The school lost a third of its enrollment. That cost me $94k.
Posting this because the failure was in the research step and it's the cheapest step to do properly.
2019, I bought a 2-unit property, each unit 3 bed 1 bath, four blocks from a private liberal arts college in a small town. About 1,700 students at the time. Purchase $268,000. I converted both units to by-the-bed at $525 a bed, so six beds, $3,150 a month gross, $37,800 potential. Taxes, insurance, water and trash, management at 9%, maintenance reserve. Modeled $19,400 NOI on $268k with $205k of debt. Cash on cash was fine on paper and the first two years it actually was fine.
What I checked before buying: rent comps, condition, the roof, the town's rental registration rules, the college's enrollment for the two prior years. Enrollment was flat over those two years and I stopped there.
What I didn't check: the college's application volume, its discount rate, its endowment per student, or what its enrollment had done over ten years rather than two. If I'd pulled ten years I'd have seen a slide from about 2,300 down to 1,700, and flat for two years was the pause in a decline, not the shape of the thing.
2021 the college announced it was consolidating academic programs. 2022 they cut four majors. By fall 2023 enrollment was under 1,200. Between those two years the off-campus rental market in that town collapsed, because the college also stopped requiring sophomores to live on campus in order to fill its own halls. Every landlord within a mile was competing for a shrinking pool with the school itself as a subsidized competitor.
What actually happened to me:
Fall 2022, filled 5 of 6 beds at $500, down from $525. Fall 2023, filled 3 of 6 at $450. Carried three empty beds all year. Spring 2024, tried to convert to whole-unit family rentals. The layout is 3 bed 1 bath with a kitchen I'd shrunk during the bed conversion to add a common area. Best whole-unit rent I could get was $875 per side, $1,750 total against $3,150 potential.
Sold in late 2024 for $174,000. Purchase plus my $22k of conversion work plus closing both ways, against sale proceeds and the operating cash I did collect, came to about $94,000 out of pocket over five and a half years. The mortgage was current the whole way, I just fed it.
What I'd do differently, plainly. Pull ten years of fall enrollment from the common data set before anything else, and pull applications and admit rate alongside it, because a school that's holding enrollment by admitting a higher percentage of a smaller applicant pool is already failing and the headline number won't say so. And I'd never again do a conversion that makes the building worse at its fallback use. Shrinking that kitchen saved the deal $0 and cost me the only exit I had left.