Determining Quality MTR
Investor · Oswego, IL · Member since 2024 · 21 posts · 19 votes
Determining Quality MTR
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Miguel Del MazoPro Member
Northeast Georgia · Member since 2023 · 140 posts · 170 votesI am going to try and answer this question with a fair amount of grace, so please bear with me.
As to the original question, here's a rough idea of my thought process regarding a potential purchase:
The hospital is a Level II trauma center with 390 beds (that's a decent-sized hospital), so it probably needs a fair number of travelers. If you want a general sense of their demand for traveling medical professionals, go to the hospital job recruitment page. If there are a large number of openings, then they are likely filling that need with travelers.
See how much the property will cost a month. Principal, interest, taxes and insurance. 280k with 20% down at 7% = about $1500 a month for PI. Taxes are public record, and are about $125 a month (will go up after purchase a bit). Insurance shouldn't be bad as this is a condo, so a lot of potential risk is covered by the HOA insurance. Add another $20 a month for that.
Add in HOA fees ($300 a month; shown in your link), Gas, electricity, high-speed internet, water, trash and snow removal. A lot of those costs are probably part of the HOA dues, so let's say and average of $175 a month for electricty and another $80 for internet. You have a better idea of those costs as I do not live in IL.
So, costs so far are $2200. Play around with that with your more accurate estimates.
Rentometer estimates that rents in the area for a 2/1.5+ are around $2500. Using a 1.5x estimate for what a MTR rental rate might be gives us $3,750. Then I would compare that estimate with what Furnishedfinder.com has in the area. In the immediate are there are 3 houses on FF that are going for 4000 to 6000 a month, but they are 3 BR to 4BR SFHs. I would then adjust down the original MTR rental estimate based on those findings. Let's say $3200?
$3200- $2200 = $1000 month of profit, right? Not really. Put aside some money for fixing things up around the condo from time to time ("CapEx"; 5% to be conservative), and some for vacancy (maybe 10% of the monthly). That leaves ($3200 x .85) - $2200 = $520 a month in profit. Bear in mind, you will have to tweak these numbers based on what you think are proper estimates. For instance, I suspect vacancy might be a little higher based on the train tracks running directly behind the condo. That might be normal and expected in IL. I don't know.
So for $56,000 dollars down plus (an estimated) $7,500 in closing costs plus another $5000 in furnishings, you get an asset that produces about $500 dollars a month. $68,500 / $500 per month = about 12.4 years to get back the intial investment.
So why do people bother if it takes 12 years to get back your investment on what looks a pretty good monthly profit? Well, in that 12 years, your tenants will have paid down about $35,000 in principal (aren't amortization schedules depressing?), and at a 2% average yearly increase in value of the condo, it will be worth about $60,000 more than when it was purchased. These numbers get better if the area is becoming more in demand over time as rents will go up and the condo will appreciate faster than 2%.
*Now we come to the hardest part*: does this property have "potential"? I have no idea primarily because deals are only "good" or "bad" in the context of what the goals of the owner are. Would I self-manage this deal to earn $500 a month allowing me to own this property in 15, 20 or 30 years? Yes. Should you? Again, I have no idea. that's a much more personal decision, and that is probably why Jonathan Greene asked for more information from you about your experience level, especially since you wrote "I am totally out of my league understanding the possibilities of an MTR".
To be successful in the MTR space, I would recommend that any owner or operator strive to provide the best customer experience possible. Potential residents can tell if the owner/operator authentically cares about providing that A+ experience, and they will vote with their wallet regarding where they stay.
So going back to my original sentence, here is where my grace runs out. I have a challenge for the OP. I took over an hour, on a Sunday,to click a suspicious link in order to look over your property, to learn a little bit more about the West Chicago sub-market, to analyze a deal for a stranger; and to present a rough algorithm for how to analyze the numbers of a deal so that a general process could extrapolated for the next property you consider. All of that was done without thought for any return to me. It was done simply because I enjoy helping in my very limited way. If at any point in this admittedly large wall of text, you, OP, found yourself getting upset with me, then I would recommend you avoid the MTR space as you will find many similar opportunites to learn that you will not enjoy. LTRs are a great way to approach real estate, and it sounds like you are doing very well in that space. Keep crushing it there.
34 Replies
- Lender · TX · Member since 2024 · 308 posts · 197 votes1y
Sounds like a solid find, especially with its location near the hospital! MTRs can be a great option for traveling nurses or professionals needing short-term housing. They typically have longer stays than STRs, meaning less turnover, but offer more flexibility than a long-term rental. If you’re new to MTRs, it’s worth researching local demand or even checking out some local listings for comparison.
- Investor · Oswego, IL · Member since 2024 · 21 posts · 19 votes1y
Thank you very much!. I have a lot to learn before I consider anything.
- Investor · Oswego, IL · Member since 2024 · 21 posts · 19 votes1y
Quote from @Jonathan Greene:
Quote from @Travis Timmons:
@Jonathan Greene no mention of a participation trophy and not making it seem easy. I'm just a guy that wants to help. This "give value in return" is mostly nonsense. Someone either takes an interest and helps or they don't.
If you think it is stupid, don't respond. He's a guy looking for help from experienced MTR operators, and a few of us responded. That's the whole point of the forums.
The "you lucked out because of nice people" is the idea. I also lucked out because of some nice people several years ago. I am now paying that forward and doing what I can to help. Criticizing a new investor for being new seems silly. You're also somehow being critical of people being nice.
Go back to the top and read his post and my response. I told him he shouldn't post a link because most people will be worried it's phishing (completely valid and smart). Then I told him if he doesn't know enough to even ask a full question, he probably doesn't have the reps to buy this now (obviously true and not debatable). Then I asked him three questions to help him ask better questions and get better answers. This is WAY better advice than the other things in the forum because when you are in the real world and you show up and ask strangers for help and have done no research, laid no background, and didn't even try to do anything, they won't help you.
Every one of the most well known coaches in the entire world will all tell you the same things. Come prepared, ask better questions, and you will get better answers. This is exactly how I responded. If you think a Tony Robbins or Zig Ziglar would respond to a question that vague, you are crazy. And they are there to help people. So am I. I am not there to baby them and do their job for them.
Let me suggest that your response actually speaks more to fatigue in working the forums than it does to anything related to me.
I literally shared in my post, “However, I am totally out of my league understanding the possibilities of an MTR.” I thought I was simply starting a dialogue on what qualities make a good MTR as I don’t know. I thought it might be fun to connect with some who would look at the property on Zillow and discuss ways to approach the idea. Multiple people took the opportunity to share resources and ways to consider the decision process And that is phenomenal which is what forums are for right? Connect with others and have good dialogue.
Its fine, if you feel like you didn't come in ”hot”… great... My bad. The digital world is full of different perspectives and this is already more time than I care to share on this topic any more. If its important for you educate everyone on forum etiquette, have at it sir.
Thanks to all those who have engaged in sharing as there are some phenomenal responses on here.
- Investor · Oswego, IL · Member since 2024 · 21 posts · 19 votes1y
Quote from @Misti Meador:
Good advice. I used to travel and preferred 1-2 bedrooms that allowed pets. A W&D in unit was a big bonus since I worked night shift.Quote from @Bonnie Low:
Quote from @Scott Meech:
Thank you. Do you have suggestions on how best to do that research? Are there mid term rental sites to find them?Quote from @Jamie Banks:
Hi Scott,
When determining if a property is suited for MTR you should do some research on what brings people to the area who need to rent midterm.
You can always start by looking on Furnished Finder. This site says it's for travel nurses, but their users come from all walks of life and it's growing daily. go to https://furnishedfinder.stats and enter the city information. This will show you how many furnished units are currently listed on FF, their size and monthly rate as well as the number of searches. Then look at some of the competition to see what your property needs to offer in order to be competitive. You can also search Airbnb & look for 30+ day stays and do the same. Checking their calendar helps you determine if there is strong demand. If the calendar is booked, there's demand. If it's wide open, that should be a red flag. Are there extended stay type hotels in your area? If so, that's a good indicator that there's demand for MTRs. I'd encourage you to think more broadly than just hospital travelers. They can be a great source for tenants, but the world of people traveling who need furnished rentals is much, much larger than just traveling medical professionals.
Thanks for sharing. I feel like the more people share, first hand experience in this space gives folks confidence and one of many reasons it doesn't feel comfortable to me. It is fun to learn about though for sure.
- Property Manager · Indianapolis, IN · Member since 2024 · 45 posts · 24 votes1y
I work for Brentwood Property Group and manage MTRs in Indianapolis, and many of our tenants are traveling healthcare professionals. Having an MTR near a hospital is a plus. When assessing if a property will do well as an MTR, we typically look at similar listings in the area on Furnished Finder, where we find most of our tenants. This can give you an idea of potential rental income. Another factor to consider is whether you’re willing to furnish the property, as MTRs generally need to be furnished.
- 1yTravis TimmonsPro MemberRental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
Quote from @V.G Jason:
"You'll go nowhere in life"
1. He's the one taking things personally?
2. Is that you, Dad?
- Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes1y
Hey @Scott Meech - Check out your competition with furnished finder that is where a lot of Medium Turn rentals list their properties.
I have a MTR in Chicago that has been decently successful...whatever I have found throughout my entire life and investing career is it is never one property/deal that is a grand slam...
Rather, the grand slam is done by hitting many singles and using systems and processes to scale your operation; the combination of scaling and experience in a niche of real estate allows you to hit unlimited grand slams because, unlike baseball, real estate is NOT a zero-sum game.
Quality Builders4.968 Reviews Quote from @Travis Timmons:
Quote from @V.G Jason:
"You'll go nowhere in life"
1. He's the one taking things personally?
2. Is that you, Dad?
That comment doesn't mean he doesn't take things personally.
That's sound advice to change your perception. That's what was told to me my junior year of college way back when. Maybe you could take a page out of that book, but then again you are probably similar to him and couldn't relate. For that, I rest my case. Birds of a feather flock together. Stay small.
- Rental Property Investor · Kansas City · Member since 2023 · 13 posts · 3 votes1y
Quote from @Bonnie Low:
Quote from @Scott Meech:
Wasn't that the main point of the post? I gave an example of a property to start a conversation to learn more about MTR. It also is potential for someone who has expertise in MTR to connect. It didn't ask should I do this.
To answer your other question, yes I have LTR property that is doing quite well.
Appreciate the forum etiquette lesson. Perhaps some reciprocal is to tone it down and not come in hot as my teenagers call it!Hey, Scott. I'm sorry you got some unhelpful responses. I don't know why people take the time to NOT be helpful. I'm happy to take a look at your link and let you know some initial thoughts. You might find it helpful to join a group like THE MTR Connect, which I co-host with @Jamie Banks. It's a group that meets virtually every Friday from 9-10am PST and is specifically for MTR hosts. We have newbies and very seasoned investors in the group and the sole purpose is to help people with their properties, whether that is sourcing & qualifying markets, set up, trouble shooting or building a network of go-to resources. You can even share your link to the property or market you're considering and let folks weigh in in real time. We've helped a lot of our members trouble shoot and make minor tweaks to their properties to improve the performance. I'm sure our members would be happy to help you, too. PM me if you're interested - it's free - and I'll send you the link. Hang in there!
Hi Bonnie,
How can I join the MTR Connect ? I am an MTR host in the Kansas City area and would like to connect with you. How can I connect with you ?
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