Underwriting Student Housing: Anyone seeing 28% OpEx on deals lately form the OM?

[Daniel Sehy]

Hey BP Community, quick question for the lenders/operators deep in student housing:

I’m underwriting a deal where the OM shows Operating Expenses at 28% of EGI.

Looks amazing on paper.
Great cap rate. Huge “instant value.”

Except… I don’t know a single stabilized student housing operator running sub-30% OpEx without cutting corners so aggressively that the NOI becomes fiction.

Here’s what I’m seeing in the real numbers:

Where the OM breaks reality

• Management fees appear included,
  but once you properly account for student housing staffing — 28% isn’t sustainable.

• CapEx reserves? Left out entirely,
  as if buildings never age when students live in them.

By the time we apply:
✅ realistic student housing ops
✅ lender-required reserves

…the deal goes from “slam dunk” → “DSCR drop below threshold.”

So here’s my question:

Do lenders have a floor they’ll accept based on:

• Bed count?

• Market?

• Stabilization history?

Or is everyone just recasting the T-12 with conservative assumptions no matter what the OM says? Would love to hear what you’re seeing on your side of the table. I want to make sure I’m modeling bankable NOI, not "broker brochure NOI."