How to Analyze a PadSplit Coliving Rental Property in 30 Minutes

Why This Episode Matters

Most investors struggle with analyzing affordable housing deals that go beyond traditional single-family or multifamily rentals. In this episode of the Affordable Housing & Real Estate Investing Podcast, host Kent Fai He walks you step by step through how he analyzed a real PadSplit co-living rental property in Atlanta, Georgia.

PadSplit is a platform that enables investors to rent by the room, offering affordable housing to working-class tenants while generating strong cash-on-cash returns. Kent shows how to take a property from initial glance to in-depth financial analysis in under 25 minutes, revealing what makes a deal worth pursuing—and when to walk away.

If you’ve ever wondered how to evaluate co-living properties, identify hidden bedrooms, and underwrite conservatively to protect your capital, this episode is for you

How Do You Quickly Tell if a PadSplit Deal is Worth Analyzing?

Kent begins by outlining his five-step framework for evaluating co-living rentals:

1. Initial screening: Does the property layout allow for additional bedroom conversions?
   
   

2. Intangibles: Are there parking, proximity-to-work, and neighborhood strengths?
   
   

3. Walkthroughs: Validate bedroom counts and layouts with real video tours.
   
   

4. Financial analysis: Plug numbers into a conservative Excel model.
   
   

5. Decision point: Compare expected returns to your minimum required threshold
   Kent He »»» @PadSplit How to a…
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He emphasizes that the first check is layout flexibility. A property with easily convertible rooms, multiple bathrooms, and good parking can often be reshaped into a high-performing PadSplit.

What Intangibles Should Investors Look For in Co-Living Rentals?

Not every property with multiple bedrooms is a good fit. Kent highlights three intangibles that matter most:

• Parking capacity: Tenants need reliable spaces; plan for at least 70% of them to have parking.
  
  

• Neighborhood quality: Look for minimal signs of crime (no boarded windows, minimal trash).
  
  

• Proximity to employment centers: Properties near airports, hospitals, and downtown job hubs make ideal PadSplit rentals.
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For this Atlanta property, being minutes from the airport created natural demand from hourly workers who want shorter commutes and lower gas costs.

How Do You Analyze the Numbers on a Co-Living Deal?

Kent shares his conservative underwriting assumptions:

• Purchase price: $265,000
  
  

• Bedrooms: 10 after conversion
  
  

• Weekly rent per room: $170
  
  

• Occupancy: 92% (48 weeks out of 52)
  
  

• Rehab cost: ~$55,000 plus contingencies
  
  

• Property management: 8% plus 2% for asset management
  
  

With these inputs, the deal produced a 20% cash-on-cash return, comfortably above Kent’s partnership threshold of 17.5%.

What Renovations and Costs Should You Expect for PadSplit Conversions?

Kent provides a rare look at an itemized scope of work, including:

• Room conversions with new walls, ductwork, and electric
  
  

• Bathroom additions (converting half baths into full baths)
  
  

• Two refrigerators for tenant use, plus mini-fridges in each room
  
  

• Security cameras for safety and accountability
  
  

• Flooring, HVAC, and painting updates
  
  

Total rehab came in just under $55,000, with a contingency budget added for an extra HVAC unit.

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Key Insights for Affordable Housing Investors

• Look for hidden bedrooms: Video walkthroughs can reveal spaces overlooked in the listing.
  
  

• Validate assumptions with local experts: Property managers and PadSplit reps provide critical rent and occupancy data.
  
  

• Underwrite conservatively: Always assume higher expenses and lower rents to protect downside risk.
  
  

• Intangibles drive demand: Proximity to jobs and adequate parking often matter more than luxury finishes.
  
  

• Strong returns are possible: Properly structured co-living deals can generate 17–20%+ cash-on-cash returns.
  
  

Best Quotes from Kent Fai He

“I want to give you guys a really good idea of how to look at a property, analyze a deal, and see whether or not it is actually a good property.”

“We didn’t think this was a deal at first—until the second walkthrough revealed we could convert it into ten bedrooms with three bathrooms.”

“Conservative underwriting is key. If the deal still works at 92% occupancy and lower rents, then you know you have something solid.”

“PadSplit isn’t about granite countertops. It’s about functional spaces, affordable rents, and reliable returns.”

Common Questions This Episode Answers

Q: How many bedrooms make a PadSplit deal worthwhile?
Most investors target at least 8–10 bedrooms to cover costs and create strong returns

Q: What occupancy rate should I use in underwriting?
Kent recommends 90–92% occupancy to remain conservative, even if the market is performing higher.

Q: How much does it cost to convert a property into a PadSplit?
Typical renovations range from $50,000–$70,000 depending on room additions, bathrooms, and HVAC.

Q: What’s the ideal location for co-living rentals?
Near employment hubs like airports, hospitals, and city centers, where hourly workers seek affordable housing.

Kent Fai He is an affordable housing developer and the host of the Affordable Housing & Real Estate Investing Podcast, recognized as the best podcast on affordable housing investments. His hands-on deal breakdowns make complex strategies like co-living rentals accessible for everyday investors.

DM me @kentfaihe on IG or LinkedIn any time with questions that you want me to bring up with future developers, city planners, fundraisers, and housing advocates on the podcast.