If you’ve been staying up on the latest in the real estate investing world, you’ve probably heard the term “medium-term rentals” on forums, podcasts, YouTube, and more—BiggerPockets even just released a book about the strategy. Investors nationwide are adding medium-term rentals to their portfolios and enjoying the massive cash flow.
So, what are medium-term rentals?
A medium-term rental refers to a furnished rental that hosts guests for durations of more than 30 days or more. On average, medium-term rental guests stay for two to three months. The tenants are often traveling professionals like nurses, utility workers, or other seasonal workers. By hosting guests for more than 30 days, investors can enjoy higher cash flow than long-term tenants without dealing with the hassle of constant tenant turnover experienced with short-term rentals. Plus, medium-term rentals allow investors to abide by short-term regulations and ordinances that normally restrict short-term stays.
Are there specific markets for this strategy?
Medium-term rental markets can be urban, rural, and anywhere in the country. When analyzing a market, look at things like: concentration of hospitals, large utility projects, and HQ offices of large companies that might promote traveling professionals. Think: what would draw someone to this city for 2-3 months? Is there a stable enough workforce to support consistent tenant bookings?
Then, you can use Furnished Finder, one of the most commonly used websites to connect traveling professionals to housing providers, to gauge market demand, and view comparable listings. When viewing comparables, be sure to use listings similar to your home (bed/bath count, square footage, location, etc.). This will help you paint the most accurate picture of potential income.
How do I get started?
Sarah Weaver’s book, “30-Day Stay: A Real Estate Investor’s Guide to Mastering the Medium-Term Rental,” will teach you everything you need to know to start and scale your medium-term rental portfolio. The book will teach you how to:
- 1. Choose a market
- 2. Analyze deals
- 3. Purchase a property
- 4. Furnish your units
- 5. List the unit on Furnished Finder and any other platforms of your choice (some hosts cross-list on Airbnb or VRBO)
- 6. Enjoy your cash flow!
What else do I need to know?
As always, it is important to do your due diligence on the market you choose and the property you purchase. Make sure you are confident running the numbers.
Tip: When analyzing a medium-term rental, remember to add the cost of furnishing to your initial investment. This can change whether or not a property is a good deal.
The same goes for landlord-paid utilities—unlike long-term rentals, you will be responsible for paying utilities for your MTR. Be sure to estimate these costs as accurately as you can. If you’re not sure, call the local utility companies in the area.
How do I finance a medium-term rental?
It’s no secret that obtaining a loan with the current interest rates can be overwhelming. As an investor, you should look for a lender who is fluent with investors. That’s where Easy Street Capital comes in. A forward-thinking DSCR lender that specializes in lending on short- and medium-term rentals, Easy Street pioneered the ultimate solution for investors looking to build and scale robust portfolios.
Plus, if you use a DSCR loan, the loan will be based on the projected income of the property, including how it’s projected to earn through medium-term leases (often significantly more than traditional long-term tenants!)—not on your personal lendability. So, if you’ve maxed out your personal residential loans, don’t have great DTI, or your current lender stubbornly sticks to using long-term rents, you can still qualify for the loan.
Stay in the Loop
Subscribe to our newsletter