Resident Lifetime Value (LTV)
Definition
Resident LTV is the total revenue a resident generates across their entire stay, including renewals — monthly rate multiplied by expected months. It sets the honest ceiling on acquisition spend: what a signed lease is worth determines what you can afford to pay to win one.
The formula
LTV = Contribution margin per month × Average stay in months
- Contribution margin
- net effective rent minus variable cost per occupied bed — not gross rent
- Average stay
- the mean completed tenancy length in the building, measured on residents who have actually left
Worked example
Our worked example: contribution margin £786 a month, average completed stay 9.4 months, cost per signed lease £410.
- 01LTV = £786 × 9.4 = £7,388.
- 02LTV ÷ cost per signed lease = £7,388 ÷ £410 = 18.0.
- 03If average stay fell to 6 months: LTV = £4,716, ratio = 11.5.
- 04If stay held but acquisition cost doubled to £820: ratio = 9.0.
The ratio survives both shocks comfortably, which is the usual finding in coliving and the reason most operators are under-investing in acquisition rather than over-investing. A ratio in double digits is not prudence, it is an unspent budget.
LTV exists to answer one operational question: how much can we afford to spend to fill a bed. Without it, marketing budgets are set by feel or by last year's number, and the two failure modes are equally expensive — underspending and running voids, or overspending and buying residents who leave before they pay for themselves.
Average stay is the input that decides everything, and it is the one most often estimated rather than measured. Measure it on completed tenancies only. Including current residents drags the average down, because everyone still living there has an unfinished stay, and the error makes retention work look less valuable than it is.
The relationship between LTV and retention is the strategic point. Acquisition cost buys one resident once; a month of extra average stay raises the value of every resident you will ever sign. In a building where the average stay is nine months, adding one month lifts LTV by about eleven percent across the whole base — a return no single marketing channel can match.
The common mistake
Using gross rent instead of contribution margin
Multiplying the advertised rent by the average stay produces a figure roughly ten to twenty percent too high, and it is the version most often quoted to investors. Worse, it is not a margin at all — it is revenue, and revenue cannot be spent on acquiring the next resident. The whole purpose of LTV is to set an affordable acquisition cost, and only the margin is available to spend.
Frequently asked
What LTV to acquisition cost ratio should coliving aim for?+
The conventional subscription benchmark of 3:1 is imported from software and translates badly here, because a coliving bed has a physical capacity limit and an empty one earns nothing at all. In practice we see healthy buildings far above 3:1, and a very high ratio usually means the acquisition budget is too small rather than that the business is unusually good.
Should ancillary revenue be in LTV?+
Only the margin on it, and only if it is reliable. Parking, laundry and storage margins are legitimately part of what a resident contributes; one-off fees that most residents never pay are not, and including them inflates the number that sets your marketing budget.
How does LTV differ between a one-month and a twelve-month product?+
Substantially, and that is why a single portfolio-wide LTV is misleading when you run both. A short-stay product has lower LTV per resident and needs a proportionally lower acquisition cost to work; running both against one blended figure systematically overspends on the short product and underspends on the long one.
Contribution margin explained
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Cost per signed lease
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