Austin MTR will NOT rent

Austin, Texas
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Austin MTR will NOT rent

Hector Bermudez
New to Real Estate · NH · Member since 2018 · 27 posts · 16 votes

In the summer of 2022 I recently, completely renovated a 3/2 house that was a long time LTR and began listing it as a MTR.  The property is practically all new and is located near North Austin.  I have a PM that had listed the property on VRBO and Furnished Finder for roughly $3200.  The property rented fairly quickly for 3 months from a Home Insurance placement company.  After that, the property has now been vacant for nearly 4 months!  Last week, my PM placed the property on AirBNB and Landing at below comp prices.  It's only been a week since then, but nothing so far.  My PM doesn't understand why it is not renting out.  I am reaching out to the FB community for any input on why it may not be renting and what my PM or I can do to get it rented again.  Thanks in advance for your ideas and considerations.  

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Ryan KellyBusiness Member
Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
3y

@Hector Bermudez the simple answer is the market is getting saturated with STRs and MTRs because most investors haven't been able to get cash flow from long-term rentals. I probably have calls with 3-5 investors a week all interested in doing STR or MTR strategies in Austin. In addition, while the supply is increasing, the demand is shrinking. The recession creates less demand and fewer people are traveling and checking out Austin for business. Be prepared to convert it to a long-term rental or another strategy if you can't find success as an MTR.

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  • Brett Deas
    CO · Member since 2022 · 588 posts · 426 votes
    3y

    First I would not recommend a PM for a mid-term. I spend maybe 30 minutes a month managing mine, it is super easy and you don't have to really learn a lot. Also, My opinion on the MTR market as a whole is negative. It has gotten too much attention lately and everyone who can no longer STR is trying to mid term it when demand isn't there, leading to major saturation in the market and high competitive intensity. Also I don't know the Austin area to well but what is the demand for mid-terms? Any hospitals or medical centers nearby? Is your property and area attractive to digital nomads? Typically the bigger properties (over 2 Bedrooms) don't function as well because travel nurses don't bring their families along, and digital nomads typically don't have families.

    Now I know that was negative so here are some things I do with my units to get them rented, first make sure you are pet friendly. People love pets and if they can't bring them then they can't stay at your place, and it is a huge portion of the market. Another is look at the places around yours and make sure you are doing more than they are, whether that is providing more amenities, better pictures, more furniture even. I would say it takes a while to get traction through Airbnb but we get about 90% of our bookings through there. VRBO is kinda pointless in my professional opinion for mid-term rentals, and furnished finders is so-so. 

    1Reply
  • Eliott Elias
    Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes
    3y

    The rental market is suffering, you are better off putting a long term tenant in place. 

    1Reply
  • Ryan KellyBusiness Member
    Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
    3y

    @Hector Bermudez the simple answer is the market is getting saturated with STRs and MTRs because most investors haven't been able to get cash flow from long-term rentals. I probably have calls with 3-5 investors a week all interested in doing STR or MTR strategies in Austin. In addition, while the supply is increasing, the demand is shrinking. The recession creates less demand and fewer people are traveling and checking out Austin for business. Be prepared to convert it to a long-term rental or another strategy if you can't find success as an MTR.

    [email protected]512-674-5478
    Ryan Kelly Group - Keller Williams5112 Reviews
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  • Celine Crestin
    Real Estate Broker · Austin, TX · Member since 2022 · 89 posts · 93 votes
    3y

    I agree with what Ryan said. There is less demand for it currently and location is critical. Austin is a widespread area and not all areas are suited for MTR or STR.

    Will the property work for you as a LTR? There is still a need for those currently. 

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  • Hector Bermudez
    OP
    New to Real Estate · NH · Member since 2018 · 27 posts · 16 votes
    3y

    Thanks @Brett Deas,@Eliott Elias,@Ryan Kelly,@Celine Crestin for all of your input.  I'm grateful for you taking the time to leave a comment to my post.  I decided to start with a PM that was willing to help with getting it furnished and manage the bookings and cleanings since he was a realtor, lived across the street and managed his own MTR.  I also live out of state and needed the help to initially get it furnished. Having boots on the ground to get me going was beneficial, as well as to handle any tenant issues and cleanings.   My plan was to commit with a PM for a year and then see about possibly manage it myself from afar.   

    As far as the demand for MTR, according to my PM back in the summer of 2022, it was high.  I researched and saw there are a number of large hospitals in Austin, most within 15-20 minutes from my unit.  And Austin appeared to be a hotspot for traveling professionals.  I made the unit pet friendly to make it more appealing for those wanting to travel with pets.  

    I agree with your points about being prepared to convert back to a LTR if I don't get action on it relatively soon.  Fortunately, although I have a small portfolio of properties, my other ones are supporting the Austin vacancy so I am not in a critical situation.  

    A possible downside is that although I didn't pay a tremendous amount to furnish the property, if I convert back to a LTR, is there any demand for furnished LTR's?  Or am I better off selling the furniture and renting it vacant?

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  • Ryan KellyBusiness Member
    Real Estate Broker · Austin, TX · Member since 2018 · 1k+ posts · 1k+ votes
    3y

    One option is to post the unit on the MLS, which most short-term and mid-term rentals are not. They prefer to use Airbnb, VRBO, and FurnishedFinder. A lot of Realtors work with clients moving to town, or sellers who just sold and are waiting for a new home to be built. The MLS may put your unit in front of Realtors, who don't spend time looking at Airbnb and VRBO for clients. I would also make your advertising state the length is flexible for any time longer than a month. Flexibility is key with MTRs. Good luck!

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    Over the past 50 years what has been the success of MTR’s nationally as well as in your market?

    Just because you want it to work doesn’t mean it will.

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  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    3y

    @Hector Bermudez can you post it here so @Conner Olsen and I can look at it?

    [email protected]512-888-9122
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  • Brett Deas
    CO · Member since 2022 · 588 posts · 426 votes
    3y

    A possible downside is that although I didn't pay a tremendous amount to furnish the property, if I convert back to a LTR, is there any demand for furnished LTR's?  Or am I better off selling the furniture and renting it vacant?

    Ya demand across the board for furnished LTRs is pretty low. It's a small demographic that uses them. I would say if you do revert then you are better off selling the furniture.
    2Reply
  • Hector Bermudez
    OP
    New to Real Estate · NH · Member since 2018 · 27 posts · 16 votes
    3y

    Well it’s funny how timing works out, but it looks like we received a one month booking. SMH

    @Jordan Moorhead here is link to the property.

    https://tours.jamesbrucephotog...

    1Reply
  • Robin SimonBusiness Member
    Lender · Austin, TX · Member since 2022 · 5k+ posts · 4k+ votes
    3y

    I would suggest as well being mindful of the seasonality of Austin - the driest months for visitors is probably November-February or pretty much the 4-month window you are talking about.  Starting in March with SXSW through the spring and summer and then the fall with UT Football, ACL, great weather etc are the best months - hopefully whoever is managing your property has a good understanding of how to adjust rents with time of year

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  • Hector Bermudez
    OP
    New to Real Estate · NH · Member since 2018 · 27 posts · 16 votes
    3y

    @Robin Simon  Thanks for your input Robin. 

    I think we were posting at the same time. Haha. But just posted that property looks like it booked. We had lowered the price to get traction. What do you estimate the percentage change increase in rent should be from low to high period?  

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  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    3y

    @Hector Bermudez can you post the airbnb or furnished finder link? I'd like to see the full listing that is one Airbnb, Furnished Finder and VRBO. We get the same rate for every month of the year and stay at around 90-95% occupancy on out monthly rentals. 

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  • Hector Bermudez
    OP
    New to Real Estate · NH · Member since 2018 · 27 posts · 16 votes
    3y

    @Jordan Moorhead Here you go... Thanks for giving it a look

    https://www.airbnb.com/rooms/8...

    https://www.vrbo.com/2904729?u...

    https://www.furnishedfinder.co...

    0Reply
  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    3y
    Quote from @Hector Bermudez:

    @Jordan Moorhead Here you go... Thanks for giving it a look

    https://www.airbnb.com/rooms/8...

    https://www.vrbo.com/2904729?u...

    https://www.furnishedfinder.co...


     Your listing is great, the property is just priced too high. When I am 6 weeks out every week it doesn’t book I drop the price 1%. The vacancy will kill you. Just like everyone said the supply is increasing and demand decreasing and it’s slower months right now so we have to be more price sensitive than we used to.

    Also look up Austin Furnished Apartments FB groups and post in there. I post it when I’m 2-3 weeks out in those groups.

    2Reply
  • Hector Bermudez
    OP
    New to Real Estate · NH · Member since 2018 · 27 posts · 16 votes
    3y

    @Conner Olsen Thanks for the feedback. That is good, positive actions I can implement. And I hadn’t considered the seasonality demand fluctuations. Appreciate your time and input!  

    1Reply
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    3y

    @Hector Bermudez I would agree with @Conner Olsen. If you aren't booked you're losing 100% of revenue. You need to get some bookings and reviews before you raise the price back up too.

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  • Sarah WeaverPro Member
    Rental Property Investor · KC, MO · Member since 2015 · 38 posts · 50 votes
    3y

    Hi Hector! I agree with the other points that have been brought up: adjust pricing to match the current demand, look at your competition, analyze what amenities you can offer, try posting the listing on new platforms...lots of great ideas. 

    Austin is a very saturated rental market, so it makes sense that bookings are drying up a bit during the slow season. 

    From an Airbnb listing perspective, I would change your main photo to one of the interior photos. The inside of the home is bright, clean, and colorful, and it might stand out to potential tenants more than the photo of the exterior home. Also, changing the photos is said to boost visibility with Airbnb.

    Best of luck! 

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  • Hector Bermudez
    OP
    New to Real Estate · NH · Member since 2018 · 27 posts · 16 votes
    3y

    @Sarah Weaver GREAT advice on the photo change. The interior is where most of the time will be spent so it totally makes sense. I also heard making edits, changes the algorithm to increase visibility.  Thanks so much!!

    0Reply
  • Michael Win
    Austin, TX · Member since 2015 · 61 posts · 21 votes
    3y

    Hector,


    I have 4 doors all 2/2 near you.  Smaller, less parking, worse quality interiors and I can't figure out why your place doesnt rent.  2 have had 95% and 2 85% occupancy since I opened them up a yr ago.  My rate is 90 for 2 and 105 for the other 2 so about your price range.

    Good luck and I think it will rent.  MTR is great.  I get 2x typical rent and renters keep the place so clean when they leave.

    0Reply
  • Hector Bermudez
    OP
    New to Real Estate · NH · Member since 2018 · 27 posts · 16 votes
    3y
    @Michael Win

    We made some changes to the minimum length of stay from 90 to 30 days, and listed on Airbnb. Since then we received a one month booking on Airbnb and currently a 75 day booking on FF. The one month booking came with some drama, that’s a whole other story. During that booking we received a 90 day booking on FF that ultimately backed out, but we were able to get the 75 day booking shortly thereafter. Things seem to be booking up a lot easier now. 

    Quote from @Michael Win
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  • Michael Win
    Austin, TX · Member since 2015 · 61 posts · 21 votes
    3y

    Makes sense.  Your 90 dys is what likely caused the issues

    0Reply
  • Ryan Leake
    Property Manager · Austin, TX · Member since 2021 · 88 posts · 72 votes
    3y
    Quote from @Michael Win:

    Makes sense.  Your 90 dys is what likely caused the issues

    Congrats on all your success - 85%+ occupancy for MTR is amazing! Could you send the listing for your MTR as well? 

    0Reply
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