Coliving provides purpose-oriented living spaces for those of us whom value (some) openness and collaboration. Spaces embracing cooperative coliving involve us as stakeholders, and as you may have guessed, employ the co-operative principles.
This approach is pragmatic and practical, providing a framework for resilient and dynamic coliving space operators and their communities. We do not consider in what way a group of owners or a business may use this, and we believe there is a choice between a focus on impact as a mutualised society, and as a commercial project to reward backers, all whilst maintaining a standards-based service.
The model is intended to help guide the establishment of new coliving spaces operating predominantly as social enterprises — having flexible use time stakes held by its members, alongside a revenue-generating business. The model provides rules for incorporation and operations however these are not yet published, please reach out to know more or participate.
The property owning/holding entity's shares are issued in proportion to a defined capacity, split between two core classes of co-owners having distinct purposes — fractional use members, and investors receiving (capped) returns from guest rentals, with any remaining surplus allocated for reinvestments as a community fund.
This structure avoids conflicts of interest arising from stakeholders desiring both use and returns such as generating dividends to then spend but eliminating the capacity to be nought by them. Here members may own both classes, but must choose in what proportion. This ensures the property is sustainable with a revenue stream grounded in the markets, derived from its responsibility to investors for returns, yet which also benefits the community creating a virtuous purpose, and avoiding a harmfully singular dependance upon member fees.
| class | capital | fees | use | earnings |
|---|---|---|---|---|
| members | ✅ | ✅ discounted | ✅ fractional | 🔄 non-use |
| founders | 🔄 sweat | ❌ | ❌ | ✅ |
| investors | ✅ | ❌ | ❌ | ✅ |
| guests | ❌ | ✅ market-rate | ✅ rentals | ❌ |
The model may include an additional dedicated-unit member class (e.g. cohousing), which by virtue of being a unique unit class, will maintain good rental demand thus generating reliable revenue from non-use, however the intention of such stakeholders should be carefully evaluated and use restrictions enacted to avoid yield speculation though this might not be an undesireable funding approach.
A one-time coliving share purchase of €
providing annual use-value of € / nights
For demonstration only using average rates. Units could vary ±30% as would seasons, for 60% more value/time (cheaper, e.g. pods during winter) or 60% less value/time (more expensive, e.g. studios during summer).
Operating costs and contributions / charges are outside the scope of the model. Some operators may have chefs and dedicated staff, including contingency fund contributions, whilst others may not.
This enables part-time use of a property (e.g. for digital nomads and those only wishing to stay for a limited time each year) as a co-owner, or as gradual acquisition towards dedicated ownership, and so may be combined with dedicated units owned outright.
Actual share issue costs may vary, e.g. early supporters receiving a discount. Should additional capital need to be raised (works or improvements) the use value reduces unless the corresponding proportion of the new issue is also acquired. (Generally should not be needed as a fund is maintained for anticipated works.)
Any use booked is not free of costs, as the property will have its running costs, to be shared by the members whom have booked, thus acquired use time is at-cost paid as a member fee. (Generally a fixed fee for used time, however specifics may vary from a fixed advance fee defined in an annual budget, to having end-of-year adjustments.) This fee includes contributions to a maintenance fund.
The effects of the relative size and split in the two core classes are significant. The investor allocation defines the member flexibility and must therefore represent at least the off-season capacity value.
A minimum proportion will generally correspond to the off-peak seasonality. If this is 3 months (e.g. winter), and investor shares are 25%, the last member to book will have no choice for an in-season date, however in reality some members will choose to book off-season due to getting a stay up to twice as long as in season. It is highly recommended to reserve (not issue shares against) at least one bunk/pod at all times for additional booking flexibility as even members whom normally prefer a private room will book this if it means they can have a private room for at least part of a stay.
The proportion must also consider that a surplus should be generated to pay investors and contribute to the community fund, if this were only generated from off-season rentals it would be very poor, however as noted there should be sufficient distribution to result in some rentals in-season, yet this needs to be supplemented thus the minimum should be a somewhat larger than the off-season alone…
Under no circumstances can all capacity be issued to members as this would result in no flexibility, effectively becoming a timeshare. However capacity may be reserved for flexibility, with the member share cost increasing proportionally, e.g. 25%, wherein all rental revenue would become a community surplus. This is undesireable due to the likelihood of members preferring to gain dividends over use, yet can be prevented by requiring all suplusses be reinvested (e.g. to expand to other properties), never being issued as didvidends. The disadvantage of a share cost increase is that the diversity of and accessibility for members will reduce.
The investor proportion represents investment into a social enterprise, having benefits for all stakeholders. The precise terms of which will depend upon the investors and approach. It is suggested to use preferential payments (preferred stock) with thresholds and caps, but may simply be structured as loan repayments.
To ensure investors gain a preferential return, a yield up to a baseline threshold e.g. 4% can be utilised, this would be paid out as priority from surplusses. Remaining surplusses would split payouts to the community fund and investors equally, up to a higher threshold cap (e.g. 10%). This mechanism ensures there's incentive in running the business for everyone's benefit.
The motivating factor for members should be use, not returns, however normal use must offer sufficient benefits, and it is inevitable that members may not make use of their stake all the time. On the assumption that members would otherwise pay retail rental rates for an annual coworkation, with a shareholding and nominal membership fee, the shareholding cost could be returned after around 8 years of use, thereafter representing a significant discount (being the difference between the membership fee/contribution and the retail rates).
This evaluation is only applicable to professionals whom value the cost of coworkations, not digital nomads whom seek geoarbitrage with upgrades to coliving only where affordable. Whilst it remains accessible to the latter, it generally involves exchanging the convenience of a private rental for the community value in a pod/bunk or other low cost room, thus will have significantly lower takeup amongst digital nomads than amongst professionals seeking to regularly escape their office and city bound lives. The audience of any given property project must however be targetted apropriately and it is possible to target such a project exclusively at digital nomads providing the real estate acquisition and operations can utilise geoarbitrage.
Where the operational costs include future maintenance, the appeal and affordability appear to fall significantly versus owning one's own private property, however in reality still remains good value but only assuming one actually uses most of the communal facilities. If one does not, one is paying a (small) premium for them.
May be addressed with and internal market in which use is resaleable exclusively amongst members. This is however a more complex three-tier system of ownership-resale-retail.
An internal market offers a generally desireable discount to members over retail rates thus ensures good potential demand when longer stays are desired, whilst also offering increased capacity (booking availabilities) so should not need disincentivisation. It also plays well with capitalistic desires, by not eliminating them entirely, merely restricting them to existing members.
As every member would set their own resale cost, those having the lowest will sell first driving costs down.
To ensure community engagement and prevent revenue speculation, a minimum owner use should apply. The level of this would need to be defined by each operator and for each location.
With 100% non-use and a 30% discount on retail, minus member fees (e.g. €200/mo), a €4k stake (1 month) could generate €500 p.a. thus becoming profitable after 8 years similar to use. If this is notably better than use, additional controls may be required, such as a commission (going to the platform.coop and/or community fund).
To eliminate sale speculation, all shares are non-transferable (cannot be sold to others) yet are withdrawable, returning their cost (for which terms, and some manner of appreciation may apply).
The enforcement of non-speculation preserves affordability, with the buy-back of shares upon widthdrawal having limited or no appreciation. These shares may be issued to new members at new above-inflation costs, with the benefits going to the community fund.
It is nonetheless possible to allow any sale price to pre-approved members, and for the seller to gain such proceeds above the original value thus preserving capitalistic intents here also (may however involve regulatory complications).
Providing all members ensure the community remains desirable, it will be easy to exit as there will be a waiting list of new members whom wish to join. If the community is not desirable it will be impossible to exit thus it is in everyone's interest to maintain a desireable community, being unlikely that members will remain for life.
Should the property value have increased to the point where it becomes desireable to leverage, a special resolution may be used to divest of it, and for example acquire other properties in lieu, or to terminate the project entirely.