Meet Bailey, a thirty something professional with a passion for home renovation and interior design, who transformed a dilapidated barn house on her five-acre property outside of Seattle into an A-frame Airbnb inspired by Scandinavian architecture – using a Figure HELOC and lots of elbow grease.
Q: Bailey, what inspired you to pursue this ADU project and turn it into an Airbnb?
A: In 2021, I purchased a property that was converted and ready to go as an Airbnb rental. I was drawn to the property because of how spacious it was – it covers five acres and has a private pond – but this was during the height of Covid-19, so housing demand was sky high and the market was very competitive. I took a huge leap of faith and put an offer on the property before seeing it.
When I closed on the property and visited it, I was pleasantly surprised, especially when I found that there was also a small, dilapidated barn house on the grounds. The barn house was falling apart, but I instantly saw an opportunity to transform it into a second Airbnb rental. Growing up, my mom and I loved watching HGTV together, and I had always wanted to do a home renovation project on my own. This was an opportunity to take on my first remodeling project, while also helping to generate additional income and expand my Airbnb portfolio.
Q: How did you decide to use a HELOC to help fund the renovation project?
A: I have a full-time job as a product manager and I teach fitness classes on the side, so I am no stranger to a side hustle, and I had my own savings to help with the renovation project. That said, even though I had savings and wanted to DIY many of the renovations, I still needed some additional funding to cover professional help and materials.
When I purchased the property, I got it under the asking price and got a very low, circa 2021-interest rate mortgage, so I didn’t want to do anything that would disrupt that interest rate. My friend, who happens to be the realtor that helped me purchase the home, recommended I consider taking out a HELOC on the property as this would not impact the low rate on my existing mortgage and would allow me to easily and affordably access funds to complete the project.
Q: Had you heard of a HELOC before? What other funding options did you consider?
A: I was familiar with HELOCs as I majored in financial services in college and took a course on real estate. I also considered other options like a private loan, but the interest rates on those loans were very high. Going with a HELOC was a better financial decision for me. I researched a few different HELOC lenders, but Figure offered a seamless, fast process and a great rate.
Q: Can you discuss your experience taking out the HELOC? What other financial tips did you learn along the way?
A: At first, I was nervous that a HELOC could impact my financial status or credit score, but that wasn’t the case at all. Working with Figure was incredibly easy, I got a great rate on the HELOC, and I was able to keep the low rate on my existing mortgage. It was an all-around win.
When I bought the property in 2021, I paid around $410K. I took out the HELOC about a year ago after the property’s value had skyrocketed to over $700K. I was able to access even more cash than I needed; I ultimately tapped about $60K of my home equity.
It’s great that interest paid on a HELOC can be tax deductible when used for home improvements, and I also started my own LLC, called Evergreens and Moss (i.e. my favorite things about Seattle) to make my mortgage interest deductible and to capitalize on other tax benefits. I recommend that others looking to pursue home renovation projects consider doing the same.
Q: Tell us about the home renovation project. How much of the renovations did you do on your own?
A: The original property owner built the barn house back in the 1970s, and it was inspired by the Scandinavian architecture that we see a lot of in the Seattle area as there is a sizable Norwegian and Swedish community. I wanted to preserve as much of the original A-frame design and sloped roof as I could, and I was even able to reuse a lot of the original wood – some of which was actually milled on the property years ago.
When I started the project, it was quite the undertaking. The foundation was crumbling and the deck started to fall off as well, so I used a large chunk of my HELOC to hire professional contractors. They handled a lot of the structural rebuilding including the roof, foundation, electrical and plumbing work.
I invested a lot of my own time (lots of weekends and late nights) and elbow grease to complete this dream project. Among the many projects I handled myself: I did the demo wall construction, insulation, tiling, built-ins, flooring, and the fireplace on my own. I also moved windows so that I could install a library wall, which was the focal point for me as I am an avid reader and wanted to build the perfect reading nook for fellow book lovers.
It was a lot of hard work, and it took me about a year, but I’m very proud of what I accomplished. In fact, the experience has gone so well it inspired me to take on more home renovation projects.
Q: Is the ADU an Airbnb now?
A: Yes! The ADU is now finished and listed on Airbnb alongside the original main cabin. The property is about an hour outside Seattle and is close to a very beautiful and well-known national park, so this can be a little weekend getaway for couples, families or used as separate rentals entirely. I built a firepit between both homes as a central gathering spot for a relaxing evening with friends or for a smores night by the fire with kids.
I also plan to take advantage of the space with my own family. Last Christmas, my mom and I stayed there and cut down our own Christmas tree. It made for the perfect holiday.
Q: What would you tell homeowners that are aspiring to build, remodel and/or finance an ADU?
Taking on a project of this size and scope can be daunting, but these projects can be very rewarding from both a personal and financial perspective. Whether looking to create an additional income stream, increase the value of a property, or to build out an additional space to spend time with loved ones, it’s well worth the investment.
