House Hacking with a STR

[Erika Shiu]

Hello!

I am new to real estate investing and am on the verge of getting my 1st property underway; it's so close I can taste it! This is my 1st post and I am so incredibly thankful that a forum like this exists and for any information to help guide me through this tough decision is so immensely appreciated! I am looking at a 4 bed/3 bath property on the edge of Littleton/Denver. There are 3 bedrooms upstairs, and 1 bedroom/bathroom in the basement, there is also a separate basement entrance. My house-hack plan is to live upstairs with my boyfriend, charge him rent, and STR the basement unit. According to AirDNA, the analytics broken down are a 60% occupancy with a gross revenue of $32,000.00 in my 1st year. I have heard AirDNA is a little generous so I am hoping for a 50% occupancy, which on average would pay ~$1,000.00 per month. My dilemma is the mortgage is a little over 50% of my take home pay from my W-2 and I am worried that I am biting off more than I can chew. Another concern is the shower in the basement is also very small so I don't know if that would deter potential guests. And are potential guests interested in staying at a STR in a basement that can have occasional squeaky floors from time to time? Thank you so much for your time in reading my post and providing any clarity.

[Jonathan Greene]

There are a lot of Denver investors who should be able to weigh in directly here. I believe there are license allotments in many towns near and around Denver so you want to make sure there is a license available for the basement unit before you factor this into your cashflow plan. @Craig Curelop is a great resource to assist with this as he is in Denver and wrote the book on house hacking for BP.

You are a little numbers heavy vs. expectations meaning that it seems like you are really counting on these numbers to work and they could be tight which can be scary for a first property. If you are going to charge your boyfriend rent, what if you break up? Unfortunately, you need to account for this as you are living in the biggest unit. The best house hacks cash flow from living in the smallest and renting the biggest so you need to work out all the scenarios that could come up. Good luck!

[Ashish Acharya]

@Erika Shiu House hacking with an STR is a smart strategy but ensures financial viability since your mortgage is over 50% of take-home pay. Use conservative AirDNA projections (e.g., 50% occupancy, $1,000/month net) and factor in cleaning, platform fees, and utilities.

Address basement concerns by improving the shower usability and adding soundproofing. Highlight features like the private entrance to attract budget-conscious travelers. Verify STR regulations in Littleton/Denver and secure permits. Build an emergency fund to cover unexpected costs, and ensure you can manage the mortgage without STR income if needed. With proper planning, this can be a great investment!

Don't forget the cost segregation on the SRT portion to save you taxes.

This post does not create a CPA-Client relationship. The information contained in this post is not to be relied upon. Readers should seek professional advice.

[Wale Lawal]

@Erika Shiu

To make an informed first-house investment, consider income potential, mortgage risk, and budget constraints. Address issues like a squeaky basement shower and squeaky floors by marketing the space effectively. Consider long-term strategy, risk management, and appreciation potential. Consult an STR expert and hire an inspector for confidence. If the property meets your financial and lifestyle goals, it could be an excellent first house hack, but be cautious with the risks and have a contingency plan.

Good luck!

[Sean Graham]

Quote from @Erika Shiu:

Hello!

I am new to real estate investing and am on the verge of getting my 1st property underway; it's so close I can taste it! This is my 1st post and I am so incredibly thankful that a forum like this exists and for any information to help guide me through this tough decision is so immensely appreciated! I am looking at a 4 bed/3 bath property on the edge of Littleton/Denver. There are 3 bedrooms upstairs, and 1 bedroom/bathroom in the basement, there is also a separate basement entrance. My house-hack plan is to live upstairs with my boyfriend, charge him rent, and STR the basement unit. According to AirDNA, the analytics broken down are a 60% occupancy with a gross revenue of $32,000.00 in my 1st year. I have heard AirDNA is a little generous so I am hoping for a 50% occupancy, which on average would pay ~$1,000.00 per month. My dilemma is the mortgage is a little over 50% of my take home pay from my W-2 and I am worried that I am biting off more than I can chew. Another concern is the shower in the basement is also very small so I don't know if that would deter potential guests. And are potential guests interested in staying at a STR in a basement that can have occasional squeaky floors from time to time? Thank you so much for your time in reading my post and providing any clarity.

Great location!

[Erika Shiu]

Thank you for all of the advice!

[Koren Lavi]

@Erika Shiu

Definitely stay conservative with your numbers. Don’t forget to take into account utilities including internet, lawn maintenance, snow removal, etc. into consideration. Also AirBNB stocking fees, maintenance, cap ex.

But at the same token know that the principal portion of your mortgage payment is actually not a true expense so there is that benefit to doing all of this even if you are light on the cash flow or break even. 
 

[Aaron Zimmerman]

Would it  be possible to get an additional roommate where you and your boyfriend live? Or move down to the basement?

You would likely get higher daily rates by renting out the 3 BR. 

That would help alleviate the 50% of take home income issue.

What do long term rents look like in your area for both units?