The Airbnb Era is Over—Investors Should Be Flocking to This Instead

Let’s look at the numbers. A lower-income worker earning $21,500 annually must pay just $540/month to stay under the recommended 30% threshold. Good luck finding a studio apartment at that price in any city. That’s why room rentals fill such a critical gap at $500-$800/month.

Some might hope rising wages or dropping rents will solve this issue, but data says otherwise. Even if incomes continue to increase at their current pace, we’re decades away from affordability—70 years, in some cases. And rents? They haven’t dropped meaningfully since the Great Depression.

So what’s left? A new product altogether: room rentals.

Demand for this kind of housing isn’t speculative; it’s baked into the economic reality of most working Americans. As affordability continues to worsen, demand will only grow.

Will co-living get too crowded?

If co-living demand is strong, the next question is: What about supply?

I don’t want to paint an overly rosy picture; there are always risks with any investment. With co-living, it is possible that investors could flood the space and oversupply it, just like what happened with STRs; however, I don’t think this is very likely.

Currently, co-living looks especially attractive because cash flow is much higher than alternatives like traditional single-family rentals. With interest rates high, investors are avoiding long-term rentals that don’t cash flow positively and are looking for ways to make deals pencil. That’s leading more people to explore STRs and co-living.

But here’s the catch: If interest rates eventually drop, traditional rentals may become profitable again, and many investors who weren’t cut out for all the extra work these high cash flow strategies require will return to conventional rentals. They’re more straightforward, more familiar, and require less day-to-day involvement.

So, I think the co-living supply will likely drop as the macro environment shifts. That is a bet, but every investment has some degree of risk that you must weigh.

Regardless, if you are an early adopter of any strategy and become the best in town at it, you’ll have much better odds of continuing to receive incredible returns now and down the road.

Don’t Get Left Behind—Co-Living is Where We’re Headed

If you’re tired of chasing short-term rentals that don’t cash flow or, worse, aren’t even legal anymore, co-living offers a smarter path forward.

It’s better for renters. It’s better for cities. And it can be better for your bottom line.

This isn’t a hack or a loophole. Co-living is a scalable, long-term strategy that adapts to the realities of today’s housing market. When STRs are getting squeezed out of metro areas, co-living provides what cities need: affordable, quality housing for residents, not vacationers.

If you’re serious about staying in the game for the next decade, it’s time to look at what’s next, not what worked five years ago.

Want to dig deeper? Check out Co-Living Cash Flow, my new BiggerPockets book, launching April 29. It’s the complete guide to launching a high-cash-flow co-living rental, even in tight or expensive markets.