Co-Living: $1k a Month with Your First Co-Living Rental Property

What if you could create $1,000 to $2,000 per month in cash flow from a single property and need just three homes to replace your W-2 income?

Sam Wegert discovered this path 14 years ago when he started house hacking a single property.

Today, he owns over 200 rooms across his co-living portfolio, all passively managed while he lives overseas.

Co-living is when you buy a larger house and rent out individual rooms instead of the entire property.

It’s the difference between earning $250 a month from a traditional single-family rental and $1,000 to $2,000 from the same-sized property set up for co-living.

From the Scale Your Co-Living Real Estate podcast and ScaleYourRealEstate.com, Sam Wegert shares how he turned a simple house hack into a six-figure business addressing affordable housing from the ground up.

(Join his Free 5-Day Co-Living Challenge to learn how to develop the mindset that will take you to success as a CoLiving investor!)

Listen to Episode 721 of the Side Hustle Show to learn:

• how co-living can produce 4-5X the cash flow of traditional rentals
• the formula for converting homes into profitable co-living spaces
• creative financing strategies to get started with minimal capital

But First, Grab Our Playlist of the Best Real Estate Side Hustles

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The Cash Flow Math That Changes Everything

Sam remembers the traditional advice from real estate investing communities like BiggerPockets: if you get $100 a month in cash flow per unit, that’s considered good.

He wasn’t impressed. To create meaningful income at that rate, you’d need hundreds or even thousands of units. He recently heard Brandon Turner on a podcast mention that his cash flow from a billion dollars in real estate and over 10,000 units was “a couple thousand dollars a month.”

Co-living completely changes the equation. Sam won’t even consider a co-living home unless it produces a minimum of $1,000 a month in cash flow. The average is closer to $2,000 per property.

If you manage the property yourself, you can keep the typical 15% management fee, pushing your monthly income even higher.

The Square Footage Formula

Sam has developed a simple formula for evaluating potential co-living properties based on square footage.

A 1,500 square foot house will yield four bedrooms once you’re done converting spaces. You might think it only has two bedrooms now, but by adding walls and closets in dining rooms, living rooms, and basements, you’ll find four.

Then, for every 250 square feet the house grows beyond that base, you can add another room:

• 1,500 square feet = 4 bedrooms
• 1,750 square feet = 5 bedrooms
• 2,000 square feet = 6 bedrooms
• 3,000 square feet = 10 bedrooms

Sam grew up as one of eight siblings in a 1,900 square foot house with 10 people total. So when people say he’s packing too many people in, he just laughs. Four people to a room with parents sleeping in the basement was his normal growing up.

Getting Started with Minimal Capital

Sam started his co-living journey the same way he recommends others begin: with a primary residence loan requiring just 3% down.

His first home cost $150,000, so his down payment was around $5,000. He lived in the home himself and rented out the other rooms, a classic house hacking strategy.

Here’s the key: you can get a new primary residence loan every year in the United States. After one year and one day, Sam went back to his mortgage broker and said he wanted another primary residence. The broker asked where he was moving. Sam said he was moving down the street to turn his first home into a full co-living house.

His second loan required 5% down, and it was completely legal. One of Sam’s students came up with an even better variation: buy a home with a primary residence loan, live in it with your family for a year with no roommates, then move out after one year to turn it into a co-living house.

Repeat three times, and you’ve potentially replaced your income with just three moves over three years instead of waiting 30 years to retire.

The Invoice Authorization Strategy

Converting a home for co-living typically costs $20,000 to $30,000 for adding walls, closets, and potentially bathrooms. Sam’s first conversion only cost $4,500, but that was years ago.

Most people don’t have that kind of cash sitting around after making a down payment. That’s where the invoice authorization strategy comes in.

Here’s how it works: let’s say someone is selling you their house for $100,000 and you negotiate $20,000 off so they agree to $80,000.

Instead of having them give you that $20,000 as a discount, you say: “I’ll buy it for the full $100,000, but write me a check for $20,000 at closing.” The seller still gets their $80,000, but now you have $20,000 in cash to fund your rehab.

Essentially, you’re rolling the construction cost into your mortgage instead of paying it upfront. You’re paying whatever your interest rate is, amortized over 30 years, which makes it much more manageable than coming up with tens of thousands in cash.

The Co-Living Property Checklist

Sam shared five critical criteria to look for when shopping for a co-living property:

• No HOA – Non-negotiable. Sam tried operating in HOA neighborhoods and got sued for $365,000. He kicked everyone out the next day and sold that house as fast as possible.
• Neighborhood fit – Walk through the neighborhood. Is every lawn perfectly manicured? White picket fences everywhere? Zero street parking? Run away. You want working-class neighborhoods where someone’s grass is a little long, someone has a work truck in their driveway, people park on the street, and nobody cares.
• Square footage – Size matters in co-living because you need to spread people out and give everyone their own private room.
• No pools or amenities – You want basic housing. A pool is just added liability and maintenance with no real benefit to your tenants or your bottom line.
• Commute distance to major employers – Your target tenant makes between $15 to $25 an hour after taxes. They work at Amazon warehouses, airports, Walmart distribution centers, Target, Starbucks. You need to be within reasonable commuting distance to these jobs. Being near public transportation is a huge bonus.
• Parking – You don’t need 100% parking for each bedroom. The formula is two-thirds the number of bedrooms. So a 9-bedroom house needs six parking spots.

Pricing Strategy

Your competition is studio apartments. In good co-living markets, studios cost $1,500 to $1,700 plus utilities. Someone making $15 to $25 an hour would spend 80% of their income on that. They’re priced out.

Price your rooms at 70% to 80% of studio prices. Good markets include:

• Dallas
• Charlotte
• Tampa
• Phoenix
• Jacksonville

Avoid places that are too affordable (studios under $500) because there’s no demand for shared housing when people can afford their own place.

Dealing with Regulations

Many cities restrict unrelated people living together, sometimes to as few as two people.

Sam’s workaround: form a club structure instead of lease agreements. The club rents the house, and members use it. It’s how the biggest co-living companies operate.

Colorado’s governor recently made it illegal for local jurisdictions to regulate unrelated people in homes, making Colorado potentially the most co-living-friendly state without workarounds. Avoid Nashville and Sarasota, which are actively hostile to co-living.

Setting Up and Filling Your Co-Living Home

Sam only furnishes the common areas, not the individual rooms. He wants people to move all their own stuff into their own space so it feels like home, not like a hotel or Airbnb.

You need to set up a fully furnished kitchen and stage the common area really well for photos. Then you list it everywhere rooms can be rented. There are now many platforms specifically for this:

• Zillow (recently created a specific spot for rooms for rent)
• Roomies
• Roomster
• Facebook Marketplace
• Craigslist (still works)
• PadSplit, Homeroom (platforms similar to Airbnb for co-living)

Screening Tenants and Managing the House

Screen for income of 2.5x rent (sometimes 2x for lower-income workers), no violent history, no evictions in five to seven years, and meet everyone in person. Tenants sign 12-month terms.

Currently, 40% of Sam’s members have stayed over three years.

Key rules:

• Zero personal items in common areas (each person gets a labeled cabinet and fridge shelf)
• One fridge per six people
• Professional cleaners once or twice monthly
• 24/7 cameras in common spaces.
• Never have more than three people per bathroom.

Going Hands-Off with Property Management

Sam started out managing everything himself because there were no property management companies that would handle co-living homes. He built his own company out of necessity.

Now his company has a full team with a significant payroll, and it manages all his properties plus properties for his students. The typical fee is 15% to 20% for a property management company to handle member concerns, maintenance, filling vacancies, lease-ups, and agreements for a co-living home with six or more people.

Sam warns against companies quoting 10% or less. They either don’t know what they’re doing or they’ll realize it’s more work than expected and quit after three months.

For the first eight years, Sam was very involved in the business. Only in the last three to four years has he been able to be completely hands-off and live in Colombia with everything taken care of.

Good news for new investors: there are now multiple companies that will manage co-living homes. You don’t have to build your own management company like Sam did. The industry has matured significantly.

The Mission Behind Co-Living

600,000 people will be homeless in America tonight. We’re 7.3 million affordable housing units short.

When you become a co-living investor, you’re inventing cheaper price points that didn’t exist. Sam lived in co-living himself when making $100,000 a year because he didn’t want to spend 30% to 50% of his income on housing.

There’s also a social benefit. The Surgeon General says social isolation equals smoking 15 cigarettes a day in health impacts. Co-living brings people back into community while providing affordable housing for the underserved.

What’s Next for Sam?

Sam is continuing to buy more co-living homes and doubling down on education through his free five-day co-living training at ScaleYourRealEstate.com.

The training is truly free with no required purchase. Sam does live training for about 10 hours and by the end, participants have everything they need to jump into their first co-living home.

His goal is spreading the word that co-living is a way to create income while changing the world and doing something good for America.

Sam’s #1 Tip for Side Hustle Nation

“Choose and then blinders. Choose and then stop listening to all the other noise.”

Episode Links

• Sam Wegert
• ScaleYourRealEstate.com
• BiggerPockets
• Brandon Turner
• Zillow
• Roomies
• Roomster
• Facebook Marketplace
• Craigslist
• PadSplit
• Homeroom 
• Scale Your Co-Living Real Estate podcast
• House hacking strategy

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