What my Orlando long-term rentals taught me about running MTRs and STRs

Question

Several years ago I owned multiple long-term rentals in Orlando. Today I run my own portfolio and co-host short-term rentals for other owners, mostly as a mid-term/short-term hybrid. People sometimes talk about LTR and STR as two different businesses. In my experience, most of what makes a furnished rental work, I learned as a landlord first.

A few lessons that carried over:

1. Vacancy is the expense nobody budgets for honestly. With my long-term rentals, turnover costs varied a lot depending on the property and the tenant it was aimed at. A single turnover ran anywhere from about 35% to 100% of a month's rent. That's a big reason my calendars are set for 30+ day stays with 30-60 day minimums. Short stays only fill gaps of a few days to two weeks. Monthly guests carry the occupancy, and nightly guests fill the holes.

2. The tenant you keep beats the tenant you find. As a landlord, a good renewal was usually worth more than a small rent bump. The same is true in mid-term. After each stay I leave a 60-day window open so the guest can extend. One construction crew extended four times and stayed 90+ days. That's a lease renewal by another name.

3. Price against the market, not against your mortgage. One of my long-term rentals was a property I bought and then sold on a lease option. Because of the option, the monthly payment was slightly above market rent. When that tenant had to be evicted, I couldn't get the same rate on a regular lease. Rent went back to market, and I was fortunate to break even. Lesson learned: a rent that only works because of a special arrangement isn't your real rent. Now I use PriceLabs, and I set monthly rates between the long-term rent (my floor) and what the unit could gross nightly (my ceiling).

4. Know which costs are yours and which are the guest's. Landlording taught me to keep those lines clear. On my listings, cleaning fees are a pass-through, not a profit line, so my revenue numbers stay honest.

Why I moved on: For me, mid-term and short-term turned out to be easier to manage, and they made more money. That's after covering the extra overhead that comes with furnished units: cleaning, maintenance, utilities, furnishings, internet and some empty days between stays. It only works where there's real demand nearby, so check that before you convert anything.

To be fair to long-term rentals: I think of an LTR kind of like a mutual fund. The returns aren't high, but they're consistent, and the longer you hold it, the better it gets. If I bought in an area that made sense but limited STR and MTR enough to be a major challenge, I'd stay long-term for the cash flow and appreciation, and use that equity down the road.

For landlords who've been at it a while: what's one habit from long-term renting you'd keep no matter what strategy you moved to? And if you've gone the other way, from STR or MTR back to LTR, what made you switch?

Marisol Gallegos · Answer

@John Racine I like your point that many STR and MTR principles are really extensions of good landlording. The lesson about pricing against the market rather than the mortgage stood out to me. It’s easy to build a deal around income that may not be sustainable. I also agree that vacancy and turnover costs deserve more attention than they often get.

Your hybrid approach of using monthly stays for consistent occupancy and shorter stays to fill gaps is interesting.

Btw, does this model works across different property types, or does it depend heavily on location and demand?

Simon W. · Answer

The cleaning fee point is the one I'd build on, because how it's booked decides whether the revenue number is honest. I'd record the fee the guest pays as income and the cleaner's invoice as an expense, both at the full amount. If a guest pays $150 and the cleaner charges $120, don't net it to $30. Netting makes the cleaning cost vanish and makes revenue look lower, so you can't see whether the fee is covering the cost over time.

On vacancy, the 35% to 100% range per turnover is a good number to turn into a budget line. On a $2,700 rent, that's $945 to $2,700 each time a unit turns. If you track turns per property per year, you can see what the 30 to 60 day minimums are actually saving.

One more thing from the books side is that stays under 30 days can come with local occupancy or lodging taxes. Those are collected from the guest and owed to the government, so they belong in a liability account, not income. Muyees's point about clean deposits holds up when the bookkeeping is just as clean.

John Racine · Answer

@Muyees Ayilara yes, for me it was. That crew stayed early on in my mid-term journey, and back then there were no cleanings during the stay, just one turnover after they checked out. Over 90+ days that was one arrival and one departure, not dozens of resets.

I've changed that since. Now every mid-term stay includes a mid-stay clean every 30 days, and the cost is budgeted into the monthly rate. It keeps the unit in good shape and lets me see the condition of the place along the way, not just at checkout.

The work doesn't go away. It moves to the front. For 28+ night stays my PMS handles ID checks and a signed agreement, and I'd rather spend the time vetting one guest up front than turning the unit every few days.

On the lower nightly rate, I don't really think of it that way. I price the monthly rate between what the unit would get on a 12-month lease and what it could gross nightly, so it's built to beat the lease, not to match nightly.

Your point about the lender using market rent and not what the owner needs is a good one. When a lender looks at those 12 months of deposits, does it matter whether a 30+ day stay came through Airbnb or through a direct lease?

Muyees Ayilara · Answer

John, this one hit for me because it ties back to what you said on the other post about 30+ day stays. Your number 1 is the one I see kill deals on the lending side. Vacancy is the expense nobody budgets for honestly. A host will show me great nightly rates, but when I look at 12 months of deposits, the gaps are what stand out. Turnover, cleaning, a few empty days between guests, it all adds up. The guys who run 30-60 day minimums like you, their deposits are just cleaner.

Number 3 stuck with me too. Price against the market, not against your mortgage. I see that a lot. Someone bought high, so they need $3,200 to make it work, but the market is $2,700. On paper they say it cash flows, but the lender is going to use the market rent, not what they need. That is where a lot of refis get stuck. And I agree on the LTR as a mutual fund line. It is boring, but it is consistent. That is exactly why lenders like it. It might not be flashy, but when the numbers are steady month after month, the file goes through easy. For me, the one habit I would keep from long term is what you said in number 4, keep the costs clear. Cleaning fee is a pass-through, not profit. When the numbers are honest like that, it is easier for everyone, including the lender, to trust them.

Quick question for you — on that construction crew that extended 4 times and stayed 90+ days, did you find those longer stays actually ended up being less work overall, even with the lower nightly rate? That is what I keep hearing, but I am curious if it played out that way for you.

John Racine · Answer

@Marisol Gallegos great question. In my experience it depends far more on location and demand than on property type. I run it in single-family homes, a townhouse, and one unit in a large apartment community, and the setup is basically the same in all of them. I also have colleagues running the same model in multifamily. What changes is who's booking and why.

The 30+ day stays need a reason for people to be in the area for a month or more: hospitals, construction, insurance relocations, people between homes. One of my longest stays was a construction crew that extended four times. If that kind of demand isn't nearby, the hybrid turns back into a regular STR that fills its gaps with long stays now and then.

Before converting a unit, I check Furnished Finder to see what mid-term demand actually looks like in that market. I also search Airbnb for 30+ day stays in the area to see who else is going after those guests and what they're charging. Then I price between what it would rent for long-term (my floor) and what it could gross nightly (my ceiling).

Property type matters most in the rules. Townhomes, condos and apartment communities often have HOA or lease rules on minimum stays, and some cities treat stays under 30 days differently than 30+. Some properties can't take the short stays at all. Then you're running straight mid-term, which still works if the demand is there.

Are you seeing much mid-term demand in Dallas?

What my Orlando long-term rentals taught me about running MTRs and STRs

What my Orlando long-term rentals taught me about running MTRs and STRs

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