, sustainable, and distinctly different, way of providing quality housing and community support to people, to the benefit of both the housemates in their communities, and the landlords who support them. I'll try to make that case here.
In 2013 I made a sweet co-housing space out of my house, by finishing out the basement. It now has six bedrooms and two bathrooms, a backyard heated office, several gathering areas, two fireplaces, even gardening beds and outdoor sitting/gathering areas, like the side yard under the trees, or the back yard around the fire pit. It's a nice place for people to be, and to be together, at least I hope it is.
I made a lease to support the community that I see has come into being there. It's a normal lease, most of its terms came from a landlord who rents to UW students. But it has some special terms in it, which make it easy and safe to substitute new members for departing members, and to extend the term by another year, with rents changing by an publicly known, fair rate.
This lease aims for community longevity.
How it works from beginning to end
The Middle could last indefinitely, with new people substituting, lease extensions, and an effective community-internal process. My first successful lease is in its fourth extension with no signs of slowing down.
On a regular 12-month lease, all change is frozen and pent up until the end. After 12 months, a lease is up. It's a lot of pressure, and makes the group and relationships brittle. Anyone who wants to go makes it a big deal for everyone else, who must struggle and find a new group. Similarly anyone who wants to stay can hardly avoid putting pressure and guilt on the ones who want to go, so that a sensitive person might just accept a breakup just to avoid putting pressure on their friends. It's hard to find a win-win in a 12-month lease for a group of housemates.
So as a landlord, I want to make it super easy for individual housemates to leave early. If substitution can be done clean and easy, then the community can recreate itself over and over, and ultimately last longer and longer.
So the main innovation for success in Rental Co-Housing is the substitution addendum. The substitution addendum is mentioned in the lease, which says it's okay to substitute a departer for an arriver in good order. As landlord, I actually want it to be easy for a tenant to leave, but of course I want them to leave in good order. So I define what good order is, and I make it easy to know what to do, and not too hard to do it. Then it's not such a big deal to substitute somebody out, and someone else in. Anyone that wants to leave, that's fine, just this: the group must find a good replacement, someone that passes the background checks and everyone agrees to, then clean up after the move out, make it nice for the new person, and then once again create a community again by all signing responsibility for each other. And maybe a graduation and welcoming party.
If leaving is no big deal, and everyone is used to having new people come in and become part of the group, it makes the group resilient and self-healing. Substitution equals fluidity.
Substitution can also pay. Landlords, use psychology: Divide each tenant's deposit into a smaller non-refundable part and a larger refundable part. When the group moves out you have to clean the carpets and send the landscaper over to do the natural primping that time requires. Tenants can leave a space as clean as they want but as a responsible landlord I would still feel I need to steam the carpets, this kind of thing. So that's what the non-refundable part is for. Then if the departing tenants leave a lease-described, definite mess behind that requires paying the housecleaner or the painter or whatever, that goes against the refundable part, which might not all get refunded if much cleaning needs to be done.Here's how it pays: If tenants move out in good order, then they get the non-refundable part back, too!
So, I'll come look at the room -- I want the new person to feel welcomed by a clean and fresh space -- and if it's good, the departer gets their refundable deposit part, and because they found an arriver to put in a new deposit, I'll let the clean-and-in-good-order departers have their non-refundable part back, too, just as long as the community keeps replacing itself, and I'll only use the last departing group's non-refundable part at the end of the last lease extension, to do a one-time clean up at the end.
In short I'm paying the departers when they leave! Why? Because they left with a replacement in good order, and that's valuable to me as the landlord. It means I didn't lose income to a vacancy, I don't have to find anybody, and I didn't have to go clean up and fix after them. I'm happy. They're happy. It's perfect.
Now, the not-so-subtle implication here is that the group that ends the group is going to pay more, since they are the ones that don't get back their non-refundable deposit. Because that will be used for full turnover property cleanup which hasn't had to happen for the entire multi-year extended cohousing lease. No, it's not a big amount, it's not the end of the world, but it's a point that reveals what the landlord wants: I want group continuity. Ultimately, the group itself, surely, must also like it, at least up until the very end. And this approach pays everyone to like it.
As a landlord interested in continuity of tenancy, I want to minimize this. I want to make renegotiation as minimal and predictable as possible. So as with substitution, there is an extension addendum (disclaimer: not legal advice! Make, and take responsibility for, your own.). This one is also less than a page, and says the change will be the minimum change. I change the end date by incrementing the year. I change the rent amount so as to follow the market, as impartially measured by the Zillow rent index for this town. That's it. It's minimal, and who can argue that it's fair. Since everyone knows it in advance and nothing is controversial, it's very easy to extend.
And there's no reason not to extend, because anyone that wants to leave can use substitition, and the rest of us can continue under the extension for another year. Most people most of the time will stay for now, and with substition and extension, there's no need to terminate as a group.
From the landlord's perspective, this is ideal, and raises the value of rental cohousing above the value of other forms of rental real estate. Risk and cost that burdens regular houses on regular leases are removed from the equation in rental cohousing with substitution and extension. This is a substantial commercial advantage to this class of residential real estate. If a month of lost rent plus an amount for cleanup and preparation for the new tenant are otherwise typical between annual new tenant generations, then on the order of 10% of costs to the owner can be saved by using this kind of system. Since 10% a year can typically make the difference between negative and profitable business, or between an okay and a great investment, this point is significant for landlords and real estate investors.
A successful resident community must also work for longevity through its own internal process.
Although this is important, the boundaries need to be clear. If I'm the landlord, it's not my business how you, the tenants, want to regulate each other. My business is to care about the house, the lease, the rent, I'm outside the community. Although I am not nobody, and although I strongly wish for a happy and wise group that can figure out how to live well together, it's not my job to make that happen, it's the members of the house.
So I might (and do) have an *opinion* that any tenant community would do well to adopt a consensus driven house-meeting system like I experienced at Columbae House where I lived in college. But the group can, should, must, and is right to, do what *they* want. That's basic; it's not my place to tell residents how to govern each other.
But it won't hurt to mention a few points to ponder. Here's one. A group lease has deep hooks between the renters themselves. A normal multi-party lease says that each renter is "individually and severally liable" for the whole lease. This is perfectly standard and normal, but many people might not know what it means. It means two things. One, you're responsible for your part. Two, you are each responsible for the entire group. For example, if five get run over by a truck, it means number six is liable for the whole lease and has to pay the whole rent. That person needs to hustle about and get five replacements to help, or it's all on them and they may have to move out. So each group member is not just responsible only for themselves and forget the others. No, everyone is responsible for everyone.
This might be a surprise and might seem like a big deal, and in a way it is so, but it's also pretty normal. For example, a partnership is a legal entity in which each member is responsible for the actions of all of the others. Partnerships are common and normal. But it's a good to recognize what's going on, to go in with eyes open, and to think about contingencies and have backup plans for what should happen if the road is rocky. Yes, people who go into a regular partnership should perhaps think about it and establish some internal governance policies and procedures. Like, I'll be responsible for this, and you'll be responsible for that. Here's the rights and responsibilities of the members. Here's how we'll decide if there's an actual controversy. That's a wisely-designed partnership.
Social and financial alignment is possible.