General questions, have a room, bath, shower, small kitchen with private entrance and parking, in my home. Currently unfinished.

[Linda3817]

I lost a bit of money starting remodel to a dishonest contractor, and most of what he did was done poorly and needs to be redone or repaired.  Mostly interested in ideas for finishing this area to make it Air B&B friendly, attractive and of course compliant with rules and laws. Having lost money on the start up I am looking for information on home improvement monies, grants, or loans. for this project. This opportunity would allow me to retire and be home full time.

[Pat271]

@Linda3817 

First of all, if I may offer a bit of general advice: Don’t retire unless you are well into hosting your property and understand completely your expenses and occupancy vs. your income. This business is sometimes not as lucrative as it might first appear. There are also lulls (to put it mildly) that occur during recessions, pandemics, etc. during which time your income from short-term rentals will become completely unpredictable. Have one or more backup plans for getting through these lulls.

As far as loans, grants, etc., the Federal government does offer some programs like the 203K loan, which is an FHA purchase or refinance program that wraps your remodeling costs into your mortgage. The last time I got one of these loans was 20 years ago, so not sure if it is still being offered.

Also, you can pursue a “home equity line of credit”, which will allocate monies for home improvement projects with the equity in your home as collateral. The money is lent as you incur the costs, which is nice because you don’t have to make payments on what you haven’t used yet.

Of course you and the property have to go through a qualification process for either of these types of loans.

[Helen3]

Have you carried out your market research to understand your local STR market - what demand is like for the sort of property you want to develop and to identify who you see as your target  guest. 

Have you done your market research to see what you could charge out at and how many days a year you would need to let it out to get the income you need ?

have you put together a profit and loss account for your STR business 

have you checked building regulations with your local government and if there are any actual or planned STR restrictions 

these are the steps you need to take BEFORE you decide if an STR business  is viable .

STR is a volatile business - personally I wouldn't rely on it for retirement income . 

[Linda3817]

No I havent begun this process, getting as much infoas I can to help decide if this is the way to go.  Thanks.

[Lorna170]

@Linda3817  Before spending a dime on this project, make sure that you can have a separate apartment for AirBnB in your home.  Check with your local zoning department and HOA.  You may be able to do either short term or long term rentals.  Second, If you have a mortgage, read the fine print and verify that having an income property does not change your mortgage terms.  Thirdly, talk to your insurance company and find out what your insurance needs are and at what cost.  AirCover is not (IMO) insurance that you should rely on.

Once you have determined that you can have an income property within your property, then you can tackle funding.  @Pat271  has made some good suggestions.