Hey BP Community!
I'd love your opinion on the following question: Should my first investment be a BRRRR or transforming my 1,000 sqft detached garage / workshop into a short term rental unit?
A bit of background. I've been researching this forum, read 4 excellent books from Bigger Pockets, and securing funding to jump into real estate. I live in Jackson, TN and have $100k available. I'd been researching a good property to BRRRR in my area, when my BiggerPockets podcast playlist played an episode on house hacking and later AirBnB.
We have a detached garage / workshop / office unit that my fiance's father had used as an office for his construction business. It's about 1,000 sqft, most of it is finished with drywall and paint. It has two breaker boxes installed, has a 1/2 bath (connected to the septic system), and has water from an on-site well (which would likely need to be connected to the main). I could easily convert this to a 2br 1ba unit, maybe even a 3br (if I create a loft in the attic space). There's also a 1-car awning attached to the side for parking.
There's around 50 properties listed on AirBnB here. I'm not sure what the occupancy rate is, or how to find it for my area (without paying for the data). I'd have to do the math, but it seems at first glance that spending ~$50k to fix up the detached unit as an AirBnB and potentially eliminate my mortgage makes a lot more sense than spending ~$100k on a BRRRR for the first step. It appears to be much lower risk with a good potential to cash flow. Also, we're really preferring STR vs LTR for the unit as it's right next to us, the logic being if we hate our new neighbors they'll be gone soon haha!
The zoning board doesn't have a problem with it, so I've gotten that out of the way. So what're your opinions? TIA!
-Johnathon Chung
