Rookie Episode 232 Medium Term Rentals- Let's Discuss!

[Alicia Marks]

This Rookie Episode 232 brought lots of creative strategies for creating cashflow. The medium term rental is quickly becoming a solid option for landlords for a number of reasons. @Tony Robinson, @Ashley Kehr, @Zeona McIntyre, and @Sarah Weaver get straight to the ins and outs of managing this asset class.

Are you currently doing medium term rentals? Was it designed that way from the start, or were you forced to pivot? What instigated the change? Feel free to compare and contrast! Did you have any followup questions? Haven't read 30 day Stay? Purchase it HERE (Black Friday special!)

Let's get talking!

[Afoma Okwudiafor]

I got into MTR not necessarily by choice. In our first house hack, we had a third floor space which was completely separate from our unit that we planned to use when family and friends were around (so couldn't rent it long term). We decided to rent it out on Airbnb but the city didn't allow STRs. So we had to list it for 30+ days. We made more from this space than we did with our 2 bedroom unit that we were renting long term. The work wasn't much as most of the guests stayed a month or two. Since then, MTRs have become our preferred strategy

[Bonnie Low]

As someone who has worked remotely for more than a decade, the medium term rental niche has always just made sense to me. I stopped using hotels for vacationing shortly after STRs became "a thing" and so it just seemed like a natural extension of that to search for furnished rentals for remote work as well. We have also been real estate investors since 2017 and have done a variety of things in the single family space: flips, BRRRRs, LTRs, ADUs and even some land deals. We just launched our first furnished rental as an MTR and it's actually a combination of multiple strategies: BRRRR>ADU>MTR. It's the perfect strategy for this space. Market rent as an unfurnished long term rental would be $800-$900/month. We're getting $1300/month with a minimum 30-day stay and it's getting rented, on average, for 3-month increments. So we were able to provide a value add to our portfolio with this strategy. We love that it gets far, far less wear and tear than a long term rental and has less upkeep and management than a short term rental would. Also, the city where it is located is contemplating a moratorium on STRs, but there are no restrictions on 30+ day stays. Our area has strong demand for longer stays from travel medical professionals, digital nomads and lots of folks relocating to this area who are having difficulty finding housing but can't afford the price of STRs, so it's also filling a need. And, lastly, we intend to buy an STR, but this is giving us a chance to develop our systems and processes before we jump into the higher stakes STR market.

[Nathan Gesner]

Quote from @Alicia Marks:

I'm the "Negative Nelly" that hopes "medium-term rental" dies a horrible death. I see it creating confusion regularly.

Renting anything for more than 30 days is a long-term rental. Furnishing and including utilities doesn't change anything. It's still covered by the same laws, requires the same lease, marketed in the same places, etc. They've been referred to as "executive suites" or "month-to-month rentals" for decades. The only new aspect is that people are creating websites specifically designed for month-to-month renters, but they are just as likely to miss out on all the month-to-month renters looking on the long-term rental sites like Zillow, Apartments.com, Zumper, realtor.com, and dozens of others.

Rant over. Happy Thanksgiving, all! 

[Jon Martin]

Quote from @Nathan Gesner:

Quote from @Alicia Marks:

I'm the "Negative Nelly" that hopes "medium-term rental" dies a horrible death. I see it creating confusion regularly.

Renting anything for more than 30 days is a long-term rental. Furnishing and including utilities doesn't change anything. It's still covered by the same laws, requires the same lease, marketed in the same places, etc. They've been referred to as "executive suites" or "month-to-month rentals" for decades. The only new aspect is that people are creating websites specifically designed for month-to-month renters, but they are just as likely to miss out on all the month-to-month renters looking on the long-term rental sites like Zillow, Apartments.com, Zumper, realtor.com, and dozens of others.

Rant over. Happy Thanksgiving, all! 

Legally they are the same but they serve very different markets and needs. People want/need temporary furnished housing for all kinds of reasons, and they are willing to pay a monthly premium for the flexibility and ease of move in/out. 

Missing out on traditional LTR tenants is the whole point because those tenants usually have their own furniture, TV, wares etc and are looking for the 1+ year lease and do no want to rent your furniture in addition to the home. 

[Heather Gates]

I have a house under contract right now for an MTR strategy. From my understanding I will be the first to have one available in my area. I am definitely looking forward to the challenge but also being conservative and running my numbers as if it's going to be a LTR. Absolutely in love with this strategy. 

[Zeona McIntyre]

@Heather Gates if you are the first in your town, I highly recommend leaning into building relationships to win contracts. Call the hospitals (even 30 mins out), universities, any business complexes, large construction companies, etc. Even while you are undercontract you can start building your rolodex. 

[Heather Gates]

Quote from @Zeona McIntyre:

@Heather Gates if you are the first in your town, I highly recommend leaning into building relationships to win contracts. Call the hospitals (even 30 mins out), universities, any business complexes, large construction companies, etc. Even while you are undercontract you can start building your rolodex. 

 Great idea!! Thank you so much! I have one contact but can't even tell you why I didn't think to do that. I so appreciate your time. 

[Dale Bertrand]

Any advice as to where the MTR strategy works best? It sounds to me like areas near big cities, hospitals, universities, etc. 

[Mike Dymski]

I enjoyed the podcast...very knowledgeable and well spoken...and meeting a huge need in the marketplace and matching the way people now live and work.  @Zeona McIntyre great stuff. I am building a hybrid apartment/hotel that will have short, medium, and long term guests/residents...located in the shopping and entertainment area with pool, gym, laundry, and outdoor courtyard and kitchen on site. No leases necessary, no squatter issues, need a valid credit card to book, and no zoning or neighborhood issues. Modern, flexible housing with smart TVs and automated marketing, booking, check in/out, locks, and communication...with resident manager living on site and office open during business hours for convenience and added service. MTR (and STR) at scale.

[Zeona McIntyre]

@Mike Dymski I love the concept. This sounds like a solid idea to syndicate. If you have a proven concept, I can bring you investors. 

[Alicia Marks]

Quote from @Afoma Okwudiafor:

I got into MTR not necessarily by choice. In our first house hack, we had a third floor space which was completely separate from our unit that we planned to use when family and friends were around (so couldn't rent it long term). We decided to rent it out on Airbnb but the city didn't allow STRs. So we had to list it for 30+ days. We made more from this space than we did with our 2 bedroom unit that we were renting long term. The work wasn't much as most of the guests stayed a month or two. Since then, MTRs have become our preferred strategy

 I am considering this option for the same reasons.

[Alicia Marks]

Quote from @Nathan Gesner:

Quote from @Alicia Marks:

I'm the "Negative Nelly" that hopes "medium-term rental" dies a horrible death. I see it creating confusion regularly.

Renting anything for more than 30 days is a long-term rental. Furnishing and including utilities doesn't change anything. It's still covered by the same laws, requires the same lease, marketed in the same places, etc. They've been referred to as "executive suites" or "month-to-month rentals" for decades. The only new aspect is that people are creating websites specifically designed for month-to-month renters, but they are just as likely to miss out on all the month-to-month renters looking on the long-term rental sites like Zillow, Apartments.com, Zumper, realtor.com, and dozens of others.

Rant over. Happy Thanksgiving, all! 

I wonder how often squatters use MTR as a loophole. As soon as they receive mail in some states, it's considered their permanent residence. Blame it on my bingewatching of "World's Worst Roommates"!

[Alicia Marks]

Quote from @Dale Bertrand:

Any advice as to where the MTR strategy works best? It sounds to me like areas near big cities, hospitals, universities, etc. 

 There are obvious advantages to larger cities and hospitals, but I am considering turning one of my units to MTR because we have a lot of road construction happening in the area. My 1BR is great for supervisors coming onsite for their portion of the project. I am also looking at converting the 3br to MTR and pushing it out to local builders as a solution for their new owners. People are more concerned with selling before closing now, so offering a temporary option that the builder can promote gives them peace of mind that the buyer can close.

[Jewel B.]

Quote from @Zeona McIntyre:

@Heather Gates if you are the first in your town, I highly recommend leaning into building relationships to win contracts. Call the hospitals (even 30 mins out), universities, any business complexes, large construction companies, etc. Even while you are undercontract you can start building your rolodex. 

 Who exactly do you ask to speak to and what do you say or ask?

[Zeona McIntyre]

@Jewel B. check out Jesse Vasquez on youtube, he's got all sorts of how to videos on building these relationships and even a course!

[Jewel B.]

Quote from @Zeona McIntyre:

@Jewel B. check out Jesse Vasquez on youtube, he's got all sorts of how to videos on building these relationships and even a course!

 Thank you, I will do that. I'm eagerly awaiting the arrival of you and Sarah's new book in the mail as well :)