Are you interested in 2024’s hot new real estate investing strategy of mid term rentals (or also commonly referred to as “medium term rentals”) but unsure about where to start or how to maximize your investment? Look no further! Our comprehensive Mid Term Rentals Investor Guide 2024 is here to provide you with the latest insights on the best markets, financing options, and the most promising tenants to target. By the end of this article, you’ll be equipped with the knowledge and tools to make informed decisions and elevate your mid term rental business to new heights. So, buckle up and get ready to dive deep into the exciting world of mid term rentals!
What are Mid Term Rentals?
Mid Term Rentals (MTRs) are residential investment properties typically under leases that run more than a month but less than a year. Generally, most “long-term rentals” or standard single family rentals have leases with a 12-month term. Additionally, what are typically referred to as “short-term rentals” are rented for less than 30-days, typically only a few at a time. These are generally vacation rentals or properties primarily listed on platforms such as airbnb or VRBO. Mid Term Rentals are the in-between. They are rented typically under a lease agreement that’s 30 days or more, but not under leases as long as the full standard year. Typical mid term rental terms are a couple months – generally in the one to six month range.
Why Invest in Mid Term Rentals?
Many real estate investors are finding that the medium term rental investing strategy is the “goldilocks” zone for real estate. Real estate investors are constantly balancing the risk and reward of investment choices. There is more potential revenue from riskier strategies – but also more potential pitfalls. For example, Short Term Rentals generally earn about twice as much as properties leased under standard 12-month agreements – however the risks are generally greater. For example, short term rentals are more exposed to changing market conditions, frequent turnover and more regulatory changes. Long-term rentals are generally less risky, however, locking in tenants at full-year terms typically means much less in rental revenue and cash flow. This can be a hefty price to pay for the lowering of risk.
Some of the ways that Mid Term Rentals are “just right” for maximizing the risk/reward balance in real estate investing include:
✅Revenue and Cash Flow
In the current real estate environment, where values continue to hold up and appreciation is still the rule, but interest rates on investment property loans are still somewhat elevated, it continues to be a challenge to generate cash flow on rental properties. While the risk is less when investors lock in long-term leases, in many markets, the monthly DSCR Ratio (measure of cash flow) struggles to be positive for investors. Mid Term Rentals are increasingly a preferred solution because while they don’t typically earn twice as much or more like short term rentals, there still tends to be higher rents for medium-term stays. This allows properties to provide cash flows on rental properties without the outsized risk and expertise required for STRs.
✅Less Vacancy than Short Term Rentals
One of the biggest downsides to short term rental investing is the constant turnover. More “hospitality” than residential real estate investing, the outsized rents that make STRs so lucrative often come with the hassle and time investment of constant tenant turnover. Some investors scale short term rentals successfully. This often means, however, that managing your STR portfolio becomes near a full time job – or you hire a property management company that takes a bit out of profits. One of the reasons many STR investors have switched to Mid Term Rentals – or added a few MTRs to their portfolio is the still-solid cash flows. With turnover only a handful of times per year, they’re often a “best of both worlds” solution!
✅Regulatory Risk – 30 Day Okay?
Perhaps the biggest advantage of Mid Term Rentals over the short term rental option is much lower regulatory risk that could jeopardize your ability to run your STR in short order. Short term rentals are still a relatively new phenomenon in most markets. The rules, regulations and restrictions in many markets are still being developed, debated and changed. However, almost every market that imposes restrictions on real estate investors pursuing the STR strategy doesn’t affect properties with leases 30 days or more. So in essence, if your properties are run as medium term rentals, with minimum stays of 30 days, most of the constant regulatory worry that comes with short term rentals investing melts away.
Who are the Tenants for Mid Term Rentals?
Travel Nurses
The profession of “travel nurses” became well-known in the last few years. The Covid pandemic dramatically increased the numbers of nurses that traveled to hospitals throughout the country where there was greatest need. Many nurses flocked to the role as demand and pay soared. Travel nurses were likely, at least somewhat, behind the surge in the popularity of the medium term rental strategy.
Are travel nurses still common in 2024? Well, while there has certainly been cutbacks as the Covid era has ended, the numbers of travel nurses remain strong. Additionally, there were approximately 50,000 US travel nurses pre-pandemic. This alone is still a healthy number of potential tenants for mid term rental investment properties. Over the past few years, the travel nursing industry is estimated to have grown by a whopping 600%!
Even if the total number stabilizes back near pre-pandemic levels, travel nurses make up a huge pool of tenants that specifically need rental units that can cater to leases shorter than 12 months and greater than a typical airbnb. Many of the most successful mid term rentals are nice properties situated nearby major hospital systems – a typical recipe for medium term rental success.
Film and Theatre Companies
Another great source of tenants for medium term rentals are the cast and crew of movie projects or traveling performers. Large budget, and even small budget movies can command hundreds of people – actors, crew members and tons of specialists and workers that make projects run. Many states in recent years have significantly invested in tax breaks and incentives to draw movie-making to their states. Because many of these states are new to the movie industry, a lot of the people involved in production must come from out of town. This means many people needing accommodations for a few months during production. Investors can target these states, such as Georgia, Louisiana, and Illinois, to take advantage of this tenant niche.
Additionally, since the lifting of lockdowns that threw a wrench in many live performance industries such as plays and orchestras, the re-opening of large gathering spaces has spurred a resurgence in traveling shows. Many theatre troupes are no longer confined to traditional markets like Broadway in New York City, and have gone on the road for extended periods in major metropolises like Houston, Texas and Minneapolis, Minnesota. These make up another source of potential mid term rental tenants.
Interns
As return-to-office policies continue to define America’s white-collar work scene, in-person internships are making a comeback. Many college students covet and earn internships with employers in the summer months – often in cities separate from their hometowns and college settings. These interns, often given housing stipends from employers, are great potential money-makers for medium term rental investors.
Additionally, there has been a trend of more college students getting internships earlier in their academic careers. For example, after freshmen or sophomore year, instead of just the traditional post-junior timeline. Other trends include internships that aren’t just in the summer months – fall and spring internships are growing in popularity! College interns look to be another solid source of mid-term rental tenants.
In-Between Homes
An often-overlooked tenant source for medium term rentals are people in between homes. One of the biggest motivations to move is when a family grows and runs short on space – needing to relocate to a bigger home. However, timing a sale and a purchase of a new property is easier said than done. There can be a month or two (including unexpected extensions) between selling a home and being able to move into new digs. Often these families can’t fit their lives into tiny hotel rooms, or afford the high rates of airbnbs for months at a time. Enter mid-term rentals – a fully furnished medium term rental investment property can serve these tenants and earn solid returns.
Digital Nomads
Digital nomads are people who have jobs that allow them to “work from home” or work without being tied to a specific physical office. The 2020s have seen a significant rise in this lifestyle. Many digital nomads choose to “work from home” from many homes – traveling the country and staying in different locales for months at a time. Thus, these digital nomad professionals – able to work anywhere with just their laptop – are perfect tenants for mid term rentals.
While the work from home trend may have slowed in the years following 2020/2021, it is still growing and not going away. MTR investors specializing in properties tailored to the needs of these workers should see sustained success into the future.
Professional Athletes
Professional Athletes often don’t have a choice in where they play! Early in their careers, many athletes are “drafted” and sent to a city far from their hometown or college. Additionally, while professional athletes may eventually earn a contract to play in the city of their choice, many are often at the mercy of a highly competitive market – with geography rarely under their control. While many athletes will purchase homes in the cities they play in – professional sports seasons are often only a portion of the year, and team turnover is high. Many have a permanent “home base” in one city – and then spend months at a time at different other spots.
As such, professional athletes make great tenants for medium term rental investors. With often hefty salaries and needs for four or five month terms – these can be lucrative money-makers for mid-term rental property owners. Smartly investing in a niche catering to athletes – perhaps properties or units close to team facilities and stadiums and athlete-tailored amenities – could achieve big success in the mid term rental niche.
Additional Tenant Types – Many Mid Term Niches
There are surprisingly many types of tenants that need 30 to 90 day stays in addition to the tenant types listed above. More mid term tenant options include corporate professionals traveling to branches for projects or training assignments. They can include medical patients needing to relocate for complicated procedures to top specialist hospitals in far away markets. They can also include displaced people from natural disasters or areas prone to flooding or hurricanes. Finally, they can include people spending a few months each year in sunnier climates that contrast with their main homes. Think “snowbirds” that travel to Florida during winter months from the east coast or Midwest. The opposite is also true, such as Texans flocking to Colorado or Utah in the scorching summer months.
Real Estate investing can often be most lucrative for investors that focus and master a specific niche. The medium term rental strategy is – something the medium term rental strategy offers in spades!
Where To List Mid Term Rentals
Furnished Finder
Typically the first option for real estate investors listing their mid term rentals. It is a dedicated website that is solely focused on the MTR space, featuring great infrastructure for hosts. With an average of over 30,000 daily users, Furnished Finder is a great choice for investors looking to go all in on medium term leases.
AirBnb
Another common choice for mid term rental investors to list their properties. This platform is famous for short term rentals, and typically features properties aimed at short stays or experiences. Due to the strong brand awareness associated with AirDNA, a good portion of listings are focused on the mid term rental guest.
Airbnb is a great option for real estate investors that want to fully optimize revenues and booking strategy. Shifting between short term stays and medium term stays can be a great strategy for some. This type of hybrid medium term rental and short term rental strategy is ideal for investors in seasonal markets. Hybrid strategies are also viable in cities that host to several gigantic events per year.
Austin, Texas is a great example of a city that is suited for this hybrid strategy. In addition to college football Saturdays featuring the hometown Texas Longhorns, the city is host to perennial demand drivers such as the South By Southwest festival, Austin City Limits music festival, and Formula 1 Race weekends. Savvy investors will often strategically manage property availability with these attractions in mind. Investors list properties for short stays around these larger, demand-driving events. For the rest of the year, when the calendar is less packed, they pursue the mid term rental strategy. For these investors, a listing platform optimized for different stay lengths like Airbnb is perfect.
Corporate Housing By Owner (CHBO)
A recently launched platform not only specializing in the mid term rental niche, but within the niche aimed primarily at corporate travelers. Differentiation is key in the medium term rental space. Picking a specific niche – such as corporate tenants – can be a successful strategy. For investors in large metro areas that attract a lot of business travel – this booking platform may be the best choice. The other platforms listed cater to a more general audience.
Financing Mid Term Rentals
A common problem for real estate investors pursing new and innovative strategies is finding financing that works. Many traditional lenders, such as banks and conventional mortgage brokers are very slow to adapt to trends. Many lenders still want to see qualification based on personal income and DTI ratios or are only comfortable with the traditional long-term rental (one 12-month lease at reduced rates).
While more and more lenders are embracing short term rentals, medium term rentals can still be challenging for some lenders. Even non-QM “DSCR” lenders that specialize in financing rental properties may be hesitant to lend on MTRs. Luckily, Easy Street Capital is an innovative and forward-thinking lender that loves to work with investors on the cutting edge. With interest rates stubbornly high and property values making cash flow tenuous – creative strategies such as mid term rental leasing are key to success.
At Easy Street – our leading DSCR Loan program is flexible and forward thinking. The leader in short term rental loans, this flexibility expands to medium term rentals as well.
What sets our Medium Term Rental Loans apart from other (extremely hard-to-find) options?
✅No 12-Month Leases Required
If refinancing a mid term rental and are in-between leases or under a medium term stay – there is no issue qualifying
✅Purchasing Qualification Using Common Sense
We will utilize a judgment-based underwriting and rent qualification for purchasers planning on using the mid term rental strategy. If the property’s comparables are typically utilized as short term rentals, we are comfortable utilizing AirDNA projections. A haircut may be applied dependent upon experience and the specific scenario.
✅No DTI, No Tax Returns, No Income Verification
Our DSCR Loans are defined by flexibility and ease – qualification and the mortgage process does not require a W2 job history or personal income ratios – if you are making the jump to full time real estate investor in the medium term rental niche – there are no obstacles to qualify!
Top Markets for Mid Term Rentals
✅Austin, Texas
The aforementioned Texas capital is a great market for medium term rentals. Home to the University of Texas at Austin, the state’s flagship university, it attracts many visitors needing medium-length stays. From students taking summer classes to visiting professors, the world of academia is rife with opportunity for MTRs. Its growing business sector, particularly in technology and real estate, also attracts many interns and corporate travelers. Finally, as the “live music capital of the world” it can be a home base for musicians setting up shop for a month or two to settle in at one of the city’s plethora of venues.
✅San Diego, California
This southern California city was listed as the top destination for travel nurses in 2024. Travel nurses make up a leading tenant base for mid term rentals so cities with large quantities of these individuals should be top of mind for any medium term rental investor. The state of California has a strong regulatory environment regarding working conditions that attract nurses from all over. The city of San Diego alone features over 30 hospitals. For mid term rental investors targeting traveling nurses, San Diego could be a great option.
✅Columbus, Ohio
Columbus, Ohio is another great option for mid term rental investors. Like Austin, it boasts the state’s flagship university, Ohio State, which attracts medium term visitors connected to the university system. For those aiming to shift between STR and MTR, Ohio State athletics certainly draws visitors year-round needing short-stays. This has the potential to boost the income potential of MTRs in the city in certain seasons. Additionally, Columbus features an expanding medical infrastructure, five Fortune 500 Companies, and is the capital of Ohio. Legislators from across the state are in need of accommodation for their medium length stays in the city. Columbus is uniquely positioned to target multiple medium term renters and could be a great option for investors.
How do I get started?
Ready to purchase and need financing to secure your financial future with a mid term rental investment property?
Talk to one of our loan specialists about lending options today!
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