Unlocking Value with Neighbourgood: A Smart Approach to Co-Living Investments

In an evolving property market, maximizing return on investment (ROI) has become more critical than ever for property owners. Traditional rental models, while reliable, often limit the potential income a property can generate. Neighbourgood’s co-living model offers a compelling alternative, transforming standard rental properties into high-yield investments.

Let’s break down a real-world scenario to illustrate this opportunity.

The Deal Scenario: A Traditional Lease vs. Neighbourgood’s Co-Living Model

As Is: A Conventional Lease Approach

• Purchase Price: R5.5 million
• Closing Costs: R400,000
• Total Investment: R6 million
• Build Costs: R200,000 to add two additional rooms
• Rental Income: R40,000 per month on a standard 12-month lease
• Annual Gross Income: R480,000
• Operating Costs: 25% of income
• Net Annual Income: R360,000
• ROI: 6% on a R6 million investment

While a 6% return is respectable, it limits the property’s potential. Enter Neighbourgood’s co-living model.

Neighbourgood Co-Living: A High-Yield Alternative

• Room Rate: R12,500 per room for 6 rooms
• Monthly Gross Income: R75,000
• Annual Gross Income: R900,000
• Operating Costs: 35% of income (slightly higher due to additional amenities and management)
• Net Annual Income: R585,000
• ROI: 10% on the same R6 million investment

The Numbers Tell the Story

By converting the property into a Neighbourgood co-living space, the net operating income (NOI) sees a bump of R200,000 per year. This improvement translates to approximately R2 million in additional value creation over the year, assuming a conservative cap rate.

The enhanced ROI from 6% to 10% underscores the power of this model. The increased revenue stems from the higher cumulative rental income across multiple tenants, effectively optimizing the property’s yield.

Why Co-Living Works

1. Higher Income Potential: By maximizing occupancy and charging per room, the total rental income significantly exceeds that of a standard lease.
2. Efficient Space Utilization: Co-living layouts make better use of available space, increasing profitability without the need for substantial capital outlay.
3. Appealing to Modern Renters: Today’s renters value flexibility, affordability, and community—hallmarks of the co-living model.

Neighbourgood : Redefining Property Investment

Neighbourgood’s co-living model isn’t just about higher yields, it’s about creating spaces that resonate with modern urban lifestyles. With thoughtfully designed spaces, a strong sense of community, and professional management, we’re redefining what rental properties can offer both to residents and investors.

As the demand for co-living continues to grow, this model presents a timely opportunity for property owners looking to enhance their returns. At Neighbourgood , we’re excited to lead the way in making property investments more profitable and sustainable.