Is the rent by the room strategy good for MTR's (Nurses)
Member since 2023 · 7 posts · 1 vote
Is the rent by the room strategy good for MTR's (Nurses)
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Bonnie LowPro Member
Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes@Nicholas LaGatta I hear you, but I think it's like everything else in real estate. At one point all we heard about was multi-family and everyone tried to jump in. At first it was single family, then syndications, then STR, now MTR. To me it just highlights the versatility of real estate. Lots of ways to go depending on your goals and interests. I do agree with you, though, that MTRs are being hyped by a lot of people right now. A lot of that had to do with the high profile of COVID related travel nursing. People saw $$ signs, but the per diems for travelers are now nowhere near the COVID highs so this market has taken a bit of a hit. Simultaneously, a lot of people who jumped on the STR bandwagon and bougt over asking in an already crowded market are panicking and trying to pivot to MTRs because they hear it will generate more than LTR but less than STR. The$X problem is, not every home is suited to the MTR strategy. Unless you've tapped into the lucrative insurance or corporate rentals, you're mostly competing for travel medical professionals and digital nomads. So that 4 bedroom luxury home you bought in a vacation market (ahem...Florida) is not going to work as an MTR because you want to rent it by the room at a high rate to cover your mortgage and there are 3 problems with that strategy at least: 1) per diem rates for travel nurses in FL are amongst the worst in the nation 2) most people prefer not to have a room in a shared home and 3) Florida considers anything less than 6 months (I believe) an STR so all the taxes and rules apply and most travel contracts are 13 weeks max. So yeah, a lot of people just don't have the right property to make it work. So even if there are a lot of new listings, it doesn't mean they're the type of listing that will work in this niche. 1/1's and 2/1's seem to be the sweet spot unless you're targeting corporate, relocations or insurance placements. The other unique aspect of the MTR niche is that most listings are still really poorly done and dated - much like VRBO was back in the day. So if you do have a nice space, it will stay well booked. I see this element of the market rapidly transforming, though, as the savvy hosts update their spaces and the bar is getting raised.
17 Replies
- Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes3y
There are folks who have success with that strategy. My guess is that it's market-dependent. I don't think most prefer it, but if you're in a big enough market with enough demand, I'm sure it works.
- CO · Member since 2022 · 588 posts · 426 votes3y
It is definitely market dependent but depending on your place it can work very well. Often time nurses travel with their spouse and or a pet, but I have never gotten a tenant who has brought a whole family, so they only need a bedroom and a bathroom. That being said I think you will have much greater success if you have multiple bedrooms that have their own bathroom. Not only because you can charge more but you will also get higher demand. Now there are some things to worry about such as schedule of these nurses and making sure they aren't waking each other up in the middle of their sleeping hours.
- Member since 2023 · 7 posts · 1 vote3y
Quote from @Brett Deas:
It is definitely market dependent but depending on your place it can work very well. Often time nurses travel with their spouse and or a pet, but I have never gotten a tenant who has brought a whole family, so they only need a bedroom and a bathroom. That being said I think you will have much greater success if you have multiple bedrooms that have their own bathroom. Not only because you can charge more but you will also get higher demand. Now there are some things to worry about such as schedule of these nurses and making sure they aren't waking each other up in the middle of their sleeping hours.
Thank you for your advice
- Member since 2023 · 7 posts · 1 vote3yThanks Nicole, I have it narrowed down my city yet, but I am interested in Ohio. Can you give me some advice on where in Ohio is the best place to invest for MTR’s? I’m sorry I haven’t done much research in Ohio, so I’m asking a very basic question that I know I can research myself but I’d like to get your advice.
Quote from @Nicole Heasley Beitenman:
There are folks who have success with that strategy. My guess is that it's market-dependent. I don't think most prefer it, but if you're in a big enough market with enough demand, I'm sure it works.
- Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes3y
@Christine L Wagner, I post about this investment strategy constantly haha. To answer your question, no, do not expect high-paying traveling nurses to rent by the room and share a co-living area/space. Rent-by-the-room is targeted at working-class and young professional tenants seeking affordable rent. There is a huge demand for affordable rent in the Atlanta market. I have a whole team in place here that can help with deal structure and acquisition. As you've alluded to, this unique asset class can be an absolute cash cow, however, understand that more risk is assumed. If you have any interest in implementing this investment strategy or have any ATL market-specific questions, feel free to reach me anytime via cell or email (contact info is listed in my bio).
- Member since 2023 · 7 posts · 1 vote3yThanks Michael you pretty much confirmed what I was thinking. Two different strategies two different types of people. I’m not sure what market I’m going into or if I want to do Coliving. I will look at some of your posts because I want to find out more and see if it’s worth the headaches it may cause. Take care
Quote from @Michael Dumler:
@Christine L Wagner, I post about this investment strategy constantly haha. To answer your question, no, do not expect high-paying traveling nurses to rent by the room and share a co-living area/space. Rent-by-the-room is targeted at working-class and young professional tenants seeking affordable rent. There is a huge demand for affordable rent in the Atlanta market. I have a whole team in place here that can help with deal structure and acquisition. As you've alluded to, this unique asset class can be an absolute cash cow, however, understand that more risk is assumed. If you have any interest in implementing this investment strategy or have any ATL market-specific questions, feel free to reach me anytime via cell or email (contact info is listed in my bio).
- 3yTaylor DaschBusiness MemberReal Estate Agent · Temple, TX · Member since 2022 · 1k+ posts · 700 votes
My PM does this strategy, to me, it seems like you will get a higher cash flow but also have less tenant selection.
I think some properties will do better with this strategy( such as a 2/2) because a lot of the push back is because they want their own bathroom. Also, I have found a few nurses on Furnished Finder are actually coming down with their own roommates. I would give it a go, but if you value a lower vacancy rate over return it may be best to rent it as a whole.
Taylor Dasch | EG Realty561 Reviews - Real Estate Broker · Atlanta, GA · Member since 2017 · 229 posts · 145 votes3y
My sense is that the MTR space is about to be incredibly oversaturated with listings. Does anyone else feel this way? I feel like this same thing happened to STRs. They started getting promoted by every guru and podcast as a way to cover higher interest payments, replace active income, etc. Demand dropped off and people looked for the next big way to increase their cashflow with a similar asset class. I just don't see how a strategy being promoted at such a mass scale can have a sustained competitive advantage IMHO.
I might be wrong, though. Does anyone have a different point of view on the medium and long term prospect for this strategy?
- Member since 2023 · 7 posts · 1 vote3y
Quote from @Taylor Dasch:
My PM does this strategy, to me, it seems like you will get a higher cash flow but also have less tenant selection.
I think some properties will do better with this strategy( such as a 2/2) because a lot of the push back is because they want their own bathroom. Also, I have found a few nurses on Furnished Finder are actually coming down with their own roommates. I would give it a go, but if you value a lower vacancy rate over return it may be best to rent it as a whole.
Thank you Taylor for your input. I appreciate it.
- 3yBonnie LowPro MemberLender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
@Nicholas LaGatta I hear you, but I think it's like everything else in real estate. At one point all we heard about was multi-family and everyone tried to jump in. At first it was single family, then syndications, then STR, now MTR. To me it just highlights the versatility of real estate. Lots of ways to go depending on your goals and interests. I do agree with you, though, that MTRs are being hyped by a lot of people right now. A lot of that had to do with the high profile of COVID related travel nursing. People saw $$ signs, but the per diems for travelers are now nowhere near the COVID highs so this market has taken a bit of a hit. Simultaneously, a lot of people who jumped on the STR bandwagon and bougt over asking in an already crowded market are panicking and trying to pivot to MTRs because they hear it will generate more than LTR but less than STR. The$X problem is, not every home is suited to the MTR strategy. Unless you've tapped into the lucrative insurance or corporate rentals, you're mostly competing for travel medical professionals and digital nomads. So that 4 bedroom luxury home you bought in a vacation market (ahem...Florida) is not going to work as an MTR because you want to rent it by the room at a high rate to cover your mortgage and there are 3 problems with that strategy at least: 1) per diem rates for travel nurses in FL are amongst the worst in the nation 2) most people prefer not to have a room in a shared home and 3) Florida considers anything less than 6 months (I believe) an STR so all the taxes and rules apply and most travel contracts are 13 weeks max. So yeah, a lot of people just don't have the right property to make it work. So even if there are a lot of new listings, it doesn't mean they're the type of listing that will work in this niche. 1/1's and 2/1's seem to be the sweet spot unless you're targeting corporate, relocations or insurance placements. The other unique aspect of the MTR niche is that most listings are still really poorly done and dated - much like VRBO was back in the day. So if you do have a nice space, it will stay well booked. I see this element of the market rapidly transforming, though, as the savvy hosts update their spaces and the bar is getting raised.
- Member since 2023 · 5 posts · 5 votes3y
I am a first time investor and also a traveling Radiology professional. Not everyone who travels in healthcare is a traveling nurse. There is a very large need and use for traveling radiology professionals.(Xray, CT, MRI, Ultrasound, Interventional Radiology, etc.) These professionals make less than nurses in most cases and are often willing to room share in a house. Usually the biggest concern for most is having a private bathroom with the bedroom. I have done this myself in California where MTR prices for sfh are quite expensive. If your area has hospitals that use travelers other than nurses, the rent by rooms strategy can work. AS an FYI, I have been traveling as a CT Technologist for 4 years but have met other travelers during this time who have traveled for 20 years!
- Member since 2023 · 7 posts · 1 vote3y
Hi Jerri, thank you so much for your reply. I had no idea that those fields were also traveling. And I didn’t realize it has been for 20 years. I appreciate the information
- Member since 2020 · 8 posts · 3 votes3y
Quote from @Michael Dumler:
@Christine L Wagner, I post about this investment strategy constantly haha. To answer your question, no, do not expect high-paying traveling nurses to rent by the room and share a co-living area/space. Rent-by-the-room is targeted at working-class and young professional tenants seeking affordable rent. There is a huge demand for affordable rent in the Atlanta market. I have a whole team in place here that can help with deal structure and acquisition. As you've alluded to, this unique asset class can be an absolute cash cow, however, understand that more risk is assumed. If you have any interest in implementing this investment strategy or have any ATL market-specific questions, feel free to reach me anytime via cell or email (contact info is listed in my bio).
- Member since 2020 · 8 posts · 3 votes3y
Hi...I'm in the ATL market. I'm interested in getting more info about this strategy. Can I reach out to you?
- Real Estate Agent · Atlanta, GA · Member since 2020 · 1k+ posts · 1k+ votes3y
@Munya Chawa, yes, please shoot me an email or text for preferred communication (contact info is listed in my bio).
- Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes3y
Quote from @Nicholas LaGatta:
My sense is that the MTR space is about to be incredibly oversaturated with listings. Does anyone else feel this way? I feel like this same thing happened to STRs. They started getting promoted by every guru and podcast as a way to cover higher interest payments, replace active income, etc. Demand dropped off and people looked for the next big way to increase their cashflow with a similar asset class. I just don't see how a strategy being promoted at such a mass scale can have a sustained competitive advantage IMHO.
I might be wrong, though. Does anyone have a different point of view on the medium and long term prospect for this strategy?
You're probably right. I don't see that as a reason to avoid the strategy. You should never acquire a piece of real estate without multiple strategies for operating or exiting it. Considering it's still relatively unknown, I think we have a while before that happens.
Everything that was "trendy" at one point still works. SFs, MFs, STRs--those all still work. But the gold rush ends; you can still make money doing them, but you have to work a little harder because you have more competition than the folks who got in early.
- Real Estate Coach · Atlanta, GA · Member since 2019 · 20 posts · 22 votes3y
Quote from @Christine L Wagner:
Hello everyone, I'm very intrigued by the rent by the room strategy for the cash flow and filling a need for workers who can't afford an apartment. Has anyone tried it for nurses, nomads etc. Do you find that nurses prefer the entire unit or are they willing to rent a room? I've been told that they don't prefer a room, but would love advice from the experts on this forum.
Thanks so much in advance.
My sister is a travel nurse and I am in health care. To answer your question, I would say that it really depends on the individual nurse's preferences and needs. MOST nurses prefer to rent an entire unit and not a shared space. Others may find that renting a room is a more affordable and convenient option. Ultimately, it comes down to personal preference.
I've seen 'by the room' rentals work for college students, young professionals, or and people on a tight budget. Cost living has increased so, this is a viable solution for those looking to save $$. Renting a room may also be a temporary solution for those who are in transition, such as people who are moving to a new city or experiencing a period of financial hardship.
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