Freedom enables innovators to find new values to create and new ways to create values. Airbnb found a new way to provide vacation housing. Uber found a new way to provide transportation. And PadSplit is attempting to bring innovation to affordable housing.
Founded in 2017, PadSplit acts as a broker between property owners and individuals looking for inexpensive housing. In that regard, it is much like Airbnb. However, with PadSplit others will be living in the house with you. It is, as the company’s name implies, a way to split the cost of a pad—housing.
Tenants get their own bedroom and access to other rooms in the house, such as the living room, bathroom, and kitchen. The typical cost is $130 to $190 a week, depending on location and the amenities offered. With average rents for one-bedroom apartments well over $1,000 in most large cities, the appeal to tenants is understandable.
For landlords, the appeal comes from a higher revenue stream. As an example, let us say that a three-bedroom house will rent for $1,200 a month. With PadSplit, that same house could generate about $450 a week, or $1,800 a month. Many property owners engage in a little creative remodeling to add an extra bedroom and increase income further.
The company began in Atlanta, but has expanded to Tampa and Houston. So far, the company has attracted nearly $15 million in funding from both venture capital firms and affordable housing developers.
Not everyone is enamored with PadSplit’s concept. An urban studies professor is quoted in a New Republic article:
We do need a way to generate lower-cost options. But anytime you put housing and ‘innovation’ together, I worry.
Apparently, this professor thinks that all housing innovation has been accomplished and no further progress can be made. What if Steve Jobs had taken that attitude towards the telephone? What if Sam Walton or Jeff Bezos had taken that approach to retail? The magnificent, life-enhancing values they created would have never existed. The fact is, there are no limits to the innovation that is possible.
Of course, moving into a house with complete strangers isn’t for everyone. But neither is sleeping in one’s car or under a bridge. PadSplit offers an inexpensive alternative. If enough landlords and tenants find this innovation beneficial, it will succeed.
Innovations like PadSplit are possible only when producers are free to try new ideas. If we truly want to solve the affordable housing crisis, we should restore freedom to housing innovators.