Is it a bad idea to do Airbnb while building DADU in backyard?

Question

I bought SFH in West seattle where I am flipping the SFH and also building a DADU in the backyard. My flip is almost done but DADU permits will come sometime in February/March 2026. My initial plan was to sell SFH by Oct and then build DADU as planned in 2026. However since we are approaching holidays(slow market) and my separate plan to acquire a different Airbnb property failed so I am thinking about pivoting to make this house an active STR primarily to take tax benefits.

My question is if I start building DADU with the main house operating as STR, will this seriously impact guest reviews. Does it really matter if I sell the property soon? The other option is to hold DADU construction until I sell the main house so that airbnb guests are not impacted. Which option is better?

Mike Grudzien · Answer

Get a good CPA, and decide on your goals.  It sounds like you are juggling balls in multiple directions...

Filippo Seracini · Answer

I guess a lot will depend on how you will be able to separate the two properties (eg a fence, wall).
granted, if you start construction at 6 am, your reviews won't be kind to you 😄
Another thing to consider is that Seattle is not really a touristic destination in the rainy/dark months (I live here too) so you might not even recover your investment to setup the airbnb depending how soon you'd sell it.
To that, it's important to keep in mind that airbnbs are becoming a lot more competitive. It's not 2021 anymore where you could just throw a mattress on the floor and you would be booked at 100%.
To have a performing Airbnb, you need to easily invest $30-60k between furniture, designer fees etc. without even considering hot tub or other big amenities. You might be better off trying with an MTR strategy as those tend to require lower setup costs.

Ashish Acharya · Answer

This is a good question and a common scenario for investors juggling flips, STRs, and additional units.

From the guest experience perspective, I suggest being upfront with guests about the construction, mentioning it when they book or in your listing, it can go a long way in managing expectations and minimizing negative reviews. Some guests may not mind minor disruptions if they know in advance.

From a tax perspective, turning the main house into a short-term rental before selling could be a good move, it allows you to claim bonus depreciation and other STR deductions if you materially participate. Even a few months of operation can create opportunities for big write-offs that offset other income.

If you’re mainly doing this for the tax benefits and plan to sell soon, it’s worth starting the STR now and managing the timing carefully. If you’d rather keep reviews clean for a higher sale price, you can delay the DADU build, but from a tax angle, operating as an STR before year-end could make the bigger difference. I would consult with your CPA to see how incomes interplay and plan ahead first though. Happy to connect.

Andrew Street · Answer

If you plan to sell soon, I’d hold off on DADU construction until after the sale — active construction can turn off guests and hurt reviews. However, if you’re leaning toward keeping the property longer and using the STR for tax benefits, you can still move forward. Just make sure to clearly disclose the construction timeline in your listing and offer a small discount. Ultimately, it depends on whether your main goal is short-term income and tax advantages or a clean, quick sale.

Andrew Steffens · Answer

It sounds like a lot of work if you are only planning on a short hold.  I think you need to make a decision on short term sale or long term hold.  If you decide on long term hold then pursue the cost seg.  In regards to the construction, you may better off with a discounted mid term tenant during that time.  There are always people who will take some inconvenience for a good deal on rent, then pivot back to STR once construction and their lease ends.

John Underwood · Answer

Are you planning on furnishing a whole house just to get some tax benefits and then selling the house next year?

Denise Supplee · Answer

Hi @Gourav Saha nice to meet you here on BP. If your main goal is to sell soon and maximize resale value, it’s usually better to avoid construction while guests are staying there. Noise and disruption can hurt reviews, which can make the property look less attractive to buyers. Waiting to start the DADU until you’re ready to sell the main house keeps the listing clean and guest feedback positive.

If you decide to hold the property for tax advantages and short-term rental income, you can start hosting now, build up good reviews for a few months, and then pause the listing during construction. Being upfront in your listing about upcoming improvements can help manage expectations.

Filippo Seracini · Answer

cost segregation only works if you keep the property. If you sell it right away, you zero out what you saved. I would talk with a CPA first

Is it a bad idea to do Airbnb while building DADU in backyard?

Most Popular Reply