How do you know your MTR will get rented out?

Question

Hi all,

I’ve been doing market research in my area for MTR arbitrage, with a focus on serving traveling nurses.

One of the challenges I’ve been facing is the hesitation around whether I’ll actually be able to rent out a unit with a higher asking price.

The properties I’m looking at are luxury apartments with great amenities but they would have some of the highest rents in the area compared to other options for traveling nurses.

While the amenities are attractive, I’m not fully confident that they alone will be enough to consistently attract tenants.

Is there any way to gauge interest or demand for a specific unit before I commit to leasing it?

Thank you in advance for any advice or insight.

Summer Chen · Answer

Traveling nurses may only want to pay what they need, not for luxury amenities they do not use.

Chris Seveney · Answer

There are companies that do studies to give you an idea of what the demand is but they will charge you a hefty price for a report. My recommendation is to never bank on one exit - so if it does not work as a long term rental then I would not do it as a MTR. Also are you going to arbitrage where you sign a long term lease and sublet. Does the proeprty you are looking to do this allow it?

Michael K Gallagher · Answer

@Vanessa Lule not sure if you are local to that market, and I am not in MTR myself, but my clients who have done it went as far as touring the market, introducing themselves at long term hotels, speaking to construction companies, and talking to friends and contacts that they could arrange to speak to who were travel nurses to get insights.

Candidly I'm not a huge fan of the Arbitrage method but that's just not the investing I'm trying to, but in this case if you could get a shorter term than 12 months on your end of things that would reduce the risk in my mind, as would flexibility of use case.

Allen Duan · Answer

Hi Vanessa, this is all about market research. Just like any other business, you need to get an idea of what the marketplace/tenants will pay for and what they want to buy. But it's always going to be a prediction until you actually start offering your product and see who will buy and for how much.

The best way I've found to predict MTR performance is to look at comps. You'll get an idea of pricing, demand/occupancy, amenities and property set up.

Noah Laker · Answer

I'm a local broker and manage about 100 STR and MTR properties. We always try to get an STR permit regardless so that we can blend these strategies. MTR is great, but it tends to be somewhat inconsistent, meaning you will expect to have gaps in between bookings. This is where STR comes in handy.

Obviously this is a challenge for the arbitrage model, since most places don't allow subletting, and if they do, they won't like short term stays. Work with private home landlords, rather than apartment complexes.

Jeremy Jareckyj · Answer

Maybe reach out to some local hosts or PMs who do MTR in the area and see what the performance is like!

Jake Andronico · Answer

Great question. Occupancy is everything

12 months x $3,000 per month = $36,000

9 months x $4,000 per month = $36,000

Getting clarity from a multiple year operator is highly recommended! It may not be worth it, but it definitely can be.

How do you know your MTR will get rented out?

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