The great compression
If you bought a single-family rental (SFR) in the last three years, thinking you were securing your financial future, you might want to check your math again. The “safe” 9% cap rates of the past have evaporated, replaced by a razor-thin 4.7% national average that leaves zero margin for error.
You aren’t investing; you are speculating on appreciation that may never come, all while subsidizing your tenants’ housing with your own negative cash flow. The era of buying a 3-bedroom home, renting it to a single family, and “retiring on passive income” is officially dead.
Let’s be honest about what your P&L statement actually looks like in 2025. You’re facing an “Expense Tsunami” that you can’t control.
Insurance premiums have surged by over 20%—and up to 45% in some markets—wiping out your cash flow overnight. Property taxes are climbing as municipalities reassess values, and maintenance costs are skyrocketing due to labor shortages. Meanwhile, rent growth has flatlined at under 1.5%, failing to keep pace with inflation.
You are fighting a losing battle against a market that has structurally shifted against the small investor. You’re facing vacancies you can’t afford, marketing that isn’t working, and a sinking realization that your “asset” is actually a liability.
What if unlocking higher yield meant renting rooms, not houses?
The reason your current model is failing is that you’re renting to a declining demographic when you should be renting to a growing one. The traditional model relies on finding one family to pay for 2,000 square feet. The new opportunity with PadSplit lies in fractionalizing the house and providing all-inclusive, affordable furnished room rentals.
By converting a single-family home into a coliving space with PadSplit, you align your asset with the actual demand of the 2025 market: affordable, flexible housing for the modern-day resident.
Instead of one rent payment from one family, you generate multiple revenue streams and maximize returns by converting underutilized space into additional rooms. This isn’t just about slicing the pie differently; it’s about baking a bigger pie.
You aren’t just a landlord anymore; you’re an affordable housing provider offering a vital service that solves the affordability crisis while also increasing your revenue per square foot. It’s a win-win solution.
This isn’t theory; it’s a proven model backed by 7+ years of data and real-world success.
- The 2.5x Multiplier: Data shows that a typical 4-bedroom home renting for $1,649 traditionally can generate $4,183 as a PadSplit—a 2.5x increase in gross revenue.
- Real Investor Success: Take Ed, who pivoted to PadSplit after attempting to rent rooms on his own. Within 10 days of going live, he was able to achieve 100% occupancy.
- Resilient Collections: While traditional landlords struggle with evictions and non-payment, PadSplit maintains a 97% collections rate.
If you list your property on PadSplit, you’ll have the opportunity to generate higher net operating income, reduce vacancy risk through fractionalization, and provide essential affordable housing to your community—all without the headaches of traditional single-family rental management.
When you partner with PadSplit, you aren’t just getting a listing service; you’re getting a complete operational system designed for room rentals:
- Industry-leading marketing: Paid advertising across all major social media channels. Your rooms are also cross-promoted to over 60 listing sites for room rentals, ensuring maximum visibility to fill vacancies fast.
- Comprehensive screening: PadSplit handles resident screening, which includes background checks, eviction reports, and income verification. PadSplit also manages all legal room rental agreements.
- 24/7 support: You get round-the-clock support for residents and the capability for site-unseen move-ins, streamlining the leasing process.
- Automated payments: Access to industry-leading payment collection services that handle weekly billing, ensuring consistent cash flow.
You might expect a service that doubles your revenue to charge double the fees, but the math is in your favor.
- PadSplit only charges an 8% platform fee for all of these services and access to leading property management technology in the room rental industry.
- The booking fee (member placement fee) is just the first 10 days of a member’s stay. This is a fraction of the tenant placement cost (often 50-100% of one month’s rent) that a traditional property manager charges.
The time is now to position your portfolio for the single resident rental model
The 2025 market is hostile to the old way of doing things. Institutional investors are already pivoting to high-density models; this is your chance to follow smart money. Every month you wait is another month of negative cash flow, risking your equity in a market where 4.7% cap rates are the norm for traditional single-family rentals.
The investors who adapt to the coliving model now will secure the highest performing assets; those who wait will be left holding the bag on depreciating, cash-flow-negative properties.
Book a complimentary PadSplit earnings analysis
Stop guessing and start earning. Send an email to emanuel@padsplit.com for a complimentary PadSplit earnings analysis to see exactly how much more you can earn with PadSplit.
