Cut 12 two bedrooms into 4 bedroom layouts, delivered three weeks before move-in

$14k a unit for one bath is high and I say that as someone whose crews do this work. Were you moving the stack or coring the slab? Because if you'd been willing to put the second bath back to back with the first and give up a closet, you might have halved that line.

I'm trying to learn how the money reads on deals like this, so I ran your own numbers back against the thing that almost happened.

If the permit had taken twelve weeks instead of nine, you don't deliver August 1, you deliver mid-September. Students are already housed by then. So you're not late by six weeks, you're late by a year. 45 beds at $690 is $372,600 of annual gross you don't collect, and you're still paying debt service and taxes on $1.85M all in. Call it $130k of carry with nothing coming in, plus the giveback you'd written into those April leases, plus 41 residents who signed with you and had to find something else and won't sign again. That's a $500k swing sitting on top of a $498k renovation budget, decided by a plan reviewer's queue.

So the win here is the same shape as the risk. You bought a project where the entire downside was concentrated in one date, and you got the date. What I'd want to know before I put money into someone else's version of this is whether they've built in a full year of carry, and whether the deal survives delivering in September of the following year. If it does, the permit queue is an annoyance. If it doesn't, they're one clerk away from losing the equity.

Did you have that year of carry, or were you relying on hitting July?

@sable that's the post I'll be rereading. I've been stuck in analysis on a much smaller conversion and I never once modeled the version where I miss the leasing season entirely. I was modeling three months of extra vacancy, which is the wrong unit.

Starting from nothing here, so a basic one. Why does 45 beds at $690 beat 12 units at $1,150 by that much? Is the per-bed rent just higher because you're renting a room instead of an apartment?

@ember yes. Four people paying $690 for a room in a shared apartment is $2,760 for a unit that rented for $1,150 as a whole. Students pay per room because they're comparing to a dorm, and their parents are guaranteeing it. That spread is the entire reason the sector exists, and it's also why every operator in a college town has already thought of this, so the ones left to buy are usually the ones with a physical reason you can't convert.

@girder the three units you couldn't get to four beds are the interesting part to me. Did you price the exterior window work and reject it, or was it a code problem you couldn't buy your way out of?

What happens to this building in eight years? Everything I read says the number of 18 year olds starts dropping. Flagship with growing enrollment sounds like the right side of that, but you've also just added 21 beds of supply to that submarket, and so has everyone else who noticed the same spread.

Nine of twelve units to plan and three that didn't, discovered at plan review. That's the scope creep story every time. On my last one I found out at framing that the second floor bedrooms needed a bigger header than drawn, and the $6k fix cost $19k because the crew was already past it.

@girder how much contingency did you carry against the $498k, and what did you actually use it on?

Coming from the trades, the thing I'd flag for anyone copying this is that a June Saturday framing crew in a college town costs what it costs. @girder you paid a premium and delivered. Somebody with a thinner budget pays the same premium and runs out of money in week three with the walls open.

The written giveback in the April leases is the detail I'm stealing for the service side. It converts a schedule risk into a priced number instead of a fight. How did you set the amount, and did the leases spell out what happened if you were more than a couple weeks late rather than a few days?