Managing money together.

do these spaces make money? can they? for the community itself, what is their financial model? does there need to be one? if they’re not “making money,” why would you need to think about managing money together?

examples of reasons you would need to manage money together, even without running a business: utilities, supplies, projects, furniture… but also as you get larger spaces, they spaces suggest themselves as a platform, and as larger scale spaces they often involve some revenue even if only to assist in sustainining their existence. which means there will need to be discussions about money and management, and management requires responsibility, and often over time responsible parties, by way of taking on more responsibility than others, may desire to be recognized or compensated in kind for creating that container.

so there’s a natural pressure in the direction of money and resource management together, as space gets larger and more platform-y. FWIW, this is really exciting! A vector spurning us towards co-management of resources creates an engine not just of creativity, but of commoning, and prompts us to ask questions (and innovate new answers) in the areas of governance and mangement. Prototyping the new world.

financing new spaces

equity vs. loan - in my experience, equity feels unfair even if it isn’t! because residents don’t SEE the early efforts of the investors/facilitators, all they see is that they’re busting their ass to make the house work, whereas the original sponsors aren’t doing any work, yet are still making a cut of the profit (rather than a fixed amount). it’s not necessarily rational but in my experience people rarely see it from the other side, which is less risk on the part of the community in the tough times, and a reward to the investors for that risk in the good times. but it does come down to where you want risk to lie. as above, the most important thing is any arrangement is transparency. in this case, transaprency is crucial step to the other important factor which is buy in (no pun intended). if an equity arrangement is something that people choose then it will feel different, they will have had to go through the reasoning ahead of time and understand the pros and cons. a loan arrangement is always a bit easier to swallow because as a fixed cost, it maintains the firewalls between for profit and non profit elements.

real estate costs and earning potential

the square foot analysis - yes, it’s cheaper per sqft, but you are paying for more sqft because you want and need common space, so the total cost to the residents is still usually on par or a little more than market. but what you GET is amazing. (and a coliving space without enough common spaces means you wont get the collision space and the emergent interactions that make these spaces desireable). the common space at scale becomes a generative platform and people get excited and creative, but only if they also have agency over it.

don’t get me wrong, co-management and agency may well mean choosing a relatively traditional management structure, or it might mean something more flat. it needn’t mean endless meetings and formal consensus processes. but regardless it has to be one that the residents choose, opt into, and can change when they want to update it.

the cost of service

at platform scale, you might be tempted to outsource all this work. this gets into what i would call serviced coliving. and you might indeed be able to charge more for a serviced spaced, but “services” means you have to spend more money also: provide fixtures a nd furnishings, manage people’s feedback and opinions, provide a community manager, property management, etc. and the side effect is that when the space is serviced, people have less agency. their creativity with and around the space goes down, because they expect things to be solved for them. now, that’s not a value statement per se, and many people are _looking _ for that in their living environment. but if what you’re looking to create is a space that is vibrating with creative energy, people need to have some skin in the game.

if you continue to charge more for a serviced space but have people manage the space themselves, then you might make more money, but the community will eventually be pissed when you try and take the profits since its off the back of their own volunteerism and marginal time contribution. so the ownership, literal and figurative, of the fruits of their labor, is an important motivator.

regardless, there should be a clear firewall between any for-proft and non profit elements. the most important thing is transparency and boundaries. it needn’t be bad for people to be paid! but if people are putting their heart and soul into building something that intentionally goes beyond economic transactions, and as a result, the people who are making money, make more money, there will be tension. there will also be tension if there’s not full transparency around where profits are going. this is when a lease holder or owner can easily degrade into a title and not a member of the community.

Ownership

if the community are not the owners, then you basically have two groups.

if the community are owners, then you still have to think about what as a community you want to monetize, what your necessary vs. optional cash outlays are, if you want to own to reduce costs for owners who are also users, or if you want owners to make revenue off the property, or if you aren’t worried about revenue but you want to sell later for a profit… all these things inform how you’ll manage the property operationally.