In the realm of real estate investing, maximizing profits is often the primary objective. Whether you're a seasoned investor or just stepping into the market, understanding the nuances of different investment avenues is crucial. 

HomeRoom uses a unique calculator to estimate how much more you can make from renting by the room.

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Looking for personalized advice : BOOK A CALL HERE 

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What tool do CoLiving companies use to underwrite deals? 

Here is a deep-dive on how to use the tool that we use to underwrite rent by the room properties. 

Step 1: Input Essential Data – Enter the following into the model : 

• Home Purchase Price
• Anticipated Number of Bedrooms post-construction
• Price per Bedroom
• Annual Management Fees
• Estimated Costs for Repairs, Maintenance & Utilities
• Insurance Expenses
• Projected Annual Tax Rate
• Loan Amount & Interest Rate

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Step 2: Benchmark Analysis

Compare Internal Rate of Return (IRR), Cash-on-Cash Return (CoC), and Cap Rate against established market benchmarks:

• Different markets have distinct CoC targets. For properties rented by the room, we suggest the following benchmarks:

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Step 3: Collaborate with a management partner.

The highest returns from Real estate will always be from self-managing the property yourself. However, this is a substantially amount of work for rent by the room properties.  Finding the right manager can help lower your costs. HomeRoom is one potential partner that can make your job much easier! 

Discuss your potential deal with the HomeRoom team during an introductory call. BOOK AN INTRO CALL HERE.

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DeepDive into Numbers: an Atlanta Single Family home vs. Atlanta CoLiving Properties🏡

Both Deals have a similar IRRs, but CoLiving gives the investor a 10% higher annual Cash return! 
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‍Deciphering the Differences: CoLiving vs. SFH

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Now, let's explore five key differentiators that make Coliving investments stand out from traditional single-family home investments:

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👉 Rentability and Income Potential: CoLiving properties offer higher gross rent percentages and leverage multiple rooms for rent, significantly enhancing the income potential compared to SFHs.

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👉 Cost Efficiency: Despite a higher initial investment, CoLiving investments exhibit superior net present value (NPV) and annual internal rate of return (IRR), indicating better long-term profitability.📈

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👉 Management and Maintenance: While both investment options incur management and maintenance expenses, CoLiving's adjusted management fees and shared maintenance costs provide a more streamlined and potentially cost-effective approach.

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👉Cash-on-Cash (CoC) Returns: CoLiving investments outperform SFHs in terms of annual CoC returns, showcasing a more favorable cash flow scenario for investors. 💵

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👉 Risk Mitigation: Diversification through multiple rental units within a single property reduces vacancy risks and enhances stability, mitigating potential income disruptions compared to SFHs.

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Looking for personalized advice : BOOK A CALL HERE 

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Conclusion: Enhancing Returns with CoLiving

In the competitive landscape of real estate investing, CoLiving presents a compelling alternative to traditional single-family home investments. With its innovative approach, HomeRoom offers investors the opportunity to maximize returns through higher rental income, cost efficiency, and superior cash flow. 

By understanding the nuances of both investment avenues and leveraging the insights provided by data analysis, investors can make informed decisions to optimize their real estate portfolios and ultimately achieve their financial goals.

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Want to learn more?  Book a call here.

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