Renovation/furnishing costs of an STR

[Alex Silang]

So I've heard this can run you a lot - around $30,000 for the average sized home of $400,000 in the area I'm looking at. So that means if my downpayment is $80,000, $30,000 is really going to affect things:

1) Capital raised. I need I need 37.5% more capital

2) If I need to sell in a few years, this capital will largely go *poof*. A new buyer is probably not going to pay the full value of those renovations. Ideally I'd be able to find a buyer that wants to do STR but that's not guaranteed by any means.

3) Cashflow will probably be only $1,000/mo. So back of the napkin, that's almost 3 years of waiting to get the money back. 

I understand that this is just a part of STR investing. Anything else I missed?

[John Underwood]

I would say 30k would be a good amount.

You could spend alot more or substantial less.

You can save some money by buying quality used furniture off Craigslist or FB marketplace. 

[Sarah Kensinger]

To help guesstimate numbers I would be interested to know square footage, number of bed/baths, how much remodeling is needed, info about the outdoor space, and where the property is located. Otherwise, is too hard to know for sure how much a property might cost to prepare for a STR.

[Bruce Woodruff]

We have zero way of knowing what your costs are going to be, until you pick a specific property. Your renovation costs could easily be $100,000. The cost of furnish an average size house could be as low as $5,000, if you are smart and go with high quality used furnishings like John said.

[Alex Silang]

Oh I meant that "this is the reality of owning a STR" post and was hoping people could challenge my initial points and maybe add one or two. Because owning for a few years wouldn't make much sense.

[Andrew Steffens]

I use a very non scientific $20 per foot for furnishing which includes a designer.  It includes everything from TV's to linens to forks and knives.  I understand this can vary by market but this number has served me well.

[Tom Dieringer]

Quote from @John Underwood:

I would say 30k would be a good amount.

You could spend alot more or substantial less.

You can save some money by buying quality used furniture off Craigslist or FB marketplace. 

Hey John,
I'm just wondering if your suggestion about quality used furniture off Craigslist and Facebook Marketplace is predicated on being a local owner?  We plan on being  long distance owners/mgrs and can't imagine findng & hiring someone to rent a truck, drive around and grab furniture on a onesy/twosy basis, particularly within a reasonable timeframe to not delay launch.  Or have you/others been able to accomplish exactly that remotely?  Thx

[John Underwood]

I've not done that remotely, but it could be done.

I have a handyman that gets used appliances all the time and installs them in my rental houses when needed.

It would take some trust or coordination on your part but could save you some substantial money.

I'm sure you could find someone on the next door app that was handy and had a truck to go pickup stuff. Maybe find an estate sale where you could buy a bunch of stuff at once.

Might be worth a trip to your property to save 10k or more.

[Jon Martin]

Impossible to guestimate rehab costs, could vary wildly. $30K should be more than enough for fresh paint and flooring and some other odds and ends, but if you need dry wall, cabinets, countertops, mechanicals etc it could get much pricier. 

Your instincts are correct regarding used furniture, unless you have someone you have rapport and trust with already it will be a major hassle coordinating picking up used furniture. The cost savings will be somewhat negated by what you will spend for their time. 

As for furnishing costs, you are welcome to PM for my Excel shopping list. Instead of SF I have it broken down per room. I have it at around $5K for a quality living and dining setup (sectional, accent chairs, coffee table, tv, rug, dining set for 6). That could vary somewhat in either direction based on guest count. $3K per bedroom, $1700 for kitchen/dining utensils, $300 per bathroom, and another $1000 for miscellaneous (smart lock, modem/router, cameras, board games etc). You could easily be under $18K for a 3 bedroom house, not including set up costs. I can give you some insights on setup as well. This is for mid-range quality and minimal assembly items- what you save in purchase price you will lose in replacement and assembly costs!

[Michael Baum]

Hey @Alex Silang, I am not going to challenge those numbers much. Like the others have said, there is no way to know what a place needs until we actually see it and have the info.

@Tom Dieringer, you can do it remotely if you have someone with boots on the ground you can trust. We did our lake house from 7 hours away but I bought stuff locally, refinished it as needed and we loaded up the van and drove it over.

@Alex Silang, the only way to get around the expenses is to buy a turn key property and even then they usually need something. You can mitigate a lot by buying good used USA made furniture like @John Underwood said.

No, you won't get the bulk of that investment back. Upgrades to the house, improved kitchens, bathrooms and the like will yield a return when you sell of course.

Getting into STRs on the cheap has gone the way of the dinosaurs. You have to plan for everything before you jump in. 

[Garrett Brown]

I'll echo everyone's statements that each place is so different it is hard to give a blanket number. Square feet, number of bedrooms, bathrooms, outdoor space, etc. all are critical. 
I'll cosign @Andrew Steffens  number though and I have ran furnishings either between $15-20 per square foot as a really rough ball park depending on location/style. 

[V.G Jason]

Quote from @Alex Silang:

So I've heard this can run you a lot - around $30,000 for the average sized home of $400,000 in the area I'm looking at. So that means if my downpayment is $80,000, $30,000 is really going to affect things:

1) Capital raised. I need I need 37.5% more capital

2) If I need to sell in a few years, this capital will largely go *poof*. A new buyer is probably not going to pay the full value of those renovations. Ideally I'd be able to find a buyer that wants to do STR but that's not guaranteed by any means.

3) Cashflow will probably be only $1,000/mo. So back of the napkin, that's almost 3 years of waiting to get the money back. 

I understand that this is just a part of STR investing. Anything else I missed?

Yes, you're missing the underlying appreciation of the house, the value of storing money in a physical asset versus an alternative and capex costs. It's almost always worth owning a house in a very good area, very rare it's not worth it.

Making it a STR is just a hospitality play, the underlying value is the asset.

[Nathan M kiefer]

in my experience, if its a "average sized home" i take that as a 3/2 or 4/3, 4/4 etc that number of 30k is very close. 20k low end, 30k high and of course you can get stupid beyond that.

cant comment on the financial return as to much missing info as others have said but if it rings true of 1k per month, potential 3 year return is accurate 

[Todd Goedeke]

@Alex Silang You answered your own question. Based on $110k investment it does not make financial sense from a ConC perspective to invest. $1,000/ mo. Only yields a 11% ConC return.

[John Litz]

First I would never buy a property that wouldn't cash flow as an LTR. That way is you choose to do STR you can always pivot if needed. Often people will do a a dollar amount per square foot that helps them calculate furnishing cost. This is good for getting some rough figures. Only you know what level of furnishing will be you personal niche. Some are rustic while others are luxury. I can tell you nationally average occupancy rates are approx 55%. Obviously this is dependent on your local area, saturation and quality of product. But it is a good starting point to estimate your revenue. For a 3 bed 2 bath my average nightly rate is about $215. But every market will differ. I would do more research on YouTube university to analyze the property and then get familiar with your local area so you can be more confident with your numbers.

[Pat Mulligan]

Quote from @John Underwood:

I would say 30k would be a good amount.

You could spend alot more or substantial less.

You can save some money by buying quality used furniture off Craigslist or FB marketplace. 

We have furnished 3 STRs last year. Budget will depend on the size, specifically # of BRs, # of living spaces. We averaged $10k for our 2 BRs (including kitchen appliances). We used a combination of Wayfair, thrift stores and online second-hand sale sites. Used stuff is much better quality for hard furniture. Cheap but good decor can be found used, too.  Just keep in mind that thrift shopping takes time. Which is more important to you? Time or money? 

btw, dont listed to any "guru" who say you can furnish for a couple thousand- that is a load of bull. 

[Pat Mulligan]

Quote from @John Underwood:

I've not done that remotely, but it could be done.

I have a handyman that gets used appliances all the time and installs them in my rental houses when needed.

It would take some trust or coordination on your part but could save you some substantial money.

I'm sure you could find someone on the next door app that was handy and had a truck to go pickup stuff. Maybe find an estate sale where you could buy a bunch of stuff at once.

Might be worth a trip to your property to save 10k or more.

IDK long distance. Nothing looks as good as the pics. I have picked out all of my own buys
Sometimes I get there and have to pass based on the condition of the piece.  I don't want my STRs to look like grandma's house. That said, you can get a pickup/mover through Task Rabbit. 

[Kumar R.]

@Alex Silang As pretty much everyone has said, additional info about the property itself will be helpful in giving you better advise. Consider checking the local thrift stores as well. You can pick up some nice artwork and decorative stuff on the cheap. 

[Parmesh P.]

Quote from @Alex Silang:

So I've heard this can run you a lot - around $30,000 for the average sized home of $400,000 in the area I'm looking at. So that means if my downpayment is $80,000, $30,000 is really going to affect things:

1) Capital raised. I need I need 37.5% more capital

2) If I need to sell in a few years, this capital will largely go *poof*. A new buyer is probably not going to pay the full value of those renovations. Ideally I'd be able to find a buyer that wants to do STR but that's not guaranteed by any means.

3) Cashflow will probably be only $1,000/mo. So back of the napkin, that's almost 3 years of waiting to get the money back. 

I understand that this is just a part of STR investing. Anything else I missed?

Furnishing a bedroom is very subjective but can be done for under $3K with higher than average materials. Here is a breakdown:

1. Queen bed frame: $400 - $700
2. High-quality mattress: $500 - $9,000
3. Pillows (2-4 per bed): $40 - $120
4. Linens (sheets, duvet, comforter): $150 - $300
5. Blanket: $50 - $75
6. 1 Bedside tables: $40 - $150
7. 1 Lamps/lighting: $40 - $75
8. Art decor (2 pieces): $100 - $275
9. Bathroom towel racks, dispensers and soap racks: $100 - $200
10. Makeup mirror: $20 - $80
11. Hair dryer: $20 - $60
12. 5x7 rug: $75 - $250
13. Small vase with plant: $20 - $50
14. 3-ft decorative tree: $50 - $150
15. Two window curtains (with rods): $80 - $150
16. 55-inch TV: $375 - $500

Total cost per bedroom will range from $2,320 - $3,545