Medium-Term Rental Vs. Long Term Rental for a 2 bed/2 bath single family home.

Mason WeissBusiness Member

Realtor · Phoenix, AZ · Member since 2021 · 524 posts · 240 votes

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Hey David, I would probably rent as a long term rental. Unless you have experience in the MTR space, or want to invest your time into learning, you are better off renting to a long term tenants. MTR's are very competitive in Phoenix and even experienced investors in the space are struggling to find tenants right now.

Colleen F.Pro Member

Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes

@David Rodriguez MTR is about location for health travelers and you also have a healthy population of snowbirds in Phoenix. The finishes sound fine but for health travelers you have to furnish down to the sheets and towels. It has to be a good area and for night shift workers a quiet location. If you have two full baths it will appeal more to this group.

The downside in Phoenix to a MTR is I am not sure you would get summer occupancy if you aren't the top location. Consider that in your initial plan. You can switch strategies later. You might look at vacancies on FF close to your location to get a feel for what the market is. Again consider the summer if you have MTR. I think pools also factor in to summer rentals, if you don't have one that will hurt you.

2 Reply

OP

Member since 2024 · 6 posts · 2 votes

So I do want to clarify a few things about how my property is furnished that I assumed was implied, but my potential MTR does have the following:

- Washer/Dryer

- 75 inch mounted TV

- Fridge/Microwave

- Kitchen Appliances (silverware, pots/pans, soap dispensers, coffee maker, cutting boards, etc)

- Multiple large mirrors on walls, fake plants around the home, living room carpet/coffee table in additon to couch.

- Full office with a desk and a deskchar plus filing cabinet.

- Bathroom towels, hair dryer, soap, toilettires, etc.

- Grill in the backyard.

I'm not sure if this makes a difference? This is all in ADDITION to of course having the obivous (bed set in the master plus a couch)

The main reason im debating is because its a 2 bed. I'm nervous I will have hardly any cash flow with this property if I rent it as a long term rental. I feel there is potential for it to be a good MTR if I advertise and take pictures properly. Im currently reading "30 day stay" by Zeona McLntyre and Sarah Weaver to help me understand how to maximize the market of my property.

Colleen F.Pro Member

Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes

@David Rodriguez The only thing I would add is a two bed might do better as a two bed rather than 1 plus office. Putting at least a day bed or murphy in the office will make it appeal better as people have visitors or might be traveling with a child. At least that is what I hear from people looking I don't know MTR in phoenix. I see people looking on FB groups but live in the east valley.

Vivian Yip

Specialist · Austin TX · Member since 2018 · 82 posts · 55 votes

Hey @David Rodriguez

I have 5 MTR's that are 2 bedrooms in Austin and they do really well. They are in B class neighborhoods close to A neighborhoods and good proximity to hospitals, downtown, The Domain, etc. I get more than 2x rent for each unit.

I have mine really nicely furnished with good quality furniture and high end finishes (quartz, stainless steel appliances). I recommend 2 Queen beds (King if you can) over choose two twins.

You can also ask members in my FB group, there are 3.5K people running MTRs in my group!

Jackson Harris

Realtor · Phoenix AZ, USA · Member since 2023 · 209 posts · 81 votes

Quote from @David Rodriguez:

I purchased a 2 bed, 2 bath home roughly 8-10 minutes from Downtown Phoenix. It was built in 2002, and I renovated the entire flooring by removing the original tile and putting Vinyl flooring in, there is no carpet within the house. I redid the master bathroom by removing the tub and putting in a standing shower with white granite looking tile, and a custom glass shower door. Replaced both toilets with brand new ones, replaced the 2 car- garage door with a brand new one, had all the walls freshly painted, put brand new baseboards in, and had the kitchen cabinets painted as well. The house is also furnished with a solid wood no spring couch, and a solid wood round dining table, and a king sized bedroom set in the master. My question is:

Is this house better off being rented long term for tenants or should I gravitate toward a midterm rental for possible traveling nurses or traveling professionals who want a cleaner, more up to date space, closer to downtown? I am thinking since it is only a 2 bedroom this may be a better choice versus trying to find a smaller family to rent it out too. Does anybody have any good experience with mid term rentals in phoenix?

Hey David, I'd recommend the LTR route if you can. Makes your life as a property manager easier, and provides consistent rents coming in. Mid terms need to be very quality and can take more time and marketing efforts to get rented.

Nicole Heasley Beitenman

Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes

Quote from @Jonathan Greene:

2 bedroom single-family homes are great rentals because they cost way less to buy and don't rent for much less than a 3-bedroom home.

I'll second this. We focused on 1 and 2 br properties long before MTRs became trendy because they have lower price points, less competition, lower expenses, and while the tenant pool is smaller, so is supply. These tenants tend to stay longer because they know they'll have a harder time finding a smaller house.

Zachary DealPro Member

Lender · Member since 2023 · 465 posts · 425 votes

From the local Phoenix are folks it seems like LTR is the route to go due to competition. I think LTR vs MTR is very area specific and would rely on the expertise of the local agents!

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Jake AndronicoBusiness Member

Realtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes

@David Rodriguez

MTR - $4K per month occupied for 9 months = $36,000

LTR - $3K per month occupied for 12 months = $36,000

Occupancy is everything.

415-233-1796

OP

Member since 2024 · 6 posts · 2 votes

Quote from @Jackson Harris:

Quote from @David Rodriguez:

I purchased a 2 bed, 2 bath home roughly 8-10 minutes from Downtown Phoenix. It was built in 2002, and I renovated the entire flooring by removing the original tile and putting Vinyl flooring in, there is no carpet within the house. I redid the master bathroom by removing the tub and putting in a standing shower with white granite looking tile, and a custom glass shower door. Replaced both toilets with brand new ones, replaced the 2 car- garage door with a brand new one, had all the walls freshly painted, put brand new baseboards in, and had the kitchen cabinets painted as well. The house is also furnished with a solid wood no spring couch, and a solid wood round dining table, and a king sized bedroom set in the master. My question is:

Is this house better off being rented long term for tenants or should I gravitate toward a midterm rental for possible traveling nurses or traveling professionals who want a cleaner, more up to date space, closer to downtown? I am thinking since it is only a 2 bedroom this may be a better choice versus trying to find a smaller family to rent it out too. Does anybody have any good experience with mid term rentals in phoenix?

Hey David, I'd recommend the LTR route if you can. Makes your life as a property manager easier, and provides consistent rents coming in. Mid terms need to be very quality and can take more time and marketing efforts to get rented.

Thank you! The overall consensus seems to be that LTR will be better given my situation. I had another local realtor tell me it might be worth a shot at least trying to fill it as an MTR for the first 3 months of 2025 as I don't owe my first mortgage payment on my new home purchase until March 1st of 2025. If MTR fails I can always pivot to a LTR model around April when people are looking for new homes to rent anyway. If I can afford the financial loss of it not being rented those months (2K mortgage) then maybe it's at least worth trying? I just know for a fact I won't cash flow on this property if I do an LTR since my monthly payment is just over 2K and the rents in my area even for a 3 bed 2 bath are only 1850 or 1900 at most.

OP

Member since 2024 · 6 posts · 2 votes

@Nicole Heasley Beitenman

Quote from @Nicole Heasley Beitenman:

Quote from @Jonathan Greene:

2 bedroom single-family homes are great rentals because they cost way less to buy and don't rent for much less than a 3-bedroom home.

I'll second this. We focused on 1 and 2 br properties long before MTRs became trendy because they have lower price points, less competition, lower expenses, and while the tenant pool is smaller, so is supply. These tenants tend to stay longer because they know they'll have a harder time finding a smaller house.

So overall you would recommend just keeping this as a LTR? It is a true 2 bed/2 full bath, so I'm assuming it would rent similarly to a 3 bed/2 bath in the same area. I was mainly tempted to use it as a MTR because of how close it is to downtown Phoenix and the University Hospitals, etc. I just worry the property won't cashflow, but I know that is hard to find it today's market. I'm okay just keeping the equity increase for now, but any tips on how to raise rent given the renovations I did already?

OP

Member since 2024 · 6 posts · 2 votes

Quote from @Vivian Yip:

Hey @David Rodriguez

I have 5 MTR's that are 2 bedrooms in Austin and they do really well. They are in B class neighborhoods close to A neighborhoods and good proximity to hospitals, downtown, The Domain, etc. I get more than 2x rent for each unit.

I have mine really nicely furnished with good quality furniture and high end finishes (quartz, stainless steel appliances). I recommend 2 Queen beds (King if you can) over choose two twins.

You can also ask members in my FB group, there are 3.5K people running MTRs in my group!

Thank you! I am still heavily debating on whether to go LTR or MTR with this 2 bed/2 full bath. I did some decent renovations on it, and it's very close to downtown Phoenix (8 minutes - no freeway needed) and close to the main university hospital in downtown as well. I would just need to invest in furnishing it very well with better appliances mainly. My main concern is not being able to cashflow the property using the LTR route.

Vivian Yip

Specialist · Austin TX · Member since 2018 · 82 posts · 55 votes

Quote from @David Rodriguez:

Quote from @Vivian Yip:

Hey @David Rodriguez

I have 5 MTR's that are 2 bedrooms in Austin and they do really well. They are in B class neighborhoods close to A neighborhoods and good proximity to hospitals, downtown, The Domain, etc. I get more than 2x rent for each unit.

I have mine really nicely furnished with good quality furniture and high end finishes (quartz, stainless steel appliances). I recommend 2 Queen beds (King if you can) over choose two twins.

You can also ask members in my FB group, there are 3.5K people running MTRs in my group!

Thank you! I am still heavily debating on whether to go LTR or MTR with this 2 bed/2 full bath. I did some decent renovations on it, and it's very close to downtown Phoenix (8 minutes - no freeway needed) and close to the main university hospital in downtown as well. I would just need to invest in furnishing it very well with better appliances mainly. My main concern is not being able to cashflow the property using the LTR route.

Totally get where you're coming from! I've been there! Here are a couple of HOT tips:

Buy furniture on facebook market place on the last day of the month to score bargains. I've been able to buy a queen bed with frame and nightstand for $150

Use Pricelabs to investigate your potential. I have a free training on my YouTube channel that teaches you how to create a comp set and review the competition in your market so that you can make an intelligent decision on whether or not to move forward. Based on what you've said, you should be able to make 2x rental income and account for 20% vacancy to be conservative.

Last thing, don't forget, hosting IS a hospitality business. Sometimes you have to drop everything to take care of your guest. Make sure it fits your lifestyle.

Good luck!!!!

2 Reply

Sylvia Santelli

Property Manager · Dallas, TX · Member since 2015 · 61 posts · 35 votes

Hi Dave--- I'd like to add to this too. The 2 bed/2 bath dilemma. I shared my story in the Bigger Pockets MTR book actually! In the end my duplex - 2bed/2 bath on each side- stays fully booked mostly by construction workers and it's been working really well for me.

The cost of the furniture is tough up front-- you can rent furniture or go through FB marketplace. Sounds like no HOA, which is great--- but based on what you are saying I think it's worth setting it up.

Did you also do an analysis? Are there are other 2bedrooms being booked in the area being booked for 30 days at a time?

You have 2 solid options! Great position to be in. Good luck!