An 18-room boarding house underwrote to 71k NOI and came in at 54k in year two

The $280 number makes sense for a standard unit because the tenant lived there six or twelve months and treated it like a home. Boarding house rooms get treated like extended-stay hotels and the bedding and mattress wear alone will eat you alive if you're not on a replacement schedule rather than a reactive one. I'd be curious what your average tenancy length is because if you're under 60 days per occupant that $510 is probably still low, I've seen those costs push past $700 in higher-turnover markets once you factor in the small wall repairs and lock rekeying people skip until they can't.

On the inspection cycle, that's almost entirely city-specific and you have to find someone who's operated in that exact municipality for at least three years before you underwrite, because some cities run boarding houses through a completely separate licensing track with their own cadence and the reinspection fee is the least of it.

Room turns on a boarding house are a different product from a standard unit turn. Operators pricing service contracts for this property type tend to quote residential numbers, and those never pencil once the actual scope is on the table. The scope on a room that turns every few months bears little resemblance to a unit that turns once a year. The inspection spiral is the piece that gets underestimated most. Four visits in a year with triggered repairs each time is not unusual at all in a city that runs a dedicated rooming house enforcement unit, and more of them do now.

That $510 per turn, is that stabilized or still drifting up? Bedding inventory hits full replacement frequency eventually and the per turn cost tends to jump again when it does. The other thing worth knowing before anyone touches a deal like this is whether your city tracks deficiency history by property and moves repeat flags onto a more frequent base inspection schedule going forward.

The inspection cycle piece is where I'd push back a little. Four visits in one year sounds like the city figured out you were new to the license type and put you on a closer watch list, which tends to ease off after year three once you've got a clean reinspection record. I'd be more worried about the turn cost because that one doesn't self-correct. At 18 rooms with high movement you're basically running a hospitality operation on a residential expense model, and $510 is probably not even the ceiling yet. If I were underwriting this from scratch I'd want 24 months of actual turn logs from a comparable property in the same city, not a comp from my own residential book. The gap between $280 and $510 is 82 percent, which on a deal this size is the difference between a 7 cap and something I wouldn't have bought. That's the number I'd want stress-tested before I committed, not after.

The $510 is actually on the low end for what I'm seeing reported in the midwest. My property manager on the single unit I inherited quotes $640 to $680 for anything occupied under six months, because short stays mean more hidden damage per square foot. On the inspection thing, four visits in year two sounds like the city flagged you as a problem address early, and that tag can stick for a long time.