Charleston Airbnb House Hack

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Charleston Airbnb House Hack

Jacob D Adamczak
Charleston, SC · Member since 2018 · 182 posts · 73 votes

Investment Info:

Single-family residence buy & hold investment in Charleston.

Purchase price: $354,000
Cash invested: $10,620

This is my first deal! A short term rental/house hack, the property has a 350 sq ft ADU in the back yard that I have listed on air bnb and that should cover all of my housing costs. We painted, did light renovations, and went through the Charleston STR permitting process and now how a live Airbnb listing.

What made you interested in investing in this type of deal?

I was interested in house hacking but the market for small multifamily in Charleston is very competitive. Duplexes would go very quick or to all cash buyers. I was able to use a 3% HomeReady loan and get into a neighborhood I like, with little money down, and live for free.

How did you find this deal and how did you negotiate it?

My real estate agent brought me this deal, it was listed on the MLS. I was able to knock $11,000 off of the listing price by using the comps price per sq. ft. in the neighborhood. There was not much differed maintenance or value add to further reduce the price.

How did you finance this deal?

Home ready 3% down loan enabled me to put down a reasonable down payment and not have to save up 20%.

How did you add value to the deal?

The ADU needed painting and a deep clean, the furnishings and decorations were outdated as well. We painted, cleaned, fixed up a few things, and put our own personal touch on the place.

What was the outcome?

I went live on October 11th and have had someone staying ever since. This is a slower season then the spring and summer but I have already exceeded the historic October and projected November numbers from that the Seller provided.

Lessons learned? Challenges?

I learned that the Airbnb permitting process in Charleston is a lot more time consuming, costly, and challenging than I would have thought. I learned that it would have been better to have had a little bit more reserves for expenses while getting the unit fixed up and ready and before I was getting revenue and had to pay the full mortgage. Also, I learned ways that the seller hid things that needed fixed and to take a deep look during your walkthroughs.

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Troy GandeeBusiness Member
Real Estate Broker · Charleston, SC · Member since 2013 · 794 posts · 454 votes
6y

Great job @Jacob D Adamczak! I've helped a few people do this same thing. I'm currently helping one couple look for something with an ADU they can Airbnb. My wife and I turned one side of our garage into an Airbnb in Park Circle about 2 years ago. It's been so good to us. My wife was able to leave her 9-5 after we had our first baby and it was primarily thanks to our Airbnb.

Here's the link: https://www.airbnb.com/rooms/2...

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  • Sean McDonnell
    Real Estate Agent · Surf City, NC · Member since 2017 · 648 posts · 597 votes
    6y

    Congrats man! I have a friend who did something similar in Charleston.  One unique thing he did was that he airbnb's his main house to over some weekends in the summer and uses that extra income to go vacation with his wife all over the country! It is a great travel hack in my opinion.  Good luck with the airbnb. 

    0Reply
  • Chase Hoover
    Real Estate Broker · Staunton, VA · Member since 2019 · 194 posts · 216 votes
    6y

    Cool cottage!  I also have a ~350 sq. ft. guest cottage on my property that I rent on Airbnb.  It nearly covers my entire mortgage.  We renovated the entire thing making it one of the nicest Airbnbs in our area, which was very well worth it given our performance over the past year.  I've actually turned it into a business and now manage other Airbnb's, all of which are doing extremely well.  Best of luck!

    0Reply
  • Steven N.
    Rental Property Investor · Charleston County, SC · Member since 2014 · 42 posts · 15 votes
    6y

    Nice job. What part of Charleston is in this? West Ashley, James Island? 

    0Reply
  • Jacob D Adamczak
    OP
    Charleston, SC · Member since 2018 · 182 posts · 73 votes
    6y

    Thanks @Sean McDonnell!, I am not sure that I am able to do that, in the permitting process they were pretty specific that the permit is only for the ADU and not the main house, although I had considered that as a great idea before I learned about the city's rules. Although, I could pursue getting the permit for the main house as well.

    0Reply
  • Jacob D Adamczak
    OP
    Charleston, SC · Member since 2018 · 182 posts · 73 votes
    6y

    @Chase Hoover What do you recommend adding/upgrading?  I had a few things in mind but wasn't sure what would produce a good return on my money.  Also, do you list on VRBO as well? Use any pricing software? These are some of the things i'm still trying to figure out.

    0Reply
  • Jacob D Adamczak
    OP
    Charleston, SC · Member since 2018 · 182 posts · 73 votes
    6y

     Thanks @Steven N. It is in West Ashley, right by the end of 526.

    0Reply
  • Chase Hoover
    Real Estate Broker · Staunton, VA · Member since 2019 · 194 posts · 216 votes
    6y
    Originally posted by @Jacob D Adamczak:

    @Chase Hoover What do you recommend adding/upgrading?  I had a few things in mind but wasn't sure what would produce a good return on my money.  Also, do you list on VRBO as well? Use any pricing software? These are some of the things i'm still trying to figure out.

    We pretty much re-did everything top to bottom (pic attached).  I did most of the work myself, so the total reno was around $8k.  In peak season (winter months here in S. Florida), the cottage grosses $3-4k/month.  Off-season $1500-2000/month.  Before we bought the house and renovated the cottage, the old owner rented it annually for $750/month.

    It was very well worth it to spend the money upfront in order to have one of the nicest quality Airbnbs in our market.  I've managed other Airbnbs that are "halfway-renovated", and they do not perform nearly as well.  In our market there are hundreds of Airbnbs so travelers have many options.  I'm sure Charleston is the same way.  You need to make sure yours stands out among the best in order to be successful.

    I'd say the biggest value-add features include full-size stainless appliances in the kitchen, a coffee bar, and new flooring throughout to brighten the space and give it a new, clean feel.  We also provide bicycles and beach gear for guests' use.  Adding things like Netflix/Hulu, board games and puzzles, and any extra little touches really go a long way.  Photography is absolutely essential.  If you do not have a camera with a wide angle lens, shell out the money and hire a professional and edit the photos so they're bright and colorful.

    I do list on VRBO and Booking.com as well as a direct booking website, however the majority of our bookings 80%+ come from Airbnb.  VRBO fees are much higher (5% commission + 3% cc fee vs. Airbnb's 3% for everything), and in my experience everyone who sends me a message on VRBO asks for a discount.  With my new management business we list exclusively on Airbnb and our properties are staying just as booked as if we were advertising on all platforms.

    PriceLabs and BeyondPricing are two great pricing systems worth checking out.  It takes a lot of the guesswork out of pricing and maximizes your occupancy.  To automate housekeeping, check out TurnoverBnB and others like it.

    Hope this helps!

    2Reply
  • Steven N.
    Rental Property Investor · Charleston County, SC · Member since 2014 · 42 posts · 15 votes
    6y

    @Jacob D Adamczak that’s awesome. I love West Ashley, I live here and  there are definitely good investments on the mls at the moment. Congrats

    0Reply
  • Jacob D Adamczak
    OP
    Charleston, SC · Member since 2018 · 182 posts · 73 votes
    6y

    @Steven N. I was really excited about it because I wanted to live in West Ashley but  I was trying to house hack and there weren't too many duplexes available.  This way I can live where I want and still invest in real estate.   Definitely beats a N. Charleston Duplex!

    1Reply
  • Jacob D Adamczak
    OP
    Charleston, SC · Member since 2018 · 182 posts · 73 votes
    6y

    That looks awesome!  I was hoping to save up some revenue for about a year before I went back in and upgraded it as I put most of the money I had into buying the property and painting, gutters, urgent repairs, and furnishing of the unit.  For that type of revenue, it seems totally worth it! The previous owner air bnb'd the place for about 23k a year with about 1200-1500 in the winter and 2000-2400 in the summer coming in.  3-4k a month would be totally worth putting some money into it.

    @Chase Hoover

    You're right about the Charleston market, popular vacation spot with plenty of competition. I saw that a couple places qualified for the air bnb premium status and thus charge a higher rate and I would assume that they do so successfully.  I made the place nicer than the last owner had it but was hesitant to put that kind of money into it not knowing if I would get the return as it is a small space.

    I had it on my radar to switch to a stainless steel fridge and I have the stainless microwave. I was also thinking about getting a tankless water heater to open up space to redo the kitchen layout to fit a stove/oven in there as it currently is just a kitchenette. I like the bicycle and beach gear idea though! Have you had any problems with theft or damage to them? I did make sure to get it professionally photographed- every other house in the area was and it would have made mine look terrible in comparison if I was to omit that. 

    Thanks for the tips, I had heard similar things that most people like air bnb the best but was considering using VRBo to fill in some gaps in my booking schedule.  I had heard mixed reviews on pricing software so that's why I was wondering if you use it and if you thought it was worthwhile.  Good luck on the air bnb management business, that's pretty cool you were able to find other people's booking to manage!

    0Reply
  • Jacob D Adamczak
    OP
    Charleston, SC · Member since 2018 · 182 posts · 73 votes
    6y
    0Reply
  • Whitney Coleman
    Charleston, SC · Member since 2016 · 7 posts · 6 votes
    6y

    Very nice! I'm currently going through the STR application process to Airbnb one of the units in a quadplex I owner occupy. Hopefully all goes well! My units aren't much larger than yours (550 sq ft) and also in west Ashley. Any tips you can provide about the STR process?

    0Reply
  • Jacob D Adamczak
    OP
    Charleston, SC · Member since 2018 · 182 posts · 73 votes
    6y

    @Whitney Coleman The house I bought is in West Ashley, (I think its zone C). You have to be an owner occupant to be eligible for a STR permit in the county. They determine this by you approval for the residential 4% property tax rate. For my process, once I bought the house I waited about a month for the deed to record before I could apply for the 4% tax rate. I also still had my old NY state license and car registration so I had to switch those to SC, pay the car property tax, license fee, and plate fee before I could apply for my 4% property tax exemption. Once I had my car title, license, registration, deed, and a bill for proof of address, I could then apply for the exemption which takes another 4-6 weeks. Upon approval of that, You can go downtown to the permit office and pay a $200 fee to apply for your STR license. They post your property with a sign that says it is under review for STR zoning and I think that was 15-20 days with another appeal period after that. If nobody commented or contested the review period you would be conditionally approved upon completion of a fire inspection. It was about another week before the inspector came out and I got approved. I then was able to go and pay for the rest of the years expected income tax on the unit/pick up the business license and permit, another ~$250 or so.
    However, you have to stay overnight on the property/ be generally available and any violations are grounds for revocation of the permit. It is my understanding that all non owner occupants were grandfathered in before the addition of these rules. That is why I found a property with a guest house- I can use it as a house hack without sharing any walls with the tenants.

    0Reply
  • Phillip Austin
    CHARLESTON, SC · Member since 2019 · 10 posts · 2 votes
    6y

    Wow Jacob, congrats! I just moved to the Charleston area a couple months ago and currently living West Ashley right near where your new property is. I love living in this area, very convenient to everything. You must've put in some serious browsing hours to find an ADU that worked out like that. I'm sure whenever you move on from this property you will have no trouble finding renters for that property in the future.

    0Reply
  • Troy GandeeBusiness Member
    Real Estate Broker · Charleston, SC · Member since 2013 · 794 posts · 454 votes
    6y

    Great job @Jacob D Adamczak! I've helped a few people do this same thing. I'm currently helping one couple look for something with an ADU they can Airbnb. My wife and I turned one side of our garage into an Airbnb in Park Circle about 2 years ago. It's been so good to us. My wife was able to leave her 9-5 after we had our first baby and it was primarily thanks to our Airbnb.

    Here's the link: https://www.airbnb.com/rooms/2...

    1Reply
  • Jacob D Adamczak
    OP
    Charleston, SC · Member since 2018 · 182 posts · 73 votes
    6y

    @Phillip Austin I was lucky, my agent found it as his agency had the listing but I was looking since January before I bought in July. You're totally right about the area, everything you need is right off of 1,close to 526, and downtown isn't too far either. That was the plan, since you have to an owner occupant to do the STR, I was going to put a long term tenant in the main house which should cover the mortgage and turn the ADU into a corporate rental with a 30 day minimum.

    0Reply
  • Jacob D Adamczak
    OP
    Charleston, SC · Member since 2018 · 182 posts · 73 votes
    6y

    @Troy Gandee Looks awesome! Is that a full size stove? It looks slightly smaller and I was eventually trying to put a stove in for when I move out so I can turn it to a corporate rental as I would no longer be an owner occupant to qualify for STR. Something small like that would work great!

    0Reply
  • Troy GandeeBusiness Member
    Real Estate Broker · Charleston, SC · Member since 2013 · 794 posts · 454 votes
    6y

    @Jacob D Adamczak It's about 3/4 size. They're really hard to find and pretty expensive new. I got that one second hand somewhere. I think it was facebook marketplace, maybe. I'd say to scan Craigslist, FB Marketplace, Let Go and Offer Up for one.

    0Reply
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