MTR reality. Is something that sounds so simple be so real?

Question

I see a lot of talk on the interwebs to suggest MTR as the new get rich eventually move.  Not as profitable as an STR but easily more profitable as an LTR.  Is there something I am missing here or is the math that simple?  And I know quite a few medical professionals including nurses who are traveling nurses but I have never known any of them to run out and buy rental properties to rent out to colleagues.

Michael Baum · Answer

Hey @Damon Aniton, first things first. There really isn't a thing as MTR. Anything over 30 days is a long term rental with a short lease time and should be treated as such.

You will need to have a real lease and do all the due diligence you would do on a LTR applicant.

MTRs are the new buzzword because people who don't really know much about running a STR keep making videos, posting blogs and articles about how it is all going to hell in a handbasket and you better get out now before you end up dead alongside the road. And hey!, here you can do MTRs now and make a ton of dough and it is super easy. Just sign up for our courses and you will be on your way!

Short stay long term rentals (see I just coined a term, SSLTR) can work just fine if you have it somewhere that it is needed. Near a major university, hospital or maybe a state capitol (rent to visiting legislators and staff).

In my area, a SSLTR isn't much of a thing. We are quite rural about 36 miles downlake from the nearest big town (if 50k people is big). But if you have both a school and major hospital nearby then it could work.

STRs work just fine if you are in the right area (vacation land), have lots of amenities, close to cool stuff and run a tight ship. We are on Lake Coeur d'Alene in north Idaho and we are booking pretty solid for 2023 and have 2 bookings for 2024. Not everyone is doing as well, but those that are on here are doing just fine for the most part.

Just remember it requires all the things you would do for a LTR, just with a shorter lease time. 3 months, 6 months etc.

Nathan Gesner · Answer

@Michael Baum is one of the few on these forums that seems to understand this simple concept. MTR is a made-up term. Anything rented for 30 days or less is a short-term rental; anything over 30 days is a long-term rental. That's how it's defined by the law and city zoning. A MTR is just a long-term rental with a different name so someone can pretend they've come up with something new. It attracts eyes and they can sell books and podcasts. They've always existed as furnished long-term rentals, executive suites, or other names, but they are long-term rentals. You still follow the same landlord-tenant laws, still use the same lease agreement, still follow the same processes.

Do they earn more? Maybe. Keep in mind you have additional costs like furnishings, utilities, WiFi, lawn care, etc. You are also likely to have more vacancies between tenants. When you add that all up, it's probably not earning much more than a traditional long-term rental and its' taking more effort.

Every market is different. You need to research the demand, consider the cost and income, and decide if it's worth trying.

Mike Wood · Answer

@Damon Aniton I see it differently.  In order to you to STR or MTR the unit you dont live in, you would have to furnish it.  Given you're talking about a large 3 bed, I would guess that would cost $5,000-10,000 in upfront cost.  Say you make $1000 more per month after all expenses over a LTR, that means for 5-10 months, your making zero to pay off that furniture.  In our market, I can rent a unit priced right in less than 2 weeks, typically in 1 week.  So vacancy for a LTR is very low (one month or less = 1/12 or 8.33%), but for a MTR I would estimate it would be way higher.  Additionally, your trying to find renters for a 3 bedroom, when traveling professionals are likely to one or two person, not needing a 3 bedroom.

Mike Wood · Answer

@Damon Aniton  Prior to everyone using the MTR buzzword, I knew this concept as corporate housing.  They were furnished apartments for traveling professionals.  I tried it early in my investing career, but found finding a tenant to take way, way too long and vacancy was killing me.  I only had one tenant that didnt even stay for the entire lease term, and after trying again to find another tenant, ended up renting it to a long term tenant as a non-furnished unit.  As an investor from you city, I can say that I doubt you will need tons of interest in the MTR concept.  Add that to the high cost of furnishings that would be required (since the tenants a being charged a premium, they expect nice furnishings), I doubt your break even point is very near term.  NOLA has a very strong rental market for long term rentals and I would stick to that. I also dont think the city council will be STR friendly anytime soon, and I suspect they will get more stringent on STR permits in the future, not less (they definitely are not in my backyard types).

Gerald Pitts · Answer

Check out Noble Crawford.  He has a podcast about this, and a lot of good content.  Also BP just published a book by Zeona McIntyre and Sara Weaver called 30 day stay.  You can google their content too.  When I ordered the book on BP, it came with a webinar, and an analysis tool for MTRs.

John Underwood · Answer

The thing about a 30 day or longer lease is the people doing them are likely on perdium and can afford to pay a higher rate for something less than a year. Plus a landlord would want a higher rate for the more frequent turnover and the uncertainty of not having the house rented for a solid year.

Ryan Moyer · Answer

I think people have pretty well nailed it on the head here.

I don't have a problem with people terming it "MTR".  Even if it's not a legal term it works fine as a distinction of something between STR and traditional true LTR in practice.

I'm not sure why you think there's something you have to be "missing" here or what sounds "too good to be true".  This isn't like the early days of STRs where people are buying a few and getting rich off of it.  MTR doesn't really promise too good to be true returns.  Maybe a little more than LTR, for a bit more work than LTR.

I think once you factor in the cost of furnishing and utilities (both of which would be paid by the tenant in traditional LTR) as well as vacancy (it's typically not nearly as easy to find MTR tenants as a lot of people imply) the returns are probably similar to LTR, maybe a little better.  One nice advantage is you'd have eyes (and cleaners) on the place more often than LTR, where you don't know what kind of disaster you're going to be walking into after a tenant has been in there for years.

So yeah, it's fine.  Just because influencers have jumped on and started pumping it to make a quick buck doesn't mean it's bad.  Perfectly fine strategy with reasonable expectations.  If you're already buying the place you can try it out and let the rest of us know how it goes, as most of us don't really have much hands on experience with it to compare it to STR that we're very versed in.

Bryan S. · Answer

The MTR is an interesting middle ground LTR and STR [obviously]. Conceptually I’m a fan of getting paid a higher rate for the same property. And three major factors are rate guests will pay, occupancy and costs. I think each market will be different and it will simply come down to the math for your market.

In the early 2010’s I was doing MTR and worked well but now shifted to STR.

Bottom line, do the numbers work?

Damon Aniton · Answer

Already halfway through the book

MTR reality. Is something that sounds so simple be so real?

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