July 29, 2026
The first year costs more than the model says
Turn, lease-up, and the month nobody budgets. A twenty-year projection is usually right about year eight and wrong about year one.
Tom Bradbury
July 29, 2026 · 1 min read
A steady-state model assumes a house that is already rented, already stabilized and already behaving. Year one is none of those things, and the gap between the first year and the model is where most first-time buyers lose their nerve.
What lands in the first twelve months
The turn. Even a house handed over in good order usually wants paint, a clean, locks, and two or three things the inspection found. Budget it as a real line rather than hoping.
Lease-up. A tenant placement fee is commonly half a month to a full month of rent. It is a one-off, so a steady-state model spreads it across twenty years and makes it disappear — but you pay it in month one or two.
The gap. Between closing and a signed lease there is a stretch with a mortgage payment and no rent. Thirty days is optimistic in most markets outside the summer.
Escrow catch-up. Taxes and insurance are usually collected ahead. The first statement is often larger than the steady monthly figure.
The rough shape of it
Add them and the first year commonly runs one to two months of gross rent worse than the model. On a $1,600 rent that is $1,600 to $3,200 of cash you need and the projection never mentions.
This is not an argument against the property. It is an argument for the reserve account you open on the day you close.
Where it lands in the model
Nowhere, deliberately. The projections here are steady-state, because a steady-state model is comparable between two houses and a first-year model is not. Hold the first-year cost separately, in cash, and read the projection for what it is good at — the eighteen years after it.
