When we built the calculators, we designed two contrasting models to reflect the range of investor preferences. Some investors preferred lower exposure, choosing a 30-year mortgage with a 25% down payment. Others took a more aggressive approach by purchasing entirely with cash. For non-primary residences, mortgage interest rates are generally higher than standard rates. As of June 2025, the average 30-year fixed mortgage rate is approximately 6.9% (ranging from 6.8% to 7.0%), considerably higher than rates earlier in the decade. Investment and rental properties typically carry an additional premium of 0.75% to 1.0%, bringing expected rates to around 7.6% to 7.9%.

Based on our experience, bedroom rentals during the academic year typically generate between $900 and $1,200 per month, depending on the property’s appeal to students. In South County, there are two main rental strategies for the summer season. Vacation renters generally pay around $1,000 per bedroom per week in July and August, though this can rise to $1,200 depending on location and property quality. Properties near the beach can usually secure at least 5 weeks of rentals each summer, with 9 weeks being the practical maximum. Alternatively, students often pay $1,000 per bedroom per month for the full three summer months for properties located farther from the beach.

For purchase price assumptions, we recommend using 95% to 98% of the listing price, as most homes sell within 4% of asking. The down payment is assumed to be 25% of the purchase price. Monthly property taxes are calculated as 1/12 of the previous year’s taxes (or $250 per month if tax data is unavailable). The monthly mortgage payment is based on a 4.5% interest rate applied to the loan amount. Homeowner’s insurance is estimated at $3.50 per $1,000 of property value annually, divided by 12 for monthly expenses. The sum of these three monthly costs, multiplied by 12, provides the total annual expenses.

Annual revenue is calculated based on the rental strategy. For summer rentals, we provide two models:

• Scenario 1 (weekly rentals): Weekly summer income is added to academic year income.

• Scenario 2 (monthly summer rentals): Summer monthly rent is added to academic year income.

Academic year revenue is calculated as the monthly rent per bedroom multiplied by the number of bedrooms, and then multiplied by 9 months. After adding summer income, we subtract a 14% management fee from the gross revenue to obtain total revenue.

Finally, annual net revenue is calculated by subtracting total annual expenses from total revenue. The return on investment is then determined by dividing the net revenue by the cash invested upfront, either the down payment or full purchase price in the case of an all-cash deal.