Today, new construction debt is challenging to secure. For co-living deals, the challenges are even greater—but that doesn't mean that they aren't getting done. ELK Development recently secured $14.1 million to build an 86-unit co-living property in a Hollywood opportunity zone area.

Co-living properties need to meet a few specifics to attract lender interest. "It is still limited and it is a tough asset class to get done right now," Shahin Yazdi, principal and managing director, at George Smith Partners, tells GlobeSt.com. "People do not know what the future holds in this space; however, there are still lenders interested in the asset class with the right dynamics at play. At this point, co-living deals have to have their bathroom for each bedroom at the very least. The more limited the contact is, the more a lender can feel comfortable."

Yazdi secured the financing on behalf of the developer. The construction loan has a fixed 4.75% interest rate with a 65% loan-to-cost of total project cost and a 24-month term. The mini-perm loan is fixed at 4.5% and has a five-year term.