MTR vs LTR?

Question

I just purchased my first home in Charleston, SC. It is a 3 bed 2.5 bath and it came furnished. I plan to live in it for a year while renting out the rooms and then rent the entire place after I leave. I am considering either keeping it furnished and doing an MTR or taking the furniture and renting it as a LTR. I am concerned with the MTR route due to the difficulty for finding a family to rent out a furnished home. If anyone has any experience or advice with the best option, or maybe an option I overlooked, it would be greatly appreciated!

Andrew Bosco · Answer

Hey @Andrew Baumann - sending this your way. I try to share these items for newer MTR peeps.

1. Furnished Rental Checklist: https://docs.google.com/document/d/1RzTpNu1Vsm1_PJxPa_uTk5vL...

2. Items to purchase list: https://docs.google.com/spreadsheets/d/1Yls8YiWI9WIs0J-jWYdD...

3. MTR Presentation: https://docs.google.com/presentation/d/1qCD_XIgmg-2BGGzsDbWq...

4. Handoff List- great for listing managers sharing tenant info with leasing/property managers.

Zach Scherschel · Answer

I hold both MTR and LTR and have converted units from LTR to MTR. The biggest component to answer IMO is how good is your location? If you're close to hospitals, a University, or large development areas, converting to an MTR, marketing and getting tenants is as simple as signing LTR tenants.

If your location or the property aren't going to be super marketable to a family or someone that needs to be close to their work, then it might not be the right option.

An alternative approach could be getting a good PM when you move and continuing to do what you're doing while you live there, Rent by Room. Convert each of the rooms that are furnished with a separate solid core and locked door. Add some organization to the kitchen, bathroom areas, and look for single tenants that are simply looking for LTR rooms.

LTR is always a stable and solid route if neither of those options sound worthwhile. I have no concerns with maintaining high-quality tenants and properties on LTR, but the cash flow and returns on a stable and marketable MTR are certainly greater, to @Charlie Tunstall's callout 1.3 to 1.4x rents may be average but I see closer to 2x in my market.

Rachel Gainsbrugh · Answer

Congrats!  For your 3/2.5 I would lean into the insurance-backed MTR strategy for your Charleston property.   By opting for midterm rentals, you can tap into a market of insurance guests in need of temporary housing due to unforeseen circumstances. This niche market can provide steady demand, higher rental rates, and potential long-term partnerships with insurance agencies. With proper positioning, a well-furnished and accommodating property can attract insurance guests looking for convenience during their time of need.  We often get the same or higher rental income as STRs ... the the fact that we're  supporting individuals and families in challenging times when choosing is a PLUS!

Charlie Tunstall · Answer

Andrew, I'm in the process of changing a LTR to a MTR as we speak. There's a ton of good info on YouTube that will be a good guide for you. You can reasonably expect 1.3 to 1.4 times the LTR rate for MTR income depending on your location.  Reach out if you have questions as you progress in your research.

Cassidy Burns · Answer

Congrats on the purchase ! One other item to consider is the amount of management you will be performing (turnover, management of cleanings, etc.) with the Mid Term vs. the Long Term will be a LITTLE more passive.

Really depends on where you want to spend your time and if the $$$ is worth the squeeze and time dedication.

Good luck!

Allen Duan · Answer

What's the difficulty finding a MTR tenant? How would you go about doing that if you went the MTR route? If there is adequate demand for a 3 bedroom MTR in your area, it shouldn't be hard to find a tenant using the right methods.

Jamie Banks · Answer

Congrats on purchasing your first home! Because you have the furniture, I think you should try out MTR by the room to see how you like it. A great thing about MTR guests is that they're there for only a few months. After a guest or two you can see if it's a strategy you'd like to continue. MTR will take more work than a LTR but with the proper systems in place management shouldn't take more than 2-3 hours a week!

Another tip is that the master bedroom with a private bath generally goes for much more than a bedroom with a separate designated bathroom. I would run either scenario through a calculator (BP's are great) to see which strategy would better align with your cash flow goals.

Charlie Tunstall · Answer

great info...thanks for sharing

MTR vs LTR?

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