PadSplit, an Atlanta-based startup, has offered an interesting twist on the co-living trend, one focused on affordability.
Founded by affordable housing developer Atticus LeBlanc, PadSplit helps to create low-cost housing options by splitting and repurposing bedrooms in existing single-family homes.
These homes typically feature affordable rent, anywhere between $435 and $650 a month in the Atlanta area, which includes cable, Wi-Fi, utilities, and laundry, among other amenities.
PadSplit started by providing rooms in investor-owned domiciles but recently announced an expansion that would allow everyday home owners to take part in the service, as reported by Curbed.
The app handles tenant screening, rent payments and other services, to help take the burden of management off the homeowner.
“Our mission is to leverage housing as a tool to create financial independence for everyday workers,” LeBlanc said. “We believe that there are a large number of existing homeowners who could benefit from our specialized member management and screening, while also creating substantial recurring revenue.”
The company has stated that an average homeowner, with a six bedroom house, can make up to $43,000 in a single year using the PadSplit platform, as reported by Bloomberg Businessweek.
PadSplit has received undisclosed funding amounts from venture capital firms, such as Core Innovation Capital, which they will use to expand to new markets throughout the country, with plans under way for expansion to New York City and Louisville.
This growth may run into some problems, however, when it comes to local regulatory agencies. Operating in Atlanta is legal, but the company does have to wiggle through some loopholes. The city does not allow rooming houses in single- family neighborhoods, so each PadSplit listing is designed so tenants meet the city’s definition of a “single family,” which allows for up to six unrelated people, plus another four, as long as the latter occupy no more than two rooms.
LeBlanc states that growth should go as planned, because “almost every jurisdiction allows owner-occupants to rent a room, ADU, or in-law suite to a third party.”
Another issue is that PadSplit users lack the legal protections often found with traditional renting, as they can be evicted with no notice given.
“It’s kind of a market solution, I guess, for the affordable housing crisis, to get one room, on a week-to-week basis, that really could be yanked out from under you at any time,” Georgia State University professor Dan Immergluck said. “It’s a logical market response to a desperate need among single, low-income people. It’s designed for people earning $10 to $12 per hour.”
Chris Ptomey, director of the Urban Land Institute in Washington, states that startups like PadSplit could be a net positive for blue collar workers, especially if they scale.
“I think there’s a lot of hope that these kinds of models could work at a lower price point,” he said. “I think it’s a great, novel model if it can be additive, if it can add units that are affordable.”
photo credit: padsplit