Medium Term Rentals - Next Big Thing?
Robin SimonBusiness Member
Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
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Medium Term Rentals - Next Big Thing?
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Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
4yIt's a great investment strategy and is less work than traditional STR. As Bruce said, there's a significantly smaller market. That being said, the demand far outweighs supply. I'm booked 90%+ with MTR.
82 Replies
- Cambridge, MA · Member since 2015 · 651 posts · 736 votes4y
Airbnb charges the host 3% but also charges the guest and I think it might be as high as 14%. If a guest is willing to pay that kind of service fee, I'd prefer they pay me!
I recommend requiring the signing of a non-renewal fixed date lease. That way you can begin to advertise for the next tenant as soon as a lease is signed.
Keep in mind that the tenants who refuse to vacate generally can't afford the higher prices that fully furnished medium term rentals are charging, so eviction laws aren't likely to be an issue.
- Member since 2022 · 49 posts · 46 votes4y
I think what you're seeing is that there are cities for whom "a year" is not a desirable lease length and a market popping up for that.
Summer vacation rentals: if you want it for the summer, a medium term 3 month lease, gives you a summer vacation. You don't want to then sublet it for the year. The owner might be able to rent it for 80% of the yearly price for the summer, then rent the other 9 months (75% of the year) for another 80%, and make 160% of the LTR.
College towns, particularly urban ones like Boston - students want a 9 month lease. Locking them in for 12 months just means they are paying for months they don't want, when you could rent to someone else. Professors for quarterly.
Legally, it's a long term rental. But marketing wise, if I'm in town for some period of time (semester, school year, summer), I don't want to be responsible for subletting when I leave. The ability to pay more for a shorter lease makes sense. If you use that as your business model, "medium term rental" makes sense.
I mean, nobody used the term LTR until STR became a thing. You just had rental units. Now LTR = 1 year and STR = < 28 days. The idea that you can do a lease between 29 and 364 days now has a name, MTR.
It makes plenty of sense in cities that have a highly seasonal market. Those are vacation towns and college towns.
- Rental Property Investor · Austin TX · Member since 2019 · 20 posts · 6 votes4y
Quote from @Carolyn Fuller:
Airbnb charges the host 3% but also charges the guest and I think it might be as high as 14%. If a guest is willing to pay that kind of service fee, I'd prefer they pay me!
I recommend requiring the signing of a non-renewal fixed date lease. That way you can begin to advertise for the next tenant as soon as a lease is signed.
Keep in mind that the tenants who refuse to vacate generally can't afford the higher prices that fully furnished medium term rentals are charging, so eviction laws aren't likely to be an issue.
Thanks for the feedback. I'm new to real estate investing in general so I'm trying to wrap my head around everything.
The way I understand it (regardless of rental length), if I find tenants through a website like FurnishedFinder or social media, I need to make sure they are getting vetted/background checked and have the PM execute some sort of written lease agreement with them. Because there is no booking contract/protection through those websites.
For STR rentals through Airbnb, the PM does not typically execute a lease agreement because that is all handled through the Airbnb booking contract and there is no background check. I've never signed anything when renting an Airbnb personally but I've also never rented for more than 30 days.
Is that how y'all are handling MTR through Airbnb as well or are you having them sign lease agreements too?
I'm just wondering because for the PM it would be more work to have to do new tenant screening and leases every few months and they wouldn't have that workload with a STR or LTR.
- Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes4y
Quote from @Laura R.:
Quote from @Carolyn Fuller:
Airbnb charges the host 3% but also charges the guest and I think it might be as high as 14%. If a guest is willing to pay that kind of service fee, I'd prefer they pay me!
I recommend requiring the signing of a non-renewal fixed date lease. That way you can begin to advertise for the next tenant as soon as a lease is signed.
Keep in mind that the tenants who refuse to vacate generally can't afford the higher prices that fully furnished medium term rentals are charging, so eviction laws aren't likely to be an issue.
Thanks for the feedback. I'm new to real estate investing in general so I'm trying to wrap my head around everything.
The way I understand it (regardless of rental length), if I find tenants through a website like FurnishedFinder or social media, I need to make sure they are getting vetted/background checked and have the PM execute some sort of written lease agreement with them. Because there is no booking contract/protection through those websites.
For STR rentals through Airbnb, the PM does not typically execute a lease agreement because that is all handled through the Airbnb booking contract and there is no background check. I've never signed anything when renting an Airbnb personally but I've also never rented for more than 30 days.
Is that how y'all are handling MTR through Airbnb as well or are you having them sign lease agreements too?
I'm just wondering because for the PM it would be more work to have to do new tenant screening and leases every few months and they wouldn't have that workload with a STR or LTR.
Personally I do not have Airbnb tenants sign a lease, but I have heard that other MTR hosts do have the tenants sign an extra lease. I personally do not do any tenant screening for tenants on Airbnb.
- Cambridge, MA · Member since 2015 · 651 posts · 736 votes4y
@Laura R. Airbnb handles 30+ nights the same way they handle 1 night. There is nothing additional a guest signs. I think there might have been one of my MTR tenants that actually booked via an STR platform with no lease. Most who have reached out to me via an STR platform, I've directed to Sabbatical Homes or the University off-campus housing web sites to avoid the STR fees. Then I go through a standard rental routine, application, reference checks, interview, fixed period non-renewable lease, last month rent, security deposit, etc.
Personally, I do not use a PM. I do a better job marketing and managing my two rentals than a PM would do. I know because I have friends who use a PM and they don't do nearly as well as I do.
- 4yColleen F.Pro MemberInvestor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
@Laura R. Leases if they come through FF. A M2M lease is fine and you can do it electronically. Your real issue with medium term is turnover and requests to see. That might be very different in frequency for a PM. Have a video tour. Try a coded lock because you will need to include utilities and internet in a MTR, a coded lock is an easy ad and will simplify showing. Make sure you have demand.
- Rental Property Investor · Austin TX · Member since 2019 · 20 posts · 6 votes4y
@Carolyn Fuller I live out of state from the property and it is my first investment experience, that is why I am using a PM
@Colleen F. thanks for these tips
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