My First STR - House Hacking in Memphis TN

[Rachel Hughes]

Hi BP friends, 

My first STR has been up and running for almost 3 weeks now and I wanted to share my experience. Everyone on this forum has been super helpful and I hope to pay it forward any way that I can.

Link to my Airbnb listing below:

https://airbnb.com/h/rachelsplace 

My husband and I searched for months to find a property in Memphis TN that we could house hack (live in one unit, rent out the other). We ended up purchasing a property that has a 3bed/1bath house with a 2bed/1bath attached mother in-law suite (MIL). The house is ~1100 sq. ft. and the MIL is ~700 sq. ft. My husband and I are living in the MIL suite so we can maximize the STR revenue. Here are the details:

ZIP: 38111 (Memphis), not the most desirable neighborhood but certainly not the worst either. 

Purchase Price: 136,400

Cash to close: 31,400 (20% DP, some closing costs, some things escrowed)

Furnishing: ~7,500 (this includes everything: some appliances, furniture, 2 sets of linens for 5 beds, consumables, and much more)

Unforeseen repairs: ~5,500 (re-do HVAC, new water heater)

Total initial investment: ~44,000

PITI: 850/mo.

ADR estimate: 100/night

Occupancy estimate: 70%

Revenue estimate: 2,100/mo.

Expenses estimate: 500/mo.

Cash flow estimate: 1,600/mo if you exclude the PITI since it doubles as our own housing expense or 750/mo. + free rent if you include the PITI.

I listed the property on 2/26 and a few hours later I had a family of 6 book it for 14 nights starting the next day. I was thrilled! It ended up being a disaster and nearly everything in the house broke. The family was super patient and we were able to get everything fixed but we did have to put them up somewhere else for a few nights. 

I am charging $80 for cleaning but plan to do much of it myself because it is worth my time right now. We'll see how long that lasts! After our first guests checked out I was amazed at the destruction. Spent a couple of hours scrubbing dried mac and cheese and gum off my rugs, chocolate milk on the walls (and ceiling somehow???). 

A few things I have learned...

1) A 40 gallon water heater is not big enough for 8 people (lol)

2) If it is breakable... it will break

3) Fluffy rugs are a bad idea

4) People forget stuff... a lot of stuff (this is a pro and a con... I get lots of free food)

5) If you provide it, it will be consumed 

So far I have not had any trouble getting bookings. March is 60% booked already and my listing only has 1 review. Our listing is attracting all different types of travelers (families with kids, young budget travelers, etc.). The ability to sleep 8 people is a huge advantage but also creates a lot more wear and tear on the property. 

Overall I am very happy with this property and am already searching for my next. My goal is to have 2 more listings in Memphis by the end of the year.

Any constructive criticism/comments on my listing are welcome! I am still learning and open to suggestions on how to improve.

Rachel