Guest House Renovation - Before & After

My house is in East Downtown Austin, in the highest average appreciating zip code in Austin. Finding renters is a breeze. Demand is higher than supply, so having an accessory dwelling unit can offset your mortgage and costs quite a bit.

One of the biggest selling points of my house was the detached garage. It had been converted into a small room and two large storage spaces. Electricity was already run and it had a cement slab foundation. While it was a truly depressing, low-ceiling den, I saw additional monthly rental income. 

While my mom, Shanna and I put the finishing touches on the main house. Tony worked on converting the sad little garage unit into a little 1 bedroom with vault ceilings. On top of the cash we put up for the purchase and main house renovation, we took out an 18 month, no interest loan to finish the back house. We did the math and figured that the income generated by the guest house would pretty quickly pay off this loan. The loan decision was somewhat risky because not meeting the 18 month deadline meant paying outrageous interest on the full balance of the loan. Luckily, our gamble paid off, quite literally. I had the loan paid off two months early! 

Tony did a lot to make the guest house into what it is today: 

  • removed the roof and replace it with a new one

  • removed all interior walls and replaced them with our desired floor plan

  • installed a skylight in the ceiling

  • covered the exterior with HardiPlank siding

  • luckily plumbing was already run, but he hooked it up to the new bathroom and kitchen

  • ran new wiring and installed plugs

  • installed new drywall

  • installed windows

Here's what we did in his wake: 

  • taped and floated the drywall

  • installed kitchen cabinets, countertop and a kitchen sink

  • installed a stover and oven

  • built a bathroom vanity and installed the bathroom sink

  • installed wood floors in the kitchen and bathroom

  • sanded, stained and sealed the wood floors and the countertop

  • painted the concrete floors

  • installed window units for AC

  • bought and installed a claw foot tub

  • installed french doors out the back

  • painted the exterior

  • hung a barn door

  • installed a 40 gallon tank hot water heater

Before Guest House Renovation:

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After 5 Months of Part-Time Renovation:

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Numbers

  • Labor by Tony: $10,000

  • Materials: $14,000

  • Many hours of our own labor

 

  • Average Airbnb income: $2,300/month

  • $24,000 no interest loan paid off by November 2017, which was about 16 months after we took out the loan

  • Again, my mortgage payment, taxes and insurance come to $1790/month

The biggest thing I've taken away from this experience is that the more units, the higher the cashflow. Single family homes are much more valuable with an ADU - and even better are duplexes, triplexes and quadplexes. Eventually, I'll start investing in apartment complexes with many units. The more doors, the higher the cash flow!