Longer-term STRs (28+ days)

14 Replies

Is anyone doing STRs exclusively for 28+ days?

I have an STR in Mesa, AZ, and got a longer-term tenant from January through February who is paying me close to $6k per month. This is about $1,500 more than I get with the normal nightly rentals. I actually had another tenant from March to June at about $5,500 per month, but I allowed them to cancel due to a terrible family tragedy that changed their plans.

Currently, I've restricted my rentals to be 28+ days to see if I can consistently get longer-term renters. It's a fairly decent home in an average neighborhood, but nothing special. I think I'm hoping to prove that those two bookings weren't some fluke (although one was cancelled). 

Is anyone else doing 28+ days in a "normal" suburban neighborhood as an STR strategy?

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Originally posted by @Bruce Woodruff:

Don't do it. You're opening yourself up to the whole 'tenant' thing. Do some searches on here......

Do you want to do STRs or not? Seems like you don't.......?

I mean, we've been doing the traditional STR strategy for the last few months and it's going well. It's just the cash flow is better and effort is lower with the 28+ day rentals.

You did remind me though, I need to look into the "tenant" issues more. I certainly don't want to get into evictions and that type of thing.

@Adam Arkfeld As an Arizona Property Manager I only manage rentals that are a minimum of 30-day rentals. One reason is that less than 30 days starts to fall under the Taxation Rate of Hotel/Motel Short Term Lodging. Plenty of people in the shorter term business, it's just not our expertise.

Everything has its pros and cons, I find that the turnover and vacancies in many short-term rentals kill the yearly return. Many have great short-term returns but some vacancies in the summer can eat that up. Some short terms do great if it's in the right area of the city, Old Town Scottsdale, etc does really well, San Tan Valley not so much.

We have also done well with furnished rentals in 30 days or longer buckets, the returns can be great.

Happy to answer questions or be a resource for you.

I actually think STR is the way our society is going. People like being mobile, to be able to pick up and move, not own anything, not be tied down to one place, etc. I don't think it's smart, but that's beside the point.

I think you’re ahead of the curve if you start implementing assets that accommodate that lifestyle. I have one AirBnB that specifically targets traveling nurses for months at a time. Sure you might have some hurdles, obstacles to overcome, but just be prepared for them and implement ways to overcome them. Great business owners are great problem solvers, so be a problem solver.

Originally posted by @Adam Arkfeld:
I mean, we've been doing the traditional STR strategy for the last few months and it's going well. It's just the cash flow is better and effort is lower with the 28+ day rentals. 

So you mean because you have to clean a few more times a month, you'd take the risk of taking on (essentially) tenants? That would scare the heck out of me. I've found that even when I get the 2-3 week guests, they tend to be more fussy and picky...because they feel like it's their 'home' .....I prefer 3-7 night stays.....

@Adam Arkfeld The generally accepted term for rentals between 30-180 days is Medium Term Rental (MTR).  By definition...no longer short-term.

States vary based on when tenants have rights.  Basically, you just need them to sign an actual lease for stays around 30 days or more, depending on the state.

The most common application for MTRs in this forum would be traveling healthcare workers (generally ~3 months). The fact that you are making more as a MTR than a STR is odd to me and makes me question if your STR pricing is appropriate. STR should pay more than MTR...all things equal.

Have you tried a pricing algorithm company to set your rates? Beyond Pricing, Wheelhouse, or Pricelabs? You might discover that STR could pay more.

If you can get some of the "winter visitors" to do a 30+ day rental that could be good, but that only covers you for the winter and location really matters as well as accessibility on the house. Then you could go shorter term in the summer possibly. I've also seen the 30+ day rentals for travel nurses. 

@Adam Arkfeld we shifted our nightly furnished rental to a monthly furnished. We do full credit screening, so we are not afraid of being stuck with a tenant that has tenant rights. If you are booking through STR platforms and not screening, that could be risky. Basically anyone with a credit card could end up in your property.

What I find confusing is why your monthly rate is higher than your nightly rate. That indicates to me that you were not charging enough on a nightly basis. Also be aware in AZ that time of year will greatly affect demand. That could be why you are seeing higher rates. I have a STR guest coming from Arizona, staying June - September. They are escaping the heat and visiting family.

We also rent for 2 day minimum between long term stays. That way if we have 2-3 weeks before long term stays, we can get income. To avoid cancellations we have a $500 non refundable deposit. 

There is nothing wrong with your strategy. Just screen properly and you are fine.

Originally posted by @Alex S.:

The fact that you are making more as a MTR than a STR is odd to me and makes me question if your STR pricing is appropriate. STR should pay more than MTR...all things equal.

Good point! Absolutely a STR should make at least double what a MTR brings in........

Originally posted by @Bruce Woodruff:
Originally posted by @Adam Arkfeld:
I mean, we've been doing the traditional STR strategy for the last few months and it's going well. It's just the cash flow is better and effort is lower with the 28+ day rentals. 

So you mean because you have to clean a few more times a month, you'd take the risk of taking on (essentially) tenants? That would scare the heck out of me. I've found that even when I get the 2-3 week guests, they tend to be more fussy and picky...because they feel like it's their 'home' .....I prefer 3-7 night stays.....

Bruce, thank you for your feedback. Noted that you don't think longer-term renters are a good strategy. 

Originally posted by @Joe Splitrock:

@Adam Arkfeld we shifted our nightly furnished rental to a monthly furnished. We do full credit screening, so we are not afraid of being stuck with a tenant that has tenant rights. If you are booking through STR platforms and not screening, that could be risky. Basically anyone with a credit card could end up in your property.

What I find confusing is why your monthly rate is higher than your nightly rate. That indicates to me that you were not charging enough on a nightly basis. Also be aware in AZ that time of year will greatly affect demand. That could be why you are seeing higher rates. I have a STR guest coming from Arizona, staying June - September. They are escaping the heat and visiting family.

We also rent for 2 day minimum between long term stays. That way if we have 2-3 weeks before long term stays, we can get income. To avoid cancellations we have a $500 non refundable deposit. 

There is nothing wrong with your strategy. Just screen properly and you are fine.

 Thanks for the feedback Joe. That's a good question about the nightly rate vs the monthly rate. We charge around $175 per night. The house is a 3 bedroom in an average, suburban neighborhood. Nothing super fancy about the location, although the house is nice. We have been generating about $4,000 per month with the nightly rate (not including cleaning fees). With the long-term rentals, it's been closer to $5,500. The house is about 80% occupied on the nightly, so maybe I can increase rates a bit. I've only had it active for 3 months so still figuring out the pricing. 

Originally posted by @Adam Arkfeld:
Originally posted by @Joe Splitrock:

@Adam Arkfeld we shifted our nightly furnished rental to a monthly furnished. We do full credit screening, so we are not afraid of being stuck with a tenant that has tenant rights. If you are booking through STR platforms and not screening, that could be risky. Basically anyone with a credit card could end up in your property.

What I find confusing is why your monthly rate is higher than your nightly rate. That indicates to me that you were not charging enough on a nightly basis. Also be aware in AZ that time of year will greatly affect demand. That could be why you are seeing higher rates. I have a STR guest coming from Arizona, staying June - September. They are escaping the heat and visiting family.

We also rent for 2 day minimum between long term stays. That way if we have 2-3 weeks before long term stays, we can get income. To avoid cancellations we have a $500 non refundable deposit. 

There is nothing wrong with your strategy. Just screen properly and you are fine.

 Thanks for the feedback Joe. That's a good question about the nightly rate vs the monthly rate. We charge around $175 per night. The house is a 3 bedroom in an average, suburban neighborhood. Nothing super fancy about the location, although the house is nice. We have been generating about $4,000 per month with the nightly rate (not including cleaning fees). With the long-term rentals, it's been closer to $5,500. The house is about 80% occupied on the nightly, so maybe I can increase rates a bit. I've only had it active for 3 months so still figuring out the pricing. 

 I think you will find all things being equal that nightly rate in a given month should yield more than monthly. I am assuming AZ is more popular for travelers in January - April than it is August - November. I can say that just based on people I know who travel there and when they travel there. Usually to escape the cold in January - April. Most people don't want to go to AZ in August. I am just saying this from the perspective of someone living in a cooler climate, who has traveled to AZ and has friends that vacation there. 

Pricing is a fine balance, but we definitely started out low when we first rented our STR. That is fine, because it gets bookings and reviews. Most markets are seasonal on pricing, so it is just a matter of understanding the pricing pattern.

It's not all doom and gloom if they stay more than 30 days.  I had a group of guys stay in a place for about 6 months.  They were the first people to rent the house after we bought it.  The gross rent paid in 6 months covered the purchase price for the house.  Then they did the downward spiral with addiction and gambling and didn't pay rent.  I had the utilities disconnected.  They reconnected the utilities.  Then the police were involved, and they moved out.

Here's how they reconnected the electric.  That box is where the electric meter goes.