Rent

How to tell if a co-living company is legit or sketchy: Lessons from Bedly's meltdown

A bedroom in a Bedly apartment on East 83rd Street. The company shut down abruptly in July, although listings like this are still posted on its website.

Bedly

Share this Article

Melanie Wilkerson, a former renter at Bedly—a co-living company that rented out rooms in shared apartments and abruptly went belly up July 21—thought she would at least get a head's up before getting a new roommate. But that didn’t happen, despite repeated complaints, and in one case, a new tenant moved in after midnight. When all was said and done, 11 roommates had cycled through Wilkerson’s Bedly apartment. 

Not an ideal scenario, and it wasn't the only problem with Bedly for Wilkerson and many others, either. With the company’s demise, tenants were instructed to renegotiate lease terms with building owners, even though few Bedly renters actually knew who the owners were. When we spoke to Wilkerson last month, she was still owed her security deposit and a $500 furniture deposit—and she wasn’t alone. 

Heralded by some as the solution to what they consider an outdated and restrictive rental market, co-living is all the rage in NYC, particularly for young city dwellers in the early stages of establishing a career and home base. In New York alone, there are more than 15 co-living companies, and the phenomenon is found literally all over the world, from Bali to the Swiss Alps. 

Bedly is likely an extreme case of what can go wrong with co-living, however the story still should serve as reminder that potential renters need to vet co-living companies just as carefully as any rental situation. 

We asked Michelle Itkowitz, the founder of the Itkowitz law firm and creator of the Tenant Learning Platform, which offers online classes on navigating NYC housing, to weigh in on how to evaluate a co-living company and determine if it is safe and sound. Below, some tips on what to ask and look for. 

Read the reviews

You do it for restaurants, movies, hotels—you should do it for your next living situation. Check out Yelp for reviews, social feeds for mentions, and Google for news stories. Look up the company on the Better Business Bureau to see if it’s accredited and find out its grade. (Case in point: Bedly is not accredited, and has an “F” rating, as well as several negative reviews and complaints.)

While bigger is not always better, it’s also worth looking into how many apartments or buildings a company manages. How long have they been around? What’s their track record? 

Read the lease

This is a big one. As we’ve written about before, even though you might have a private room, your lease (and your roommates’) should be for the apartment, not a single room. It is, in fact, illegal to rent out a single room unless a building has a certificate of occupancy permitting it. SROs, or single-room occupancies, which do allow this type of living situation, are subject to different laws and safety measures

Other things to look for: Is there language about access to the apartment? (Most landlords need to provide 24-hours notice.) When will you receive your security deposit back? (New rent laws give landlords 14 days to return your security deposit after you vacate.) Is it clear how repairs and maintenance will be handled, and in what time frame? Are there rules outlining proper conduct and behavior? If so, how are things handled when you have a complaint?

These are important questions to ask, and you should feel satisfied and comfortable with the answers you receive. If anything seems off, or you feel like a company is being evasive, you might want to look elsewhere.

Here’s another major red flag: Itkowitz says that sometimes companies will provide a lease for a whole apartment but attach a rider stipulating that a single room is being subleased—and that in the event of any conflict between the two documents, the rider prevails.

Assess the space

The physical space can provide plenty of information about a co-living operation. First: Is the room you see the one that was advertised? Does it have a window? (Some of Bedly’s apartments did not.) Does it look to meet the requirements of a legal bedroom?

Is there a lock on the bedroom door? If there is, that’s illegal, so is gaining access to a bedroom through another bedroom. 

“If you walk into a room and there’s four bunk beds, or it’s an attic, common sense says to you there’s something off,” says Itkowitz. “Ask yourself, ‘How am I going to get out of here if there’s a fire?’ Is it an internal room someone created by putting in a fake wall?”

But Itkowitz adds that even if your room isn’t a death trap, it’s still problematic. “Why should you care? If the city comes in [and finds something illegal] they can shut it down instantly.” Meaning, you’re out on the street. 

What’s the vetting process?

One of the benefits of co-living is that you don’t have to personally round up a bunch of people to rent an apartment with you. But of course, that also means that your co-living company is screening potential roommates for you. You need to think bigger picture than messy versus neat and taste in music—find out what methods are in place for ensuring your living space is safe, from background checks to in-person interviews. Find out what a co-living company does to screen applicants and ensure tenant safety, and what they do if there is a problem.

Are you getting what you pay for? 

Co-living companies frequently charge a premium to live in their apartments. Whether it’s worth it is a question that can be debated. But Itkowitz stresses that if you’re paying that extra money, you should be getting something for it—and not just free wifi, “a Friday potluck and Monopoly on the kitchen table.” 

For Itkowitz, key “value adds” of co-living include the many facets of roommate aggregation and management. That means not only finding roommates, but proactively dealing with problems and conflicts as they arise, whether that’s intolerable interpersonal strife, or a roommate who skips out and doesn’t pay their share of the rent. (The burden, financial and otherwise, should fall on the co-living company.)

“The sexy website with happy millennials isn’t going to stop people from being people,” she says. “For the extra money you’re paying, that’s what you should get.” 

Itkowitz says that the solid co-living companies will have a presence in the building, whether that’s staff that live on site, or are available to tenants to address issues as they come up. “The legitimate ones are hiring extra personnel,” she says. 

Where there’s smoke...

Itkowitz has watched as scores of businesses try to get in on what they perceive as the co-living cash cow, without truly understanding what it takes to succeed, and operate legally as one.

“They don’t understand how hard it is...With co-living, property management is the real core task, but much harder. There’s more value because it’s more work.” 

If you think a co-living operation is not playing things by the book, be wary, as Itkowitz notes that the ones that break some rules are very often are committing other infractions as well that you may not be aware of.