My 18-room house underwrote to 71k NOI and I'm sitting at 54k after year two
The gap is not vacancy. Vacancy is actually fine, running around 9% against the 12% I modeled. It's the room-turn cost. I used $280 per turn as my baseline because that's what a three-unit residential property costs me per unit. Boarding house rooms turn faster and the cleaning, bedding replacement and minor repairs are averaging $510 a turn. On a house with this much movement that adds up to about $14k I didn't budget for annually. The second thing is the city inspection cycle. I budgeted one compliance visit a year. The inspector showed up four times in year two, two of those were reinspections after deficiency notices, and the city charges $175 per reinspection. Not the fee that kills you, but each visit also triggered a maintenance item I then had to fix before the follow-up. I'm tracking those triggered repairs at just over $6k for the year. So that's most of the gap right there, room-turn underestimate and inspection-cycle costs I treated as negligible. The gross rent line is almost exactly where I modeled it. I keep hearing people say their NOI miss came from rent, mine came from the expense side of a number I thought I had tight.
