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Torry McFall
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Converting LTR to MTR: Exceeding 5 miles from Hospitals

Torry McFall
Posted Jan 18 2023, 08:08

I have several SFH rentals in the nicer area of Albuquerque. I have been considering converting them to MTR. Generally, I'm reading that MTR should be within five miles of a hospital or two, as traveling nurses represent the largest swath of MTR renters. What do those of you with experience think? I'm 9 miles from the hospitals, albeit as straight shot on the interstate. I also have three and four bedroom LTRs. I also have three and four-bedroom SFHs and I'm reading one and two-bedroom condos/townhomes/SFHs are better. So I suppose I could convert one of my three-bedrooms to a combo STR/MTR, list it everywhere and see what happens or I could buy something near the hospitals and run the experiment there. Last question: Does it make sense to over-improve the MTR's? I have flipped many higher-end homes. It looks like it might be worth it to renovate small MTRs with all the bells and whistles. Thanks for advice!

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Brett Deas
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Brett Deas
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Replied Jan 18 2023, 09:15

I am not sure about the 5 mile mark, here in CO it is just 30 minutes away if they are 'on call'. I would ask some local nurses on what the deal is there and some other investors as well. Obviously the closer they are the better they will do because no one loves commuting. 

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Torry McFall
Replied Jan 18 2023, 11:33

I wonder if they care about their surroundings. Hospital areas aren't always surrounded by the nicest surrounding residential areas. That's true here. Maybe that doesn't matter to traveling nurses. Maybe they just want to get off their shift and be in a bed as quickly as possible. I don't know the nature of the tenant yet. 

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Mel Adams
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Mel Adams
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Replied Jan 18 2023, 16:37
Quote from @Torry McFall:

I wonder if they care about their surroundings. Hospital areas aren't always surrounded by the nicest surrounding residential areas. That's true here. Maybe that doesn't matter to traveling nurses. Maybe they just want to get off their shift and be in a bed as quickly as possible. I don't know the nature of the tenant yet. 

Travel nurses are predominantly women who often take assignments traveling alone, so yes, safety is always a consideration and you should aim for A or B neighborhoods. You need to find a mix of a good neighborhood and close to hospitals.

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Replied Jan 18 2023, 18:41

I'm looking at the MTR market too and I've heard that traveling nurses travel by themselves or with another. So we were going to turn 3 or 4-bed LTRs into MTRs for them, but I've heard they don't like sharing rooms with strangers (as roommates in a single SFH. Are others seeing the same? For safety reasons, is it true that traveling nurses don't like to share a SFH with strangers (in separate bedrooms but shared kitchen, dining, etc)?

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Allen Duan
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Allen Duan
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Replied Jan 19 2023, 14:39

There was a good post recently about the most important factors travel nurses look for. Check that out and it should be very insightful. There's a key distinction between travel nurses who want the most affordable housing vs those who want a nice experience in a new city.

The drive time matters more than distance.  Here in LA, it seems travel nurses want to be less than 20 minutes from work. Two bedrooms and smaller definitely have more demand, but larger MTRs cater to families who need furnished housing better. 

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Nicole Heasley Beitenman
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Nicole Heasley Beitenman
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Replied Jan 20 2023, 07:31

I wouldn't rush to convert all your houses at once. Try it with one and see how it goes. The worst thing that can happen is you have to sell some furniture if it doesn't work out. 

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Torry McFall
Replied Jan 20 2023, 16:26

I agree. Leases expire at different times so I will likely wait until a tenant isn't renewing their long-term lease to try any STR or MTR strategy. I might, however, buy a loft in our down town area to test out MTR. Something I don't see brought up very often is the affect it will have on financing future deals; i.e., if I convert to STR or MTR, a lender will want to see two years tax returns to count the income, whereas they will count the majority of income shown on a long-term lease. It has had me thinking that I might not want to convert any to STR or MTR until I'm ready to pause accumulating for a while.

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Colleen F.
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Colleen F.
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Replied Jan 21 2023, 19:32

@Torry McFall Travelers by and large go for studios to 2 bedroom by what I see. They want in unit washer dryers and their own bathroom.  For rooms you will get mostly lower budget health care professionals (OT, PT, Home nurse, pharmacy) most also don't want to share a bathroom although will. Most want to be 20 minutes or less for call.  I don't think the cost of bells and whistles will be justified by what you can charge since you need to roll in utilities and internet.  Traffic has slowed.  I listed a room in summer and through fall I got lots of inquiries then November to now crickets. I have it filled by can see there inquiries in my area and there isn't nearly what I first saw.

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Torry McFall
Replied Jan 22 2023, 10:09

@Colleen F. Good info! Thank you. I just looked at this loft downtown. It's literally walking distance to one hospital and within walking distance to another. It's also in the middle of our downtown area which could make it appealing to other professionals. It's cool historic building that has been converted into lofts. It has brick with huge two story windows that expose an unobstructed city view. It has exposed ductwork and trusses.... like a cool NYC style loft. I think if I throw down some LVP, add led lighting to brighten up, and maybe put quartz (waterfall) over the central kitchen island, it will look very chic. Units are being advertised for LTR at $1495 and $1995 per month. I think I'd be closer to the $1995 (I've flipped a lot in my past so I will be able to make it very nice for less $ out of pocket than most folks).  Are there any rules of thumb regarding LTR rental rates vs MTR? A % above LTR you can expect for MTR?  I'm going to look on furnished finder and see what my competition looks like. I also need to look into how difficult it might be to finance a condo... haven't done that before. 

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Colleen F.
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Colleen F.
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Replied Jan 22 2023, 18:16

@Torry McFall Look at FF website and competition, make sure you include utilities. I don't work alot in this space but you can find out a fair amount on FF facebook page and reading here. Make sure the HOA allows STR because if they restrict you to 6 months it likely won't work as a MTR. You are going to need to have parking unless you are say in NYC. You are going to need the condo docs to see if you will have any issues.

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Chris Allen
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Chris Allen
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Replied Jan 23 2023, 08:29

@Torry McFall here is a link to a post I made a few weeks ago. 

https://www.biggerpockets.com/...

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Torry McFall
Replied Jan 23 2023, 09:10

@Chris Allen Thank you. Well guys, my enthusiasm is toned down after looking harder at the rent I might receive. There are two decent condo's on FF that are close enough to give me some clues. There's a 2 br 2 bth at $2550/mo and a 1 br 1 bth at $1795/mo and another 1br 1ba fo $2175. That's the range and I'm closest to the last one I think. I think I will have a much cooler unit, but still, these rental rates are well below the premium I expected to see. I would need more than a couple hundred extra per month above what I would receive for a LTR to make me want to furnish and manage a MTR over a LTR. I have LTRs I bought for the price of this condo that fetch a little less than $2,175 rent.  Of course those houses would cost me $80K more now than when I bought them. But on the other hand, this condo has an extra $275/mo association fee and I would be paying for utilities and furnishing. hen I add on the fact that the rents won't really count to a lender (the next time I try to purchase a property) until I have two years of tax returns, proving the income (whereas they will count and LTR lease immediately), I'm just thinking the MTR thing isn't that attractive. I'm going to keep digging but I'm just surprised anyone would take on the added work unless there was a very substantial premium over LTR.

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Allen Duan
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Allen Duan
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Replied Jan 23 2023, 09:31

Hey Torry, do check Airbnb for comps too. In the Los Angeles market, comps on FF are much lower than comps on Airbnb. FF listings are generally less we'll equipped and decorated and run my mom and pop owners. While Airbnb listings are better set up and more professional, and the rates are higher as well. If your place is nicer and you plan to set it up better than the FF comps you're seeing, it could be you can get better MTR rates for them.

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Torry McFall
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Torry McFall
Replied Jan 23 2023, 09:50

Well, while my downtown condo idea doesn't seem to make a lot of sense, converting my SFY rentals in a nicer area of Albuquerque looks like it would make sense. The MTR rental rates look to be 33% to 40% higher than LTR rates. I'm conservatively approximating that I would get 22% more in net rent than my LTR income after taking into account paying for utilities/services. When I take out debt service and look at net cashflow, that equation is better. I would have 60% to 85% more cashflow. So if I had to retire next year, I might get busy converting them one by one. As it stands, I don't really want to convert them until I'm done acquiring for a while. As I said in my previous post, I'm concerned about how MTR and/or STR will affect my ability to get financing on future deals. I haven't seen that addressed before. MTR and STR folks, how do you deal with the financing issue?

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Torry McFall
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Torry McFall
Replied Jan 23 2023, 09:51

*SFH not SFY. Wish there was an edit button.

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Torry McFall
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Torry McFall
Replied Jan 23 2023, 09:55

@Nicole Heasley Beitenman I just saw that you are a lender Nicole. In my previous posts I've mentioned that STR and MTR concern me with regard to getting future financing b/c a lender would want to see two years tax returns to prove out the income, whereas with LTR, lenders will count the bulk of expected rent (less whatever percentage for vacancy and repairs) from the moment I have a longterm lease, which allows me to keep accumulating. I'm wondering how folks acquire a large portfolio of STR/MTRs w/o being impeded by this.

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Torry McFall
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Torry McFall
Replied Jan 23 2023, 10:46

@Allen Duan Definitely will. I liked the idea of using MTR and STR like tuning knobs I can turn when and where it makes sense. We have balloon fiesta here when STR will probably be preferable. I only recently considered that I could mix the MTR and STR options. I will need a cleaner I can really trust before I can go heavy STR. I also have seen STR demand dry up quite a bit lately.

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Allen Duan
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Allen Duan
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Replied Jan 23 2023, 11:55
Quote from @Torry McFall:

@Allen Duan Definitely will. I liked the idea of using MTR and STR like tuning knobs I can turn when and where it makes sense. We have balloon fiesta here when STR will probably be preferable. I only recently considered that I could mix the MTR and STR options. I will need a cleaner I can really trust before I can go heavy STR. I also have seen STR demand dry up quite a bit lately.


Sounds great. Don't forget you also comps Airbnbs for MTR rates, that's what I was getting at. If you can do both STR and MTR, that's the best. I wish I could do that here in LA!

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Chris Allen
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Chris Allen
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Replied Jan 23 2023, 11:58

@Torry McFall From your original post, what size property to you plan to list? From what I am seeing on AirDNA for 3-4 bedrooms in the area, over the last 12 mo the average monthly income for a STR is $4.66k. When looking at the area on FF (obviously I do not know where yours is) but there are several 1 bedrooms that I see renting for high $2k, and the 3 bedrooms I see are renting for closer to $3k.

I am not a lender, but as far as the financing goes, I think that if you go the MTR route, as long as you have a lease in place, banks will take at least most of that income. When I started on AirBNB for STR's, most banks really just wanted to see at at least 1 tax return showing the income from that property. So the financing aspect may not be as big of an issue as I think you are thinking. Plus, from how many properties it sounds like you have and are wanting to continue getting, you will likely be looking into DSCR loans soon anyways. At this point they do not care about your DTI, but rater the properties ability to service the mortgage. There are also companies out there that do DSCR loans for STR properties taking into account what the potential AirBNB income might be.

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Torry McFall
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Torry McFall
Replied Jan 23 2023, 12:18

Yeah, I will need to start looking at DSCR loans. I will be buying another personal home in the future and using my VA loan. I think having LTR that have been recently converted to STR/MTR might equal not getting to count that income and cause DTI issues when I'm using typical conforming loans and the VA is particularly rigid. Overall though, I think I have to stop letting the financing piece get in the way. I tend to try to optimize everything, including the lowest interest rate possible, to the point that it ends up slowing me down.

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Leslie Villareal
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Leslie Villareal
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Replied Jan 23 2023, 14:44

Torry- We are in the process of doing just this right now! We have 2 SFR on the westside, that we have had a long term for the past 10 years. We converted one last September and are doing the other when our tenant moves out at the end of February. We are going the hybrid route, listing on both AirBnB and Furnished finder. I'd love to chat with you if you want my 2 cents! I'll send you a PM with my contact.

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Nicole Heasley Beitenman
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Nicole Heasley Beitenman
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Replied Jan 24 2023, 08:42
Quote from @Torry McFall:

@Nicole Heasley Beitenman I just saw that you are a lender Nicole. In my previous posts I've mentioned that STR and MTR concern me with regard to getting future financing b/c a lender would want to see two years tax returns to prove out the income, whereas with LTR, lenders will count the bulk of expected rent (less whatever percentage for vacancy and repairs) from the moment I have a longterm lease, which allows me to keep accumulating. I'm wondering how folks acquire a large portfolio of STR/MTRs w/o being impeded by this.


If you didn't have 2 years of history, they'd likely use market rents for an LTR. Some won't use MTR or STR numbers regardless of the property's historical performance because so many loans were written for a property intended to be an STR that had to convert to an LTR due to oversaturation in the market.

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Sarah Weaver
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Sarah Weaver
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Replied Jan 24 2023, 12:27

In my experience, the closer to the hospital, the better. Of course, it remains very important that the unit is in a good neighborhood. I would not sacrifice safety for proximity to a hospital. Most tenants appreciate being less than 10 miles and under 20 minutes from the hospital. 

When it comes to renovations, I have found success with my units being very aesthetically pleasing through design and furnishings while opting out of larger renovations. Design and furnishing can go a LONG way, so I would recommend saving your money if possible!