Unleash the Power of Medium Term Rentals
Medium term rentals offer much of the same upside as short term rentals without as much turnover. Here’s what you need to know.
Have you ever heard of medium term rentals?The term short term rental is firmly implanted in the mainstream lexicon. Airbnb and other similar vacation rental sites are known for booking short term stays. On the flip side, most of us have engaged in a long-term rental at some point in life, signing a lease for a year or two as a place to move our stuff into and call home.
But what about a medium term rental?
A medium term rental is a rental that lasts more than 30 days, but less than a year. Instead of mid-term rental, you might also hear terms like extended stay, flexible lease, long-term stay, month-to-month rental, or monthly rentals. Medium term rentals are usually furnished, and they can be a creative strategy to add to your real estate investment business.
Reasons to add medium term rentals as a strategy
- Medium term tenants tend to be economically stable, quality renters. The standard medium term renter might be one of the following: a traveling nurse, a corporate worker on an out-of-town project, a recent divorcee, or a fancy-free remote worker checking out a new city for possible relocation. These types of tenants tend to be quiet and responsible with stable income.
- Medium term tenants often extend their stay. Some landlords report that their medium term tenants may renew their lease. They might even renew several times if they like the rental and the area or their stay is extended.
- Medium term tenants pay more in rent than long-term tenants. While you’ll probably get the most rent per day out of a short term stay, you’ll also have to deal with potential gaps in occupancy. That plus the unpredictability of those staying, and the seasonal ups and downs of tourist interest.
- Medium term rentals require less management and maintenance than do short term rentals. Some of the hassles that come with running a short term stay disappear or are reduced with a medium term rental business. Short term rentals means juggling multiple tenants, including managing the frequent cleaning and upkeep required for high turnover rentals.
- Medium term tenants can fill a gap in a vacation rental property in the off-season. If your property is in a beach town, you may find renting to corporate clients or visiting university professors a better use of your property than stringing together a few short term vacation rentals in December — and it’s likely better for your bottom line.
What kinds of landlords may want to try medium term rentals?
- Landlords with property in seasonal towns. Those with rental property near seasonal attractions such as the beach or the mountains may choose to do short term rentals in the high season. Then you can pivot to medium term rentals in the off-season. It’s a good way to capitalize on the higher payoff of short term rentals when demand soars and more stable medium term rental tenants when demand falls.
- Properties near corporate headquarters or near businesses that bring in out-of-towners for projects. If you’re near a hospital or large corporate office, you may be able to develop a relationship with the organization and build a reputation for being a trusted medium stay option.
- Landlords who are tired of short term rental hassle but prefer that model over long-term rentals. Maybe you’re just tired of scheduling a cleaning crew three times a week. Whatever the reason for souring on the short term rental market, medium term rentals can provide a similar income level with less hassle.
- Any place where professionals may want to live and buy a home in the near future. As remote work becomes more standard, young professionals are city-hopping, either for fun or to sample a city where they think they might like to move.
- Landlords who previously worked in long-term rental who want to try their hand at a different kind of rental. Coming from a traditional rental background, you may want to ease into things with a medium term rental strategy. It won’t be as time-intensive as a short term rental but will help you dip your toe into the waters.
Tips on making your next rental business a success
- Outfit the rental home, apartment, or ADU to appeal to mid-term renters who come through your area. Larger vacation home rentals might appeal to families. Smaller rentals may be more focused on the corporate traveler who wants the clean, easy comforts of a home away from home. Decorate and provide amenities that appeal to the type of renter you’d like to see in your rental.
- Make your stay more of a home-like experience than a vacation-rental one. You might stock higher-end linens and towels for your medium term tenants. Also be willing to splurge on a better quality mattress and mattress pad. Stock the kitchen for more complicated cooking than you might in a short term vacation-focused rental.
- Remember, you’ll be paying for things like WiFi and utilities that you may not have been paying for in a long-term rental. So you should work those fees into the price, especially if you’re paying for costs like sky-high AC or heating.
- Market your rental based on its proximity to things like grocery stores, public transportation, hospitals, or big company headquarters. This is in contrast to local tourist attractions for short term stays or school district for traditional rentals.
- Follow any local or state rules and regulations on medium term rentals. In general, there tend to be fewer restrictions on these types of stays than short term rentals. You can protect yourself by collecting a security deposit. Be sure to run whatever background or credit checks are allowed by law. Especially if you’re not going through a site that screens applicants.
- Expand your listings. While you may choose to use more traditional short term rental platforms such as Airbnb, there are plenty of sites that specialize in medium term rentals, including FurnishedFinder and CorporateHousingbyOwner. Craigslist and Facebook Marketplace are also options.
Is it time to give something different a try?
By renting your real estate investment property in the medium term, you’re able to price the rental at current market rates. And with inflation rising, that’s a major boon for investors looking to build wealth with their properties.