Co-Living Spaces: How One Charlotte Investor Rents the Room, Not the House

Co-Living Spaces was AVLmeetup's September 2022 event at Archetype Brewing North, featuring investor Sam Wegert. The presentation covered a roughly 150-room co-living portfolio, including 16 rooms in Asheville, that Wegert and his wife Rachel built by renting bedrooms one at a time instead of leasing whole houses.

Key Takeaways

The presentation put Wegert and Rachel's portfolio at about 150 co-living rooms; early doubt that Asheville was too small to support the model faded when the first Asheville house filled with a waiting list in two weeks, and they expanded to 16 Asheville rooms today.
The presentation set a 20% cash-on-cash return as the bar for buying a co-living house.
His square-footage formula sets minimum bedroom counts: a 1,500 square foot house needs at least 4 bedrooms, 1,750 needs 5, 2,000 needs 6, 2,200 needs 7, and 2,500 needs 8.
One example from the talk: an 8-bedroom Charlotte house bought for $320,000 grossed $6,385 a month and filled in two weeks, even after a lender's own rental analysis said the property could not support the mortgage.
HUD now allows Housing Choice Vouchers to be used for shared housing, a change the presentation credited to PadSplit CEO Atticus LeBlanc. PadSplit, which owns no real estate itself, had reached about 7,800 units and a $110 million valuation.

Sam Wegert's Path to Co-Living

Wegert's first house hack was a 3-bedroom condo in Charlottesville, Virginia, bought while running a martial arts school there, living in one room and renting the other two. After moving to Charlotte, he rented spare bedrooms in his own house, then framed in a wall to turn a large living room into another bedroom. Each added person improved the math: at 9 people, gross revenue hit $6,400 a month on a home that would have rented for about $2,000 as a single-family unit.

The talk also covered a friend named Jason, a Charlotte bank employee who watched the numbers and quit his job to go all in on co-living, and Wegert meeting Robert Kiyosaki, author of Rich Dad Poor Dad, who called co-living "the wave of the future" and said people were already converting living rooms and dining rooms into bedrooms while keeping a shared common space.

The Checklist Behind Every Purchase

Wegert buys against a checklist built from years of costly mistakes, including an HOA legal battle. Square footage sets bedroom count using his formula above. Bathrooms matter too: PadSplit's guidance caps at a 4-bedroom-to-1-bathroom ratio, but Wegert and his wife hold to 3-to-1. He avoids homes with a mandatory HOA, keeps the community area as the only furnished space ("The room is the new apartment," he said), and looks for suburbs within 30 minutes of job centers.

Odd, already-broken-up floor plans are a feature, not a bug. Wegert pointed to a listing his student in the Greensboro/Winston-Salem area found: an 18-bedroom, 10-bath former bed and breakfast that had sat on the market 543 days, still unsold. Homes that sit because their layout is unusual or dated often work best, since he is not paying a premium to tear out an open-concept kitchen he would only wall back up.

Leases, Screening, and House Rules

Every room is leased for 12 months, with premium-priced 6-month and 3-month options and no month-to-month leases, since Wegert wants to avoid constant turnover. Every lease includes a house-rules addendum, which lets him evict for rule violations rather than just nonpayment.

Screening runs a full background and credit check, and every bedroom door gets its own keyless lock. House rules include "headphones hours," 10 p.m. weekdays and 11 p.m. weekends, and a locked thermostat. Common areas get professionally cleaned once or twice a month, and personal items stay out of the shared space. The presentation raised the group-dynamics question unprompted, noting nobody in the room had asked it; after an attendee named Justin suggested a dominant head of house, the answer described a house-manager setup, $25 a month off rent, handling pay-or-vacate notices and trash duty.

What Asheville's Market Looked Like That Month

Zac Ruiz opened the night with his 30th month of the Ruiz Report. The average Buncombe County home price was $544,000 that August, $25,000 more than a year earlier, and the median home still sold in 12 days. Homes going under contract were up 16% from the previous month but down 8% year over year, and months of inventory stayed well under the roughly six-month benchmark for a balanced market, keeping the county a seller's market.

Ruiz also pulled up REMC.co live: $500,000 to $600,000 homes had a median 50 days on market with half carrying a price cut, while those already under contract sold in a median 20 days with only 25% needing a reduction. His read: first-time buyers get squeezed hardest as rates rise, exactly the affordability gap co-living is built to fill.

Questions

Is co-living legal, and what happens if the city or an HOA pushes back? In 15 years, Wegert said, he has never had someone call zoning on one of his houses. Mecklenburg County, where he owns most of his properties, recently wrote new regulations requiring a common area and spacing between co-living homes rather than banning the model. The one legal fight described in the talk was with an HOA, resolved by putting all the tenants on a single master lease instead of individual leases.
Isn't managing a room-by-room rental a lot more work than a regular rental? The presentation's answer: with the right systems, it is close to the workload of an 8-unit multifamily property, since a co-living house needs only 2 refrigerators instead of 8. It also named property managers built for this model, including Alcove out of Raleigh, Bungalow, and PadSplit.
How do you find tenants for individual rooms? The same way as an apartment: Zillow now supports room listings, and Wegert's team also uses Facebook Marketplace and Craigslist for free, plus some paid Google leads.
How do you handle rooms that run hot or cold relative to each other? Every thermostat is locked with a 4-digit PIN to 72 degrees in summer and 68 in winter, spelled out in the lease. Wegert's team originally let tenants bring their own space heaters and window units, but stopped after the added draw strained the electrical system.

AVLmeetup's next event, Rehabbing Homes in October 2022, picked up the renovation questions this crowd kept asking Wegert about turning odd floor plans workable.