All Forum Posts by: Miguel Del Mazo

100 up votes, Brent.

My wife and I are physician owner/operators of MTRs in NE GA, and we got into the rental space simply because what was being offered to the nurses (and other travelers) in our area was sub-par. The people who take care of our patients, who keep our hospitals running, and who are called to this vocation deserve a safe, quiet and restful home away from home while they work. 

We worry that too many operators (especially those switching from STRs) don't understand the situation of this kind of end user. Brent lays it out incredibly well. Traveler pay is going down, hours are brutal, and that stipend is to cover two housing costs (home and while traveling).

So please, please, please if you want to get in to MTRs for travelers, do as much research into their needs as you would into understanding a market or a deal. Be communicative to your tenants. Be flexible and understanding. Please understand that you are serving those who serve. You'll be able charge a good rent, but it can't be only about that. 

Quote from @Sean Monahan:

Travel nurses are given a specific per diem for their food and shelter.  Also please note that just because this is their stipend that this is what you should charge.  Monitor your area and find a fare value.  

This is an excellent post. Also be aware that the stipend given to travelers is not to just cover the cost of their rental housing, but it also exists to defray some of the cost of the presumed housing they have back home. While many traveling medical professionals fully embrace the nomadic lifestyle and have no such "home base", there is a logical reason why the per diem for housing should be higher than a tenant's rent.

LTR, Whole unit MTR, By the room MTR, STR

These are all great strategies for a house in San Diego, but what is the "best" strategy?  Short answer: the one that works for you.

Longer answer: Is what you want to do legal in your area? STRs are famously under attack by municipalities and HOAs. Your neighbors *will* turn you in if STRs are not legal in your area. When rehabbing for a rent by the room strategy, make sure you don't run afoul local zoning laws. For instance, adding a 2nd kitchen might be viewed as making an illegal duplex in a SFH.

Decide which headaches you want. LTRs are commonly viewed as less stressful, but if making less money is a stress, then you need to factor that in. Do you love juggle your own schedule? How would you feel about juggling your properties? If that is something that you enjoy, then you may be well rewarded with STRs. Do you de-escalate interpersonal conflict well? That is a necessary skill in rent-by-the-room.

It sounds like you are doing a great job of running the "what if" scenarios, but ultimately, you will have to decide which path to try first. Most mistakes that can be made in being a landlord are not fatal ones, so if something doesn't pan out the way you want, pivot.  Try another model.

To answer specific questions you posted: Noise monitors are available that can be mounted in a room. Set a reasonable decibel limit in your lease and enforce it.

By-the-room and "allows pets" strikes me as a bad recipe.  People who are traveling through for work are going to be leaving their pet alone for hours at a time, and that would concern me (and my insurer).

Emotional Support Animals are legally allowed to break the "no pets" policy. We've not had it come up yet in our practice, but we would abide by the law. One note, some court rulings in some circuits have limited the allowable animals to traditional dogs and cats, disallowing exotic ESA.  Hopefully, you will never have to allow an emotional support peacock. :)

I agree with Andrew that it is worth trying a whole house MTR strategy. It may earn less, but it allows for a great opportunity to learn (and thus to decide if by-the-room is preferred). Also, renting the whole house as an MTR to a insurance company may be the best of all worlds.

I wish I could upvote Joey and Julie's posts more.

My wife and I own/operate MTRs in the NE GA market, and for our area at least, traveling medical professional staffing companies want to see that you have at least 5 units to lease before they have more than a one-off relationship with you. This is probably because if you only have a few rentals in an area, they are likely to be rented when the staffing agency needs a unit.

Arbitrage can increase the number of units you operate quickly but at the cost of not getting most of the benefits of RE ownership.  Also, if you hate moving, rental arbitrage has a risk of not being renewed by the landlord leaving you to pack up and move.

We've had great success with furnishedfinder (singular, not plural) in finding tenants. Not all tenants have been nurses or other medical providers, so don't make your FF listing too specific for those avatars.

I have a friend who PadSplits in south Atlanta.  He is living in the house and rents by the room via PadSplit. He enjoys the cash flow, has a good tenant screening process, and is OK with the tenant headaches that are going to occur.

I would put it higher on the reward side of the profile, but it also is a higher amount of work and harder to scale endeavor.

I support the recommendation of PadSplit (if legal by local ordinances). Furnishedfinder is an awesome resource, and you should list there, but I find that "private bathroom" is greatly favored on furnishedfinder and less so on PadSplit.

I think this will work out well, but I would recommend for your next purchase, try "to start with the end in mind". That is to say, before closing on the property, know via official websites or phone calls to the local municipalities if STR or MTR is legal in the area, can you rent by the room, and is there demand for what you are creating. If you plan on doing significant rehab on a property, then try to have the final use in mind when you design it. For example, you may be able to add a bathroom or change a hallway to allow more privacy.

The more you know about what you can or should do before closing, the better.

With the caveat that I do not know the VA market at all, here are my thoughts on arbitrage.

Negatives: Arbitrage is more work than owning an MTR outright because you have to manage more interested parties. It is not an investment so much as a job (trading time and expertise for money). It lacks the tax and potential growth benefits of ownership.  

Positives: There is less of a capital requirement upfront, since you can get into a long-term lease for a lot less than the down payment of a property.  If things go poorly, your losses are capped. (If you rent for a year and no one sublets, then that is the amount of money you could lose in the worst case scenario, not counting some rare "tenant sues you" sort of situation). 

So where do I think arbitrage fits in to an investor's tool kit?  I think one viable use is if you don't have enough capital to buy a property outright, but you have enough to risk some loss. This lets you learn while you potentially earn. Do not arbitrage from a position where you need every dime that comes into your accounts.  Do not invest in general without some ability to handle an unexpected negative event; strengthen your personal financial situation first. Another use of arbitrage is to test a new market.  I feel that this is the best use for established MTR operators. Rather than buying in a new-to-you market, arbitrage on a one year contract and see if the market supports what you provide. If it does, go all in with a purchase there.  

I'll have an unpopular opinion here, but we have two almost identical units in a condominium where one has mounted TVs in both bedrooms and in the living room and the other only has a TV mounted in the living room.  All TVs are mounted at a height that is comfortable on the neck to watch from the couch or bed. We see no difference in occupancy or pricing in the two units, and tenants tell us that the TVs are essentially unused in the bedroom and only used in the living room if the tenants have young kids.  Most travelers are bringing their phone or laptop as their entertainment/media center, so here's my thoughts on mounted vs on-a-stand: neither.  :)

If you feel that a TV is essential, then mounting it in a common area has the advantage of making it harder to steal and harder to cause injury. Please mount it with line of sight in mind for the viewer, so that they will not need to crank their neck in an uncomfortable angle.  Please mount it securely to a stud and not to the drywall. If you are in the greater Atlanta area, let me know, and I can share the name and number of the guy that has done a great job with our TVs.