Bedroom Bump — Student-Rental Expansion Underwriter

The method

Student houses don't rent by the house. They rent by the bedroom. A 3-bed with room for 3 more is a 6-bed wearing a costume — and the costume is where the money hides.

The discipline: always underwrite both scenarios — what it cash-flows today, and what it cash-flows with the bedrooms added. If the conversion math doesn't clear your hurdle, you don't have a value-add. You have a fantasy.

One warning, and it's non-negotiable: bedroom count on paper is a guess until you walk the layout, confirm the egress, and check what the town allows. Underwrite both ways anyway. That's the job.

The Deal

What you're buying, before bedrooms enter the chat.

Purchase price ($)

Rehab estimate ($) — base reno, before any bedroom conversion

Closing costs ($)

Scenario A — As-Is

The house exactly as it sits today.

Bedrooms (current)

Rent per bedroom / month ($)

Vacancy rate (%)

Scenario B — Converted

The house after you carve out the extra bedrooms.

Bedrooms ADDED

Total conversion cost ($)

Framing, drywall, doors, closets, egress windows, permits — the whole job.

Rent / new bed / mo ($)

Vacancy (%)

Financing

The money behind the deal.

Down payment (%)

Rate (APR %)

Term (years)

Your CoC hurdle (%)

The return that makes you get out of bed.

Operating

The costs that never take a day off.

Taxes / yr ($)

Insurance / yr ($)

Management (% of gross)

Maintenance (% of gross)

CapEx reserve / yr ($)

Landlord utilities / mo ($)

Water, sewer, trash — the student-rental classics.

Other / yr ($)

Run It

Every number above recalculates live. Save the deals worth remembering.

Tip: nudge the conversion cost up and watch the verdict flip. That's the whole game — knowing the price where the bedroom stops paying for itself.

Run the numbers.

Fill in the deal above — the verdict lands here.

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Bedrooms added

–

Monthly cash-flow lift

–

Cash-on-cash: as-is → converted

–

Conversion payback

Your ceiling: max conversion budget

To still clear your 10% cash-on-cash hurdle after the work is done, the conversion must cost no more than

$–

–

This is the number to carry into the contractor walkthrough. Above it, the new bedrooms are charity work.

Side by side

Monthly cash flow

As-is

Converted

Cash-on-cash return

As-is

Converted

Line item	As-is	Converted	Δ

How the math works (no black boxes)

Gross rent = bedrooms × rent per bedroom × 12. Student rentals are priced per bed — the house is just the container.
Effective gross = gross rent × (1 − vacancy).
Operating expenses = taxes + insurance + (management % + maintenance %) of gross rent + CapEx reserve + landlord utilities × 12 + other.
NOI = effective gross − operating expenses.
Debt service = amortized P&I on (price − down payment) at your rate and term. Rehab and conversion are assumed cash — lenders rarely fund your drywall dreams.
Cash flow = NOI − debt service. Cash-on-cash = cash flow ÷ total cash invested (down payment + rehab + conversion + closing).
Cap rate = NOI ÷ all-in cost. DSCR = NOI ÷ debt service.
Max conversion budget solves for the conversion cost C where (cash flow_A + ΔNOI) ÷ (cash_A + C) = your hurdle. Pay more than that and the expansion drags you below the return you demand.
Conversion payback = conversion cost ÷ monthly cash-flow lift. How many months of extra rent it takes to earn the construction back.

Before you fall in love with the bedroom count: confirm the layout in person, confirm legal egress for every sleeping room, and confirm the town's occupancy and zoning rules. A bedroom the code won't recognize is just an expensive closet.

Saved deals

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