The $84/month co-living "deal" that almost fooled 100 investors

Issue #006 | Monday, May 11, 2026 | thecolivinginsider.com

David Edwards, co-founder of the CoLiving Operations community, posted a deal teardown this week that every co-living operator should read twice. A 5-bedroom, 3-bath property in San Antonio (78233) was pitched as a Sub-To acquisition with a 3% mortgage at $1,641/month PITI and "estimated income" of $3,960/month. Comments filled with "Interested!" within the hour. Nobody ran the numbers.

Edwards ran them. Here's what the flyer hid.

The PITI problem. The $1,641 figure assumed the seller's homestead exemption stays intact. It won't. The moment the property stops being owner-occupied, property taxes reset. Add co-living-grade insurance — which runs $2,500–$3,500/year, not the standard landlord policy baked into that PITI — and the real carrying cost lands closer to $2,461/month. That's an $820/month swing before a single tenant signs a lease.

The vacancy assumption. The pitch projected full occupancy. Edwards stress-tested at 30% vacancy — a reasonable number for San Antonio, which has seen rental market headwinds from supply overbuilding and, more recently, occupancy pressure in lower-tier submarkets. At 70% occupancy, gross income drops to $3,880/month on the 5-bedroom configuration.

The operating expenses nobody listed. All-bills-paid co-living in a 5-bedroom house runs $800–$1,200/month in utilities alone. Add cleaning, pest control, handyman, and lawn care — Edwards tallied $535/month in basic ops at the self-management level. No property manager. No marketing spend. No reserves.

Final math: $3,880 gross minus $2,461 PITI minus $800 utilities minus $535 ops = $84/month. Eighty-four dollars. On a deal requiring roughly $90,000 cash in the door — entry fee, garage conversion, furnishings, and repairs — sitting at a negative equity position relative to likely comps of $260–$280K.

The lesson isn't that Sub-To is bad. It's that co-living underwriting requires four things the standard landlord model ignores: realistic PITI after homestead exemption loss, co-living insurance pricing, all-bills-paid utility budgets, and market-specific vacancy rates. If your deal analysis skips any of those, you're not underwriting — you're hoping.

Edwards teaches exactly this kind of full-stack deal analysis through the CoLiving Agent Accelerator inside the CoLiving Operations Skool community. It's built for agents and operators who want to actually qualify a co-living deal before wiring money. If you're in acquisition mode, it's worth your time: skool.com/coliving-operations/classroom.

The San Antonio breakdown Edwards posted isn't an isolated case — it reflects a pattern playing out across co-living investor communities nationwide. Deals circulate in Facebook groups and Skool communities with headline income figures and no expense modeling. Operators, especially newer ones, anchor on the gross room rate and stop there.

The variables that get consistently underestimated: co-living insurance (most operators price it like a standard landlord policy until their first claim gets denied), utility costs in all-bills-paid setups, and market-specific vacancy. That last one is critical right now. San Antonio's mid-priced rental segment is projected to see average occupancy decline to approximately 87% in 2025, driven by supply overbuilding and tenant migration to newer product. Co-living operators in that market competing for the same renter pool are not immune to that pressure.

The discipline to stress-test at 70–80% occupancy before you buy is the single skill that separates operators who scale from those who break even — or worse. If your underwriting assumes a full house, you're not analyzing a deal. You're writing a pitch deck.

A recurring upsell in co-living deal pitches is the garage conversion — "add two more bedrooms and unlock $1,584/month in additional income." Edwards flagged this in the San Antonio case: the conversion costs $20,000–$35,000, takes time, and adds rooms to a property that isn't cash-flowing on the base configuration.

The finance logic matters for any operator evaluating a value-add acquisition. A conversion that costs $30,000 and generates $800/month in net room revenue — after vacancy and utility allocation — has roughly a 37-month payback. That math works if the base deal is sound. If the base deal is generating $84/month, you're not adding rooms, you're throwing good money after bad.

The correct sequence: underwrite the deal as-is on the existing bedroom count, using real PITI, real insurance, real utilities, and stressed vacancy. If that version pencils, evaluate the conversion as a separate capital project with its own return analysis. Never buy a deal based on the conversion upside. Buy it on what it does without the conversion, then decide if the upgrade earns its cost.

Not a legislative change, but an operational reality worth flagging for Texas operators: multifamily operators across Texas reported meaningful negative leasing and occupancy impacts through late 2025 and into 2026, driven in part by immigration enforcement activity reducing renter demand in workforce-housing submarkets. Co-living properties in San Antonio, Houston, and Dallas price points that serve that tenant population are not insulated from this trend.

If you're acquiring in Texas and underwriting at 90%+ occupancy, that assumption needs revisiting before you close. Stress-test to 75% and confirm the deal still works at that number.

Status: Ongoing market condition, not legislation. No attorney action required — but your acquisition underwriting should reflect current vacancy reality, not 2023 assumptions.

Closing: If you're in acquisition mode right now, David Edwards' five-minute teardown is worth running on every deal in your pipeline before you wire a dollar.

The Co-Living Insider | thecolivinginsider.com | Issue #006 | Monday, May 11, 2026