6 Things To Look For In a Mid-Term Rental Property
Local districts are cracking down on Short Term Rentals, and STR owners are feeling the heat. Many are considering new ways to keep pursuing furnished rentals: No wonder Mid Term Rentals are on the rise!
Investing in MTRs can be lucrative for real estate investors. These properties differ from other rentals because they cater to tenants who require accommodations for a few months, typically for work-related purposes like traveling nurses, corporate employees, or visiting professors—blending temporary rental with a home-like environment. However, to maximize the success of a mid-term rental business, it’s crucial to choose the right property.
Let’s explore the key factors investors should consider before investing in a mid-term rental property.
1. Good Location and Proximity to Amenities
One of the most critical factors to consider when choosing a mid-term rental property is its location. Opt for areas that are near hospitals, universities, large corporate offices, or other industries that frequently require temporary housing. Plus, ensuring your property is in close proximity to amenities like healthcare facilities, public transportation, shopping centers, and restaurants adds to the desirability of the property to potential tenants.
2. Tenant Demand
Before you invest, it’s important to conduct thorough market research to understand the demand for mid-term rentals in your target area. On top of looking for properties that are near key work locations and amenities, also make that sure wherever you look has a steady influx of professionals or seasonal workers who need temporary housing.
Analyze rental vacancy rates, average rental rates, and occupancy rates to gauge the potential profitability of your investment. Online platforms like AirDNA, can provide valuable insights into MTR demand in your chosen market.
3. Comfortable Property Features & Layout
Once you’ve found a prime location, now look at the current or potential features of the home. Mid-term tenants often seek comfortable, fully furnished accommodations with amenities that cater to their needs. Make sure any property you invest in has spacious living areas, well-equipped kitchens, and comfortable bedrooms.
They’ll also prefer places that offer amenities like Wifi, a security system, laundry, parking spot, and private outdoor space, which will only serve to enhance the property’s appeal. If the home doesn’t already offer those, determine if they can be easily added, or how much it would cost to add them on top of your general renovations.
4. Differentiating Factors
To stand out in the competitive midterm rental market, consider properties with unique and distinguishing features. Investing in properties with architectural charm, historical significance, or a distinctive design can attract tenants seeking a memorable experience. Many investors nowadays are giving their rental properties distinctive themes, to create this differentiated factor. A “theme” could simply be a color that is present throughout the home, a specific design style, or creative wallpaper: Really, the options are endless.
In short, avoid cookie-cutter properties and instead focus on creating a unique and appealing environment that sets your rental apart from others in the area.
5. Manageable Maintenance & Upkeep
Assess the condition of the property and evaluate its maintenance requirements. Properties that require extensive renovations or repairs may result in additional costs and downtime that you can’t afford. Look for properties that are well-maintained or have the potential for cosmetic improvements that can increase their appeal and lower your day-to-day work as a landlord. Consider hiring a professional home inspector to identify any hidden issues that might impact the property’s value or rental potential so you’re not caught off-guard after you’ve already made the investment.
6. Strong Financial Analysis
Before making any final decisions on a property, perform a comprehensive financial analysis to confirm the potential of the investment. Consider factors such as purchase price, renovation costs, ongoing maintenance expenses, property taxes, insurance, and potential rental income.
No need to dive into a spreadsheet, though. You can use the Backflip app to pull up an instant returns analysis for your MTR property. With clear data on projected cash flow and return on investment, you can determine if the property aligns with your financial goals and expectations. You can even get a list of comps to see buying and selling trends in the area. (If you’ve completed all of these steps and found a candidate that meets your criteria for a midterm rental, you can also do an non-binding loan application directly in the Backflip app to actually acquire it).
In sum:
If you’ve been looking for a promising alternative to short-term rentals, with all the pressures that come with that approach, getting into the mid-term market can be a smart addition to your portfolio—if you understand tenants who fit the mid-term range. With the right property, location, and plan, mid-term rentals can provide a strong stream of income for real estate investors in 2024 and beyond.
