Investments in mid-term rentals can be an attractive addition to your financial portfolio. The mid-term rental market is booming! In 2023, nights sold for 30+ day bookings in the U.S. increased year over year by 94%. This rise is driven by a growing demographic of digital nomads, remote workers, and students, all seeking flexible housing solutions.
Benefits of Investments in Mid-Term Rentals
Mid-term rentals represent a market where the average occupancy rate hovers around 51%, a stark contrast to the often fluctuating occupancy rates in traditional rental models and short-term rentals. Mid-term rentals offer property owners and investors an opportunity to maximize their rental income while meeting the evolving demands of modern tenants. From fully furnished apartments in urban centers to cozy homes in suburban areas show that the possibilities are diverse and lucrative.
Mid-term rentals strike a balance between stability and flexibility, offering leases that usual span from a few months to just under a year. They are ideal for an extended stay without the commitment of long-term contracts.
For landlords, mid-term housing offers a balanced alternative with steadier occupancy rates and rent prices than short-term vacation rentals but less commitment compared to traditional year-long leases. Property owners can tailor their rentals to meet the demands of the mid-term rental market, leveraging factors like dynamic pricing during peak seasons and the appeal of fully furnished spaces.
Core Characteristics of Mid-Term Leases
Here are the core characteristics of this kind of lease:
- Duration: Typically ranges from 1 to 12 months.
- Attracts individuals like professionals on temporary assignments, college students; traveling nurses, or those in between permanent residences.
- Furnishing options: Often includes furnished options.
- Utilities Commonly utilities are included, simplifying monthly payments
- More permanence Medium-term rentals provide tenants with more permanence than month to month rentals which are more common for vacationers.
The Challenges of Investments in Mid-Term Rentals for Landlords
While mid-term rentals are an emerging trend in the real estate market, they also come with specific problems. A landlord faces more frequent turnover of tenants, thereby increasing the need to find and vet new tenants. In addition, it is harder to manage furnished properties – but not impossible. Typically, a sofa needs to be replaced more often than an HVAC system!
Finding the right mid-term tenants often requires more effort than for short term or long term rental properties. The target audience for medium-term rentals is more specific, and not as large as those looking for either short-term housing or long-term leases. Tailoring your marketing strategies to attract business travelers, people relocating, or those settling into a new city can demand extra time and resources to set up the right systems.
While mid-term rentals offer benefits, they typically generate less income per unit than short-term rentals. Short-term accommodations can command higher rates, reflecting the frequent turnover. This contrast is something to consider when balancing your rental portfolio. (However, many local jurisdictions restrict short-term rentals for instance by requiring that it be an owner-occupied property. In addition, many condo buildings require that leases be at least six months in duration.)
Since mid-term rentals experience more frequent turnover compared to long-term rentals, there are higher maintenance and operational costs for property management. This frequent turnover requires ongoing attention to property upkeep and readiness for new occupants, which can add to the workload for property managers.
What to Look for in Investments in Mid-Term Rentals
Before buying properties as investments in mid-term rentals, it is important to make sure that these properties are in good condition and will require less maintenance. Is the HVAC fairly new? Are the kitchen and baths updated? Is the property near grocery stores and mass transit? The tenant may not be bringing a car and will be more attracted to properties with a good workability score. Is the property near businesses with a reasonable number of people seconded to that business or is the community one with a high influx of people coming on a mid-term basis? Consider connecting with corporate relocation offices or insurance companies trying to place families whose homes have been damaged and are being repaired.
Another option to consider are the nearby vacation areas – close to the DC area – but closer still to mountains or beaches. Annapolis and other points on the Eastern Shore would make good mid-term rentals. Consider a home on the water in Annapolis or Kent Island. Here are some beautiful homes to fall in love with! Perhaps you are a snow skier rather than a water skier. Consider a home in Garrett County in Western Maryland! Deep Creek offers easy access to water sports and Wisp Resort. With any of these vacation properties, you can rent them for a month or six or more – and still enjoy them yourself for a few months!
If this sounds like an investment strategy that you want to explore, let’s talk! You can reach me at 240-401-5577 or email me at lise@lisehowe.com.
