STR renovation financing

[Sean Bramble]

Hey everyone - I'm working towards my first STR purchase and have a question about financing for home renovations. I'll be using a DSCR-based loan from a private money lender to acquire the property (no W2). I'm drawn to investing in a fixer upper and renovating it for several reasons, but I also see some cons to this approach ...

Pros: easier to find an affordable property (i.e., avoids intense bidding wars common w/ turn-key properties), experience gained doing my first reno (I've got the time to manage the process), forced equity, being able to reverse engineer exactly what I know guests want (boosting my ADR), etc.

Cons: given where the market is I likely won't acquire a property that fits my criteria cheap enough upfront to effectively BRRRR (i.e., won't get my reno money out immediately) - so this essentially adds to my initial out-of-pocket investment and reduces the remaining capital I have to invest in addl properties. Another con is I know good contractors are hard to find and schedule these days and expensive (along w/ building materials).

Questions: 

-- Am I right to think I won't be able to recoup my renovation costs quickly?

-- Is there some other way I'm not thinking of to bake the renovation costs into my ongoing monthly payments (i.e., reducing my upfront investment)?

-- If not, have you found that renovations are still worth the addl out-of-pocket expense for your STRs? Why or why not?

Any general thoughts on this also welcome! I'm new to this and need all the advice I can get ;)