In Response to the On the Market Podcast Released today with the Furnished Finder CEO

[Molly W.]

The profitability of mid-term rentals is generally overblown and the hype seems to be coming from social media and the CEO of Furnished Finder going on every podcast channel, and I say this as someone who is running a mid-term rental successfully. I don't really have an issue with the podcast, I just want to share a dose of reality as someone who actually runs a mid-term rental. This guy is a CEO who is promoting his website.

There is very little real data on mid-term rentals, so if you are considering them, please be on high alert when picking a market. I do agree that the expensive markets like Boston, San Jose, San Francisco, and LA would be great mid-term markets, but that's because they are so expensive. The reality of buying here and their laws that favor tenants over landlords may make the reality of buying and operating here difficult.

What I wish I knew about mid-term rentals - hope this helps.

Mid-term rental cleaning and maintenance fees are high, you will need to make enough profit to deal with them. 

The maintenance is more difficult and expensive the short term rentals, and I have run several short-terms for 5 years now. You have people using the furniture and home nearly 24 hours a day for months - there is a lot of wear and tear. Price this in. If you are renting through Airbnb, please be aware that it has strict rules about you or maintenance companies entering the home while it is booked. Guests can refuse. For liability reasons, most good repair companies require a renter or owner on site while they work. Some will waive this with signed permission. I have all renters sign an agreement that if there is an issue they report, that repair companies or myself are allowed to enter the home to repair it. Having someone do a maintenance check for plumbing leaks once a month would not at all be overkill. Absolutely have a smart thermostat in any mid-term rental.

Accepting pets will make you more and will help you avoid vacancy, but it comes at a cost. Nearly every pet that I have hosted for months has caused damage - chewing up pillows, scratching up furniture, chewing rugs, scratching doors, or destroying the yard. Most renters think their pets are house trained, but very few are. Make sure you have an iron clad agreement that pet damage will be deducted from their security deposit or, for Airbnb, I let them know that all pet damage should be fixed or reported and paid for before checkout, or the guest will get a negative review. This avoids the tough dance of Airbnb reviews, where requesting damages causes a bad review for the host. That may sound strict, but good guests who are good people generally let me know anyway if their pet caused serious damage to the house. I would argue it is insane to let your pet destroy a house and then check out like everything is normal.

Cleaning: whether it is with pets or without - cleaning is a very deep, multi-day process. I have heard people on podcasts say they rent to nurses who never use the house and they barely have to clean - this is not the norm and kind of a weird thing to celebrate - that you rent to people so overworked that they can't use the house they are renting. Most people you rent to will actually use the house and they will not clean. Whether you pay someone to cleaning once a month and, again, spell that out in an agreement or lease, or pay someone a lot of money to clean over 2+ days, just make sure you price that in. Many cleaners can't handle it.

This is solely my opinion, like I said there isn't a lot of good data, but I think it's a small amount of markets where you can have a mid-term rental without a lot of vacancy and where you can line up bookings, so that you don't have a 3 week vacancy. I always block off at least 5 days for repairs and cleaning in between any rental that is 2+ months. Trust me, there will be maintenance. Vacancies will kill the "30% profit" advertised in the recent podcast and I don't hear about this reality being talked about enough. Just as with any other rental type, you will be competing against people like me with 3% mortgages, who can lower prices .

Just wanted to shout this stuff out. Don't see the reality talked about enough and I keep hearing about mid-term rentals being touted as some amazing play. Believe me, it's been discovered. Not only that, but in markets that I follow, I see mid-term rentals dropping out. Teleworking and traveling nurses were a lot of my renters, but that is fading across the country as the labor market cools, so please just be thinking about that. Assisted living, 55+ retirement communities, co-living where you rent by the room, campgrounds, unique vacation rentals - all of these are much better plays that mid-term rentals. Where I think a mid-term is useful: if it's a home in an area that will see a lot of appreciation. That's really it. Hope this helps someone.

[Victor So]

Quote from @Molly W.:

The profitability of mid-term rentals is generally overblown and the hype seems to be coming from social media and the CEO of Furnished Finder going on every podcast channel, and I say this as someone who is running a mid-term rental successfully. I don't really have an issue with the podcast, I just want to share a dose of reality as someone who actually runs a mid-term rental. This guy is a CEO who is promoting his website.

There is very little real data on mid-term rentals, so if you are considering them, please be on high alert when picking a market. I do agree that the expensive markets like Boston, San Jose, San Francisco, and LA would be great mid-term markets, but that's because they are so expensive. The reality of buying here and their laws that favor tenants over landlords may make the reality of buying and operating here difficult.

What I wish I knew about mid-term rentals - hope this helps.

Mid-term rental cleaning and maintenance fees are high, you will need to make enough profit to deal with them. 

The maintenance is more difficult and expensive the short term rentals, and I have run several short-terms for 5 years now. You have people using the furniture and home nearly 24 hours a day for months - there is a lot of wear and tear. Price this in. If you are renting through Airbnb, please be aware that it has strict rules about you or maintenance companies entering the home while it is booked. Guests can refuse. For liability reasons, most good repair companies require a renter or owner on site while they work. Some will waive this with signed permission. I have all renters sign an agreement that if there is an issue they report, that repair companies or myself are allowed to enter the home to repair it. Having someone do a maintenance check for plumbing leaks once a month would not at all be overkill. Absolutely have a smart thermostat in any mid-term rental.

Accepting pets will make you more and will help you avoid vacancy, but it comes at a cost. Nearly every pet that I have hosted for months has caused damage - chewing up pillows, scratching up furniture, chewing rugs, scratching doors, or destroying the yard. Most renters think their pets are house trained, but very few are. Make sure you have an iron clad agreement that pet damage will be deducted from their security deposit or, for Airbnb, I let them know that all pet damage should be fixed or reported and paid for before checkout, or the guest will get a negative review. This avoids the tough dance of Airbnb reviews, where requesting damages causes a bad review for the host. That may sound strict, but good guests who are good people generally let me know anyway if their pet caused serious damage to the house. I would argue it is insane to let your pet destroy a house and then check out like everything is normal.

Cleaning: whether it is with pets or without - cleaning is a very deep, multi-day process. I have heard people on podcasts say they rent to nurses who never use the house and they barely have to clean - this is not the norm and kind of a weird thing to celebrate - that you rent to people so overworked that they can't use the house they are renting. Most people you rent to will actually use the house and they will not clean. Whether you pay someone to cleaning once a month and, again, spell that out in an agreement or lease, or pay someone a lot of money to clean over 2+ days, just make sure you price that in. Many cleaners can't handle it.

This is solely my opinion, like I said there isn't a lot of good data, but I think it's a small amount of markets where you can have a mid-term rental without a lot of vacancy and where you can line up bookings, so that you don't have a 3 week vacancy. I always block off at least 5 days for repairs and cleaning in between any rental that is 2+ months. Trust me, there will be maintenance. Vacancies will kill the "30% profit" advertised in the recent podcast and I don't hear about this reality being talked about enough. Just as with any other rental type, you will be competing against people like me with 3% mortgages, who can lower prices .

Just wanted to shout this stuff out. Don't see the reality talked about enough and I keep hearing about mid-term rentals being touted as some amazing play. Believe me, it's been discovered. Not only that, but in markets that I follow, I see mid-term rentals dropping out. Teleworking and traveling nurses were a lot of my renters, but that is fading across the country as the labor market cools, so please just be thinking about that. Assisted living, 55+ retirement communities, co-living where you rent by the room, campgrounds, unique vacation rentals - all of these are much better plays that mid-term rentals. Where I think a mid-term is useful: if it's a home in an area that will see a lot of appreciation. That's really it. Hope this helps someone.

Thank you for this post! This is great information! I own/manage mid term rentals in the Chicago area and suburbs. However, I rent by room so my guests/tenants tend to be folks who want an affordable, clean place to stay. And I’ve noticed my cleaning fees and maintenance expenses aren’t as high as other operators because, for example, most people just stay in their rooms and keep to themselves. So furniture gets used less, areas are cleaner, etc. I also have house rules for how guests should conduct themselves and generally guests clean up after themselves and are respectful of other folks. 

However, if you’re renting to travel nurses (or others) and charging 3-5K a month, I would imagine they would have high standards of cleaning, furnishings, comfortably, etc.