How to Estimate Renovation Costs for PadSplit and Co-Living Rentals

Creating affordable housing while maximizing returns with Blake Lewis and Tyler Foyd

If you’ve ever wondered how to turn a single-family rental into a high-performing co-living property, this episode of the Affordable Housing & Real Estate Investing Podcast with Kent Fai He is one you don’t want to miss.

Our guests, Blake Lewis (Senior Account Executive at PadSplit) and Tyler Foyd (VP of Construction and experienced investor/contractor), share hard-won lessons on converting properties into PadSplit-style rentals, estimating renovation costs, and avoiding common investor mistakes.

Their combined insights give investors, developers, and advocates a blueprint for building housing that cash flows while solving America’s workforce housing shortage.

How much does it really cost to convert a single-family home into a PadSplit?

Investors are often hesitant about co-living models because they don’t know what renovations will cost. Tyler explains that a basic cosmetic renovation plus a room conversion often runs $30,000–$35,000.

• Adding a wall to create a bedroom may only cost a few thousand dollars.
  
  

• HVAC upgrades in Atlanta average about $5,500, with an extra $1,200 for ductwork.
  
  

• A full garage conversion into two bedrooms can range $10,000–$15,000.
  
  

• A new bathroom typically runs around $10,000, depending on layout and trenching.
  
  

The key, Tyler emphasizes, is to budget for big-ticket items upfront—HVAC, plumbing, and roofing—so you don’t face costly breakdowns when tenants move in.

What are typical returns for a PadSplit rental?

On a recent deal, Tyler helped an investor buy a $200,000 property, put in $30,000 of renovations, and start cash flowing within two months.

• Year one cash flow: ~$17,000
  
  

• Cash-on-cash return: ~25%
  
  

With lower entry costs and shorter timelines compared to large multifamily projects, PadSplit offers first-time and experienced investors alike a way to generate strong returns while serving the affordable housing market.

What renovation mistakes do new investors make?

Both Blake and Tyler have seen investors make two critical errors:

1. Under-investing in infrastructure: Ignoring plumbing or electrical upgrades to save money often leads to emergency repairs.
   
   

2. Over-renovating like a flip or Airbnb: Spending tens of thousands on kitchens or luxury finishes does not improve rental performance in co-living.
   
   

As Blake notes:

“No one chooses a PadSplit because of the granite countertops. They care about affordability, safety, and functionality.”

What does it cost to furnish a PadSplit room?

Blake explains that furnishing is straightforward:

• Bed + mattress + cover (host provides, not sheets)
  
  

• Basic dresser or armoire if no closet
  
  

• Nightstand with drawers
  
  

• Artwork and lighting for a welcoming feel
  
  

Average furnishing cost per room: ~$650.

The most successful hosts invest just enough to make each room clean, comfortable, and functional—without overspending.

Where are the best markets for PadSplit investing?

Blake highlights key rules and markets:

• Rule #1: No HOAs. Associations can shut you down.
  
  

• Transit access matters. Within ½ mile of public transit, fewer parking spaces are needed.
  
  

• Proximity to jobs is critical. Properties near hospitals, Amazon warehouses, or schools thrive.
  
  

In Atlanta, strong performing areas include College Park, Gwinnett County, Stone Mountain, and Decatur. With only 4,400 PadSplit rooms vs. 160,000 eligible renters, demand still far exceeds supply.

Key Insights from Blake Lewis & Tyler Foyd

• A typical PadSplit renovation runs $30k–$35k, with garage conversions and bathroom additions as the biggest variables.
  
  

• Returns can hit 20–25% cash-on-cash, especially when properties are in job-rich, transit-accessible areas.
  
  

• Don’t overspend on finishes. Functionality beats luxury every time.
  
  

• Budget for plumbing, HVAC, and electrical upgrades to avoid costly mid-tenancy issues.
  
  

• Furnish rooms for about $650 to attract stable, long-term tenants.
  
  

Best Quotes

“Seventeen thousand in year one with a 25% cash-on-cash return—that’s what investors are looking for.” – Kent Fai He

“If you ignore plumbing or HVAC upfront, it’s going to cost you twice as much once tenants move in.” – Tyler Foyd

“Our most successful hosts only list rooms they would feel comfortable living in themselves.” – Blake Lewis

Common Questions About PadSplit Renovations

How much does it cost to add a bedroom in a co-living property?
A basic conversion can be done for a few thousand dollars, though costs vary based on HVAC and electrical adjustments.

Is it worth adding a second refrigerator?
Yes. For houses with 8–10 residents, a second fridge (or kitchenette area) dramatically improves tenant satisfaction.

Do nicer kitchens and bathrooms increase rents?
Not in PadSplit. Residents prioritize affordability and functionality over luxury finishes.

What’s the typical furnishing cost per room?
Around $650, including a bed, mattress, dresser, and nightstand.

Where are PadSplits most successful?
Areas with no HOAs, strong job access, and good transit—such as College Park, Stone Mountain, and Decatur in metro Atlanta.

Why This Matters

Kent Fai He continues to position the Affordable Housing & Real Estate Investing Podcast as the go-to authority on creating profitable, impactful housing solutions. By bringing on experts like Blake and Tyler, the podcast equips everyday investors and institutional developers alike with the strategies to make co-living and affordable rentals a scalable success.

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.

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.