Everything a Landlord Needs to Know About Mid-Term Rentals to Be Profitable
BlogsOctober 8 2023 by Transplant Housing
As the rental market grows, more landlords are exploring new options for increasing their profits. One strategy that is gaining popularity is mid-term rentals. These rentals offer a unique opportunity for landlords to generate income from their properties while attracting a different type of tenant.
But what exactly are mid-term rentals, and how can landlords make them profitable? In this guide, we will cover everything a landlord needs to know about mid-term rentals, from what they are and how they differ from other types of rentals to tips and strategies for maximizing profits.
What Are Mid-Term Rentals?
Mid-term rentals are residential properties that are rented out for periods of one month to six months. They fall between short-term rentals (less than 30 days) and long-term rentals (six months or more). They are also commonly referred to as medium-term rentals or extended-stay rentals.
How Do Mid-Term Rentals Differ from Other Types of Rentals?
Mid-term rentals offer a unique balance between the flexibility of short-term rentals and the stability of long-term rentals. Here are some key ways in which they differ from other types of rentals:
- Length of Stay: As mentioned, mid-term rentals typically have a minimum stay of one month and a maximum stay of eleven months. This means tenants can enjoy a longer stay than short-term rentals but still have the flexibility to leave after a few months if needed- depending on how the contract is set up.
- Target Market: Mid-term rentals tend to attract a different type of tenant than short-term or long-term rentals. They are ideal for professionals on temporary work assignments, students studying abroad, and individuals in transitional periods such as divorce or relocation.
- Furnished vs. Unfurnished: While long-term rentals typically come unfurnished and short-term rentals come fully furnished, mid-term rentals offer more flexibility in terms of furnishings (furnished is most common). Landlords can offer a fully furnished, partially furnished, or unfurnished unit, depending on their target market and location.
Who is Looking for a Mid-Term Rental?
Understanding the target market for mid-term rentals is essential for landlords to make them profitable. Here are some groups of people who may be interested in renting a mid-term rental:
- Business Professionals: Individuals who are on temporary work assignments or traveling for business often prefer the comfort and amenities of a home over a hotel room. These professionals can include consultants, executives, and contractors.
- Traveling Healthcare Professionals: Nurses, doctors, and other healthcare professionals who are on temporary assignments or completing rotations may prefer the comfort of a mid-term rental over traditional housing options.
- Students: Students studying abroad or participating in exchange programs often seek mid-term rentals as they offer a more affordable and comfortable living option than a dorm or short-term rental.
- Individuals in Transition: Those going through a divorce, relocation, or home renovation may need a temporary place to stay for several months. Mid-term rentals provide the flexibility and comfort they require during this transitional period.
- Remote Workers: With the rise of remote work, many professionals seek temporary rentals in different locations to experience a change of scenery while working.
Tips for Making Mid-Term Rentals Profitable
Now that you know what mid-term rentals are and how they differ from other types of rentals, here are some tips for making them profitable:
- Market Research: Conduct thorough research on the rental market in your area to determine if there is a demand for mid-term rentals and what price points are most competitive.
- Set Reasonable Rates: Set competitive rates but also consider the longer length of stay. The price should settle somewhere in the middle of the other market rentals (short and long-term). Consider offering discounts for longer stays or including utilities in the rent to attract tenants.
- Furnish Accordingly: Furnish your rental based on your target market. For example, if you target business professionals, provide a comfortable and functional workspace. If students are your target market, ensure the rental is equipped with study areas and amenities like high-speed internet. No matter what, the space should feel cozy and well put together.
- Market Effectively: Use various marketing channels to reach potential tenants, including online platforms like Airbnb and Expedia. Also, consider contacting local companies or organizations with employees or members needing temporary housing. The easiest option is listing your property on a website specifically designed for midterm rentals, like Transplant Housing.
- Provide Excellent Customer Service: Like any rental, excellent customer service is key to attracting and retaining tenants. Be responsive to requests and concerns, and ensure the rented space is well-maintained and clean for the duration of the tenant’s stay.
- Stand Out: If you want to attract more tenants and increase profits, your rental should stand out from the competition. Consider providing additional amenities such as a gym or pool, hosting events for tenants, or offering concierge services to make their stay more enjoyable.
Where Are Most Tenants Looking For?
Mid-term rentals are in high demand, and most tenants are looking for a convenient and comfortable living option that makes it easy for them to move in and feel at home. Specific amenities and features they may be looking for include:
- Furnished Space: As mentioned, most mid-term rentals come furnished. Tenants need a place that provides the essentials for daily living without having to bring their own furniture.
- Location: The rental location is crucial as it should be in a safe and accessible area close to public transportation, restaurants, and other amenities.
- Flexible Lease Terms: Tenants seek flexibility regarding lease length and move-in/move-out dates. This allows them to plan their stay accordingly and avoid any potential issues or financial losses if they need to leave earlier than expected.
- Amenities: Depending on the target market, tenants may be interested in specific amenities such as high-speed internet, laundry facilities, or a gym.
- Affordability: Mid-term rentals are typically more expensive than long-term rentals, but they should still be reasonably priced compared to short-term options. Tenants will be looking for good value for their money and may compare prices with other rental options in the area.
The Pros and Cons of Having a Mid-Term Rental
Mid-term rentals are typically more expensive than long-term rentals, but they also offer several advantages for landlords, including:
- Higher Profits: Mid-term rentals can be more profitable than long-term rentals due to the higher rental rates and potential for shorter vacancy periods (compared to short-term).
- More Flexibility: Having a mid-term rental allows landlords to have more flexibility with their property. They can adjust rental prices and change lease lengths according to market demand every month to a year.
- Lower Turnover Rates: With longer leases than a typical vacation rental, there is less turnover and fewer expenses for finding new tenants. This can save landlords time and money in the long run.
- Potentially Higher Maintenance Costs: With longer stays, the rental property has more wear and tear, which could result in higher maintenance costs for the landlord.
- Less Consistent Income: Unlike long-term rentals, mid-term rentals may experience gaps in occupancy, resulting in less consistent income for landlords.
- More Work Involved: Managing a mid-term rental requires more effort and work than long-term rentals, as there is a need to market and manage the property constantly.
What to Always Include in a Mid-Term Rental Lease Agreement
As with any rental, it is crucial to have a comprehensive and legally binding lease agreement in place for mid-term rentals to keep you protected from scams and damage. Some essential elements that should be included are:
- Rental Price and Payment Terms: Clearly outline the rent amount and how often it should be paid (monthly, bi-weekly, etc.), as well as acceptable payment methods.
- Length of Stay: Specify the length of the lease, including the start and end dates. This should also include any provisions for early termination. Or when they need to notify you that they’re ending their contract (typically at least 30 days before).
- Security Deposit: State the amount of security deposit required and under what circumstances it will be returned or forfeited. This should help tenants stay respectful of your property.
- Tenant Responsibilities: Outline tenant responsibilities (e.g., maintaining cleanliness, not causing damage to property) and any consequences for not meeting them.
- Landlord Responsibilities: Include the landlord’s responsibilities, such as providing maintenance and repairs in a timely manner.
- Pet Policy: If pets are allowed, specify any restrictions or additional fees involved.
- Utilities and Amenities: Clearly state which utilities are included in the rent and if there are any shared amenities or facilities that tenants have access to.
- Rules and Regulations: Include any rules and regulations for the property, such as noise restrictions or smoking policies.
- Legal Disclaimer: Add a legal disclaimer that states all parties have read and agreed to the lease agreement terms.
The Best Cities to List a Mid-Term Rental
The demand for mid-term rentals is growing, and some of the best U.S. cities to list a mid-term rental include:
- New York City, NY: With its diverse population and high number of business professionals, New York City offers a prime location for mid-term rentals.
- San Francisco, CA: As one of the most expensive cities to rent in the US, San Francisco has a high demand for mid-term rentals for those looking for more affordable housing options.
- Los Angeles, CA: With its warm weather and entertainment industry, Los Angeles is a top choice for mid-term rentals for those seeking temporary housing.
- Boston, MA: As a popular academic and business hub, Boston offers many opportunities for mid-term rentals near universities and corporations.
- Washington D.C.: The nation’s capital attracts many government workers and interns looking for mid-term rental options near their workplaces.
- Austin, TX: This city has become a hub for entrepreneurs and remote workers, making it a prime location for mid-term rentals.
- Seattle, WA: With companies like Amazon, Microsoft, and Starbucks headquartered in Seattle, there is a high demand for mid-term rentals for business travelers and employees.
Other more general qualities that the city has that make it enticing include:
- A university town
- A major transportation hub
- Close proximity to major medical hubs and hospitals
- A popular tourist destination
Mid-Term Rentals Are The Happy Medium
Whether you are a landlord looking to capitalize on the growing demand for mid-term rentals or a tenant searching for temporary housing, understanding the key factors and considerations involved can help ensure a successful and mutually beneficial arrangement.
By providing furnished spaces in desirable locations with flexible lease terms and amenities at a reasonable price, landlords can attract quality tenants while tenants enjoy a comfortable and convenient living situation. With the right approach, mid-term rentals can offer the best of both worlds for landlords and tenants alike.