Coliving—the rapidly expanding trend of private bedroom, shared common space living embraced by a number of housing startups—has been welcomed by mobile millennials, and, as some developers hoped, even by families.
But the price tags on coliving spaces have put them beyond many people’s reach. A new concept being introduced in Atlanta hopes to expand coliving into moderate and lower-income housing, offering homeowners and the working class new options for renting.
PadSplit, founded by Atlanta affordable housing developer Atticus LeBlanc in 2017, creates affordable housing by splitting and repurposing bedrooms in existing single-family homes owned by professional investors into units that rent for anywhere between $435 and $650 a month, including cable, Wi-Fi, utilities, and laundry. Yesterday, at Techstars Atlanta’s Demo Day, a local event for startups, LeBlanc announced that PadSplit would expand the service and allow everyday owners to rent out spare rooms on the platform.
“Our mission is to leverage housing as a tool to create financial independence for everyday workers,” said LeBlanc in a statement. “We believe that there are a large number of existing homeowners who could benefit from our specialized member management and screening, while also creating substantial recurring revenue.”
The aim is to become a kind of Airbnb of workforce housing, a trusted platform that can offer more affordable, long-term housing alternatives by letting anyone rent out a spare bedroom. Owners will pay for any conversion, furnish the room as they please, and once it’s accepted on the platform and mets local building codes and standards, begin renting to prospective tenants; LeBlanc expects most of these spaces will already be move-in ready.
This new trial is part of a growing number of coliving and alternative housing providers looking to use shared space living as a means to provide workforce housing. PadSplit, according to LeBlanc, wants to “lead the charge in privatizing affordable housing” and creating a new model to list and rent property. LeBlanc hopes to expand the owner-occupant trial to multiple cities in 2020.
Critics of coliving projects have compared them to single-room occupancy hotels, which are banned in most cities, but LeBlanc says the way PadSplit operates doesn’t run afoul of any laws.
“Almost every jurisdiction allows owner-occupants to rent a room, ADU, or in-law suite to a third party,” says LeBlanc. “Today the space is just completely disorganized with very few owners participating because no company is set up to manage these relationships to ensure accountability the way that we are.
PadSplit will handle tenant screening—background check, income verification, and credit analysis, but no formal credit check—marketing, residence screening, move-ins, collections, peer-reviews for property owners, and ongoing customer support for the metro Atlanta trial, and there is no fee for listing properties. Like existing PadSplit units, the new trial will ask tenants to pay for rent in weekly installments.
LeBlanc says that current PadSplit housing has saved workers an estimated $3 million, based on prevailing median rent rates. He sees the expansion of PadSplit as a win-win: homeowners get an extra income source to pay their mortgage and expenses; workers and tenants, who make an average of $20,000 a year, have a new, more affordable housing option; and cities benefit by expanding affordable options and opening up living space near jobs and transit. A similar argument is being advanced in support of accessory-dwelling units (ADUs), which just got a big boost with new legislation in California.
“We are currently placing around 30 members every week, and we could easily push that higher if we had locations that were more spread out across the city that were closer to various employment centers,” LeBlanc says. “Hence, our desire to expand into the owner-occupant market, so we can reach into these areas where investors just don’t have as much inventory.”
PadSplit has recently been featured in the Wall Street Journal, and has earned recognition from other housing providers and the industry at large. It’s currently managing an affordable coliving project in New York City, won grants from UCBerkeley’s HousingLab and Louisville, Kentucky’s Reconstruct Challenge to expand the service, and raised $4.6 million from social impact and venture capital investors from across the country. PadSplit is a registered public benefit company, or B corporation, meaning they’re legally required to factor in the impact on workers, customers, suppliers, community, and the environment to any decisions.