Is This The Only Way Millennials Can Live In A House?

By Jennifer Van Grove The San Diego Union-Tribune

WWR Article Summary (tl;dr) "Bungalow" is kind of like a we-work for housing. It scouts for large, attractive rental homes in select markets, currently it's in seven cities including San Diego, and then sublets rooms to individual renters, for four to 12-month periods, at a healthy markup.

The San Diego Union-Tribune

Live like a king at a pauper's price? Not exactly, but you can reside at an estate on a budget, so long as you're willing to share it with several strangers.

That's the bargain offered by Bay Area co-living startup Bungalow, which has newly taken up residence in San Diego by leasing out two aspirational homes on a room-by-room basis.

The company offers millennials a version of the American dream, meaning a residence without their folks, in a premier neighborhood and with cushy amenities that are truly Instagram-worthy.

"We help housing become more accessible," said Andrew Collins, the chief executive of Bungalow. "It's a similar approach to how WeWork has thought about commercial real estate; we're bringing that to residential real estate."

More specifically, Bungalow scouts for large, attractive rental homes in select markets, urrently it's in seven cities including San Diego, and then sublets rooms to individual renters, for four to 12-month periods, at a healthy markup.

It claims to repurpose unused space, occupying homes to max capacity that have been on the rental market for extended periods (likely because they're too big for a typical family or a small group of friends).

For its part, the company employs an interior decorator to glam up the properties. Bungalow also completely furnishes common areas such as kitchens and living rooms. And the startup throws in house-warming freebies such as a big-screen smart TV, high-speed Internet access and monthly cleaning service. Pets aren't invited.

When taken together, the home additions should help justify room rental rates that are meant to be comparable to, but cheaper than, an unfurnished studio in the same neighborhood.

"I feel like I have everything I need here," said Elizabeth Meunier, a 27-year-old business consultant who moved into Bungalow's first San Diego space on May 14.

For $975 a month, Meunier gets her own bedroom, but not her own bathroom, in a four-bedroom Bankers Hill home occupied by three other people. "All the appliances and furniture are brand new, and it's furnished so beautifully."

Bungalow's second San Diego property, on Goldsmith Street in the Loma Portal neighborhood, is a six-bedroom, mini mansion with ample outdoor space and renovated features emblematic of its 1904 roots.

Here, the upstart is renting out rooms ranging from $875 to $1,775 per month. The latter buys the tenant his or her own detached granny flat with a full kitchen and bathroom. The former doesn't come with a closet. Parking isn't included for anyone, meaning all six roomies will take up street space if they have cars.

For comparison, the average asking rent for a studio in San Diego County was $1,399 a month in the first three months of 2018, according to real estate tracker CoStar. The average asking rent for a studio in Loma Portal during that time was $1,425 a month.

But Bungalow's pitch is bigger than the room sizes it offers. It's selling community, either for the disconnected local or the unfamiliar transplant.

Residents, who don't know each other prior to move in, are picked based on the likelihood that they'll enjoy each others' company and actually want to congregate together in the home's shared spaces. The company also hosts, and pays for, monthly outings for all city tenants.

The built-in community perk proved a compelling draw for Meunier, whose split from her boyfriend prompted her move from a one-bedroom apartment in Point Loma.

"For now, things have been working well," she said of her new living situation. Sorting out bathroom schedules and cupboard space hasn't proved a challenge, and each of the roommates has contributed something to the abode, she said.

Backed by an undisclosed sum of venture financing, Bungalow participates in the broader trend of co-living, where companies actively seek to spruce up and splice up housing supply in congested markets where millennial renters are desperate for a little bit of everything at a fraction of the price. The spaces are reminiscent of dorm living, albeit with a modern, elevated feel.

Larger operators such as the predominantly East Coast company Common and WeWork's WeLive haven't yet targeted the San Diego region, where niche twists on communal living are starting to take hold. For instance, Outsite, which promotes a work-where-you-want-to-live mentality, owns and operates two area homes where its members can pop in for transitory stays.

More ambitious co-living projects built from the ground up may not be welcome here. National City's City Council recently rejected one developer's proposal to build three-story housing units, each with 10 bedrooms and shared spaces.

Bungalow's not-so-short-term subletting approach, then, allows it to maneuver its way into a city without disturbing the powers at be. The company, which operates 100 properties across all of its markets, hopes to add four to 10 homes to its San Diego stock every month.

"The concept of Bungalow is really pretty neat," said Alan Nevin, a San Diego-based real estate analyst with Xpera Group. "I don't suspect that it will have the same negative reaction that short-term rentals have here because of more stable tenancy."

The concept, he said, wouldn't have worked with the last generation. But because such a large number of milliennials still live at home with their parents, 15 percent as of 2016, according to Pew Research Center, they're "dying to get out," and they can't afford an apartment on their own.

"To have the opportunity to live out on their own for a relatively reasonable price in good locations, where they could not (otherwise) afford to live alone, is really pretty good."

And, he argues, it's ultimately good for the city, too. That's because putting more people in a home, as Bungalow does, means greater housing supply, he said.

(Real estate reporter Phillip Molnar contributed this story.)

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