How Co-Living Creates Financial Freedom and Affordable Housing: Lessons from Michael Mnatsakanian

Why This Episode Matters

Affordable housing is one of the most pressing challenges in the United States. Rising rents and stagnant wages mean millions of working-class Americans are priced out of safe housing. In this episode of the Affordable Housing & Real Estate Investing Podcast, host Kent Fai He sits down with Michael Mnatsakanian, a real estate investor who scaled from just a few properties to $20M+ in co-living rentals.

Michael explains how the co-living model provides both financial freedom for investors and affordable housing for tenants, while also showing why small operators—not governments or large corporations—are best positioned to solve this crisis

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What is Co-Living and Why is it a Game-Changer?

Many new investors ask: What exactly is co-living and how is it different from traditional rentals?

Michael defines co-living as renting out single-family homes by the room, often converting common areas into additional bedrooms. Instead of one family paying $2,000 for a house, eight tenants each pay $600–$900, generating $6,000–$7,000 in monthly rent from the same property

This strategy not only multiplies income but also serves young working professionals—teachers, nurses, contractors, airline staff—who cannot afford rising rents for one-bedroom apartments. Co-living gives them clean, safe, affordable housing options while investors achieve sustainable returns.

How Can Co-Living Beat Traditional Rentals?

Traditional rentals often yield slim returns. Michael compares an $80,000 Missouri rental generating $200/month in cash flow to a co-living property in Florida making $1,500/month net after expenses.

The difference comes down to:

• Cash Flow: Co-living triples revenue compared to long-term rentals.
  
  

• Cash-on-Cash Return: Michael’s Port Charlotte property achieves 25% annual returns.
  
  

• Appreciation & Debt Paydown: Larger properties in better locations grow wealth faster.
  
  

• Tax Benefits: Higher-value assets create bigger write-offs and deductions
  Michael Mnatsakanian »»» Co-Li…
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“The cash flow makes you financially free, but the ownership benefits are what really make you wealthy over time.” – Michael Mnatsakanian

How to Choose the Right Market for Co-Living?

Michael stresses that location is everything. The best co-living markets share these traits:

• Major Metro Areas with growing populations.
  
  

• High Rents for Studios/1-Bedrooms, forcing affordability challenges.
  
  

• Median Incomes of $30K–$65K, where housing costs eat up a large share of wages.
  
  

By targeting areas where traditional housing is out of reach, investors can confidently project strong tenant demand

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Raising Capital for Affordable Housing Investments

Scaling co-living requires capital. Michael uses a mix of:

• Private Money Lenders (fixed interest loans).
  
  

• Private Money Partners (equity co-owners sharing cash flow and tax benefits).
  
  

• Fractional Investing Platforms, which let dozens of small investors participate with as little as $5,000
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This opens the door for everyday investors to participate in affordable housing, learn the process, and build credibility by co-owning properties.

Key Insights from Michael Mnatsakanian

• Co-living triples rental income while serving working-class tenants.
  
  

• Ownership benefits (appreciation, debt paydown, tax savings) matter as much as cash flow.
  
  

• Proof of concept matters: Michael started with house-hacking, then scaled.
  
  

• Pivoting is essential: He turned a failing short-term rental into a profitable co-living property.
  
  

• Affordable housing will not be solved by government or big corporations—it requires mom-and-pop operators
  
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Memorable Quotes

“It’s up to people like you and I to solve this problem, because we care more about our tenants and our properties.” – Michael Mnatsakanian

“Either I was going to make an offer on the next deal, or I was going to stop pretending to be a real estate investor.” – Michael Mnatsakanian

“We don’t want government or venture capitalists solving affordable housing, because they either waste money or race to the bottom.” – Michael Mnatsakanian

FAQ: Common Questions About Co-Living

1. How does co-living compare to Airbnb or long-term rentals?
Co-living creates steady, recurring income without relying on tourism like Airbnb. Unlike traditional rentals, it multiplies revenue by renting rooms individually.

2. What tenants typically live in co-living homes?
Michael’s tenants are young professionals—teachers, contractors, airline staff—earning $30K–$65K annually. They want clean, affordable housing near work.

3. What are the biggest risks of co-living?
Tenant disputes and property wear are the main risks. Michael reduces them with smart design (soundproofing, house rules, parking plans) and by treating tenants like adults.

4. How much should investors budget for reserves and utilities?
Michael sets aside three months of operating costs upfront, budgets 6% for maintenance/CapEx, and $500–$600+ monthly for utilities.

5. Why does co-living help solve affordable housing?
It directly lowers tenant costs, often by hundreds per month, while still giving investors sustainable profits. This creates a win-win solution for both sides.

Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments.

By bringing on investors like Michael Mnatsakanian, Kent continues to spotlight actionable strategies that make affordable housing both profitable and impactful.

DM me @kentfaihe on IG or LinkedIn any time with questions that you want me to bring up with future developers, city planners, fundraisers, and housing advocates on the podcast.