Part 2 — Common Challenges in Running and Scaling your Shared Living Space

This deep dive is part of my Entrepreneur in Residence journey at Builders, one of the leading start-up studios in the Netherlands. The big question we are tackling is how to best support the running and scaling of shared residential spaces, such as co-living or student housing, through technology. A topic that I have been passionate about since I started my professional journey a decade ago — through working with various online platforms, as well as gathering practical experiences while running my own co-living project in Rotterdam.

The article forms the second part of my mini-series 101 in running and scaling shared living spaces with technology. The series aims to provide an overview of the space, highlighting essential challenges and giving potential solutions when running or scaling your shared living spaces. At the same time, it aims at opening up a conversation between those of us who are passionate about building and scaling these communities.

The full series is structured in the following way

• Part 1 — focuses on the state of play such as terms used and technology available
• Part 2 — is a deep dive into the challenges of running and scaling shared living spaces (right below)
• Part 3 — explores the future of coliving, and possible scenarios of how the field might evolve in the years to come.
• Part 4 — describes what kind of software is needed to help operators run and scale their operations to be ready for whatever lies ahead. (coming soon)

Now, without further ado, let’s dive into our findings.

Lots of different models

As we concluded in part 1, there is a wide variety of terms and models existing in the field (for more information on this, have a look at my previous article — Part 1 State of play: co-living / shared Living/student housing terms used and technology available). To make things a little easier for this article, we decided to segment the market into three main categories. Of course, those categories are not exhaustive nor mutually exclusive, and just meant as a conversation starter.

Those categories are 1) the distributed model, 2) the community-focused model, as well as 3,) the operators at scale. Of course, boundaries between all those models are fluent, and many operators operate more than one model. We differentiate those segments mainly by the size of the operations, i.e. numbers of geographic locations, buildings, and beds, as well as how much ownership/control the operators have over the properties, running from renting to managed and owner-operated models.

The following chart is meant to help visualise how we look at these different models, and how those are categorised.

Biggest challenges across all segments

Each of these models comes with their own specific problems and challenges. There is, however, a set of common challenges across the majority of the shared living space operators. Those are:

• Planning permissions and regulations. As shared living is only in its infancy compared to other real estate asset classes, building regulations in many countries are missing for this asset class, making it harder to go through the respective processes to obtain all permissions and approvals.
• Incompatibility of systems across national boundaries. Many operators that grow beyond national borders are faced with the challenge that their setup does not work in the new context anymore. This is, for instance, because national building and safety regulations differ, or their preferred suppliers are not operating in the new country.
• Community building. While there are a broad range of tools available to manage the properties, as well as facilitating the communication between operator and tenants, the challenge of how to scale a community through technology is still one of the bigger questions. While top-down approaches are easy to initiate, those in most cases will not have the intended results. How to support a community to evolve organically is the question.
• Generic and fragmented tech. Most of the currently available software tooling is too generic as it does not meet the particular needs and processes of the shared living providers (e.g. frequent check-in/check-outs, community building, etc.) and does not provide a comprehensive solution to smoothly operating a shared living space in all of its facets, i.e. managing their properties and tenants, as well as allow their members to navigate their own stay (onboarding, service tickets, access control, etc). The result: either a sub-optimal set-up with a broad variety of different tools patched together or a tech set-up developed in house, a solution that requires heavy upfront investments that only the bigger parties can afford.
• Contactless member management. Covid-19 has and will accelerate the need for operators to be ready to run their operations as automated as possible — while still somehow preserving the human touch. Contact-less management (think onboarding, access control, etc.) has become a core challenge that operators will need to solve.

Core challenges per model type

On top of these generic challenges, the following are some additional challenges per category.

The distributed model

The distributed model is characterized by an operation that is spread among several locations, that can be concentrated geographically in one city, or spread across several cities and even nations. Here the individual locations are typically relatively small, sometimes even separate apartments. One of the advantages of this model is that it can be run as an asset-light business, e.g. by leasing and subletting individual units (the “rent-2-rent model”). This significantly reduces the capital needed to set up the shared living operations, and therefore allows people to quickly scale up their operations if they’d like.

On the flip side, the core challenges that this type of operator’s face is also related to the distribution of their operations over several locations. This increases the complexity of the scaling puzzle — think onboarding, maintenance requests, service tickets, etc. all to be managed across multiple locations. On top of that, as these operators are so lean in creating their portfolio, operating a strong external brand as well as having a consistent look and feel across the entire portfolio is challenging, unless you run at a certain scale.

The community-centred model

The community centred model strongly focuses on the commonalities of its members, and positions itself as a “hub of like-minded people”, think a coliving place focused on tech, entrepreneurs, wellbeing, etc. This model often goes hand in hand with an owner-operated shared living space. With community being ingrained into the DNA of the operators, also community building within the space happens more naturally, which is also facilitated by the relatively small size of the places (typically up to 10–15 max).

The biggest challenge for these spaces, however, remains the question of how to successfully scale the location without losing touch with their members, as well as how to keep maintaining a feeling of authentic community among them. On the operating side, the size of these shared living spaces still allows operating without a too advanced tech set-up. However, as soon as the operator would like to scale its operation, there is a growing need to further professionalize the operations, requiring a more advanced tech set-up that helps ensure a frictionless operation of the space, which previously perhaps could still be handled by dedicated enthusiasts.

The operators at scale

As a third segment, we have looked at operators at scale. Those operators at scale are typically operating dedicated buildings of at least 200+ beds, either purpose-built or through conversions, used primarily as either a managed model or an owner-operator model. This is where standardization of processes has created the most advanced set-up to allow for further scaling of the operations.

Core challenges here are how to still create an authentic community despite the size of the operation, as well as how to further improve the efficiency of the current processes. While the efficiency of the operations has to meet the highest standards of all operator segments as every even minor hick-up will be multiplied a hundredfold, here the majority of operators have opted to develop their own in-house tech solutions, some even including their own app to support the building of their community. The core challenge for this segment is focused on securing new building sites and financing, while further fine-tuning their operations — e.g. through integrating additional partners, etc.

Moving beyond the challenges

While all these challenges are frustrating I deeply believe there must be a better way of operating and scaling your shared living spaces with the power of technology. A way where technology truly blends in with your operations, to help you run and scale your locations more efficiently. To help you manage your properties, interact with your members, and allow your members to create those meaningful connections all from one single dashboard. To help you run your operations now, but also to be ready for the future.

And how such a future could look like will be the topic of part 3 of our mini-series.

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Or explore the future of coliving, and possible scenarios of how the field might evolve in the years to come, and keep reading part 3.

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About the author
Michael Steinmann is the Co-Founder and CEO of Obeyo. With more than 15 years of experience in growing and scaling SaaS companies, he is always up for connecting and conversing about the present and the future of residential community building.

Reach Michael at:
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