With 30+ day bookings increasing by 94% year-over-year*, the demand for mid-term rentals is growing, and it is growing fast. As a result, it is more important than ever to safeguard your properties with a mid-term rental insurance that works for you. We all know that there is nothing worse than closing a deal with a tenant only for them to become a major source of stress, headaches, and financial loss. Mid-term rental insurance can protect you and your business from the behaviors of problematic guests and help you screen for these kinds of guests in the first place.
In this article, we will guide you through all the ins-and-outs of mid-term rentals and mid-term rental insurance, providing you with the most up-to-date information to help your property portfolio shine.
What is a mid-term rental?
A mid-term rental, or MTR for short, is rental agreement that falls between a short-term rental (STR) and a long-term rental (LTR). MTRs tend to last anywhere between 14 days and 6 months—averaging around 13 weeks—and offer guests the flexibility of a short-term rental without the commitment of a longer stay. On the flip side, they allow property managers to enjoy stability without a years-long commitment, and a steady source of income without the stress of switching guests over every couple of nights. Check out these places to list your property for corporate housing and the top 10 mid-term rental platforms.
Is there a market for mid-term rentals?
The mid-term rental market is booming because MTRs have the advantage of attracting a wide variety of potential renters, including but not limited to:
- Professionals who require temporary accommodation: From visiting professors to traveling nurses, these individuals often find themselves far from home for months at a time. Instead of an impersonal hotel stay or a long string of STRs, a cozy MTR is often the best choice for those who want to feel like they have a home away from home.
- Students on short-term stays: With student exchange programs becoming more and more popular, many students are seeking accommodation options that don’t require them to commit to a year-long lease when they will only be staying in a particular place for a couple months.
- Remote workers and digital nomads: For people whose work does not tie them down to a particular place, and MTR can be just the arrangement they need to visit a new part of the world for a few months without having to commit to a longer stay.
- Families who need a temporary home for a while: Whether they are moving to a new home or waiting out some tedious home renovations, families who need to be out of their house for a couple of months can be the perfect tenants for MTRs.
As you can probably already tell from this short list, the advantage of MTRs over STRs is that they tend to attract a much more relaxed collection of potential tenants. In other words, there is less of a reason to worry about a traveling nurse on a work trip than a group of vacationers, who are more likely to rent a property for a short period of time simply for the purpose of throwing a party or trashing the space. Don’t just expect your guests to behave well, ask them to sign a mid-term or short-term rental agreement.
Are mid-term rentals profitable?
It depends on your mid-term rental strategy. MTRs can be a smart, profitable choice for property managers. According to FastExpert, “mid-term rentals are becoming increasingly popular in 2024”, and their popularity is expected to continue rising.
Intellihost also conducted an analysis comparing MTRs to STRs and found that, while STRs tend to be more profitable than MTRs, the latter have an “average occupancy rate of 51% as compared to the 38% for short-term rentals”. This translates into a more stable income over a longer period of time with less of the hassle associated with STRs. At an average nightly rate of $155 at 51% occupancy, the properties studied in Intellihost’s analysis yielded a profit of $3,901. The writers also highlights that this high rate of occupancy speaks to the lack of MTR options currently in the market, which make MTRs an under-exploited niche.
It is also worth pointing out that Intellihost’s analysis compared properties that operated as either STRs or MTRs only. So, while STRs yield around 30% higher income, occupancy rates are higher in MTRs, which leads many property managers to operate using a 60%/40% split of STR and MTR leases in the same rental depending on seasonality, location, and guest behavior. There is still a lot to learn about MTRs, making them the perfect venture for innovative, adventurous property managers.
STRs, MTRs and LTRs: What type of insurance does your rental need?
STRs, MTRs, and LTRs all incur different sets of risks and attract different kinds of tenants, so it is important to recognize the differences between them when it comes to insurance policies. The table below covers just a few of the most important differences between these kinds of rentals.
| Short | Mid | Long | |
|---|---|---|---|
| Turnover time | A few nights to a month | 1 to 6 months, averaging around 13 weeks. | 6 months to a year, or more. |
| Renter type | Vacation renters. | Traveling professionals, remote workers, and families. | Families and professionals. |
| Rental Rate | Highest per night, but can experience frequent vacancies. | Lower than STR but higher than LTR. | Tends to be the lowest per month compared to STRs and MTRs. |
| Risk | Highest of all due to high guest turnover and the profiles of holiday renters. | Higher than LTR but lower than STR. | Lowest of all. |
| Utilities | All included in rental rate | Varies and can be split. | The tenant is expected to cover utilities unless otherwise specified. |
| Furnishing | Fully furnished by the property manager. | Furnished by the property manager with some tenant belongings | Can be furnished, partially-furnished or unfurnished |
| Maintenance | It is the responsibility of the property manager. | Varies. The responsibility can be split. | Is is the tenant’s responsibility to deal with most issues that arise in the property. |
Broadly speaking, STRs are more unpredictable and riskier to manage, and their insurance tends to focus on protect your rentals against problematic guests and the damage they can cause.
Meanwhile, LTRs tend to come with less unexpected behavior or damage on a day-to-day basis.
For this reason, the insurance available for LTRs tends to be more focused on protecting the property from structural damage and re-housing costs for cases where the property is rendered unlivable and tenants must be accommodated elsewhere while the problem is solved.
What insurance should you have in place for a mid-term rental?
A good MTR insurance plan will protect your rental against legal liabilities, property damage, and loss of income. However, they do not cover the tenant’s own property or any damage caused to the rental by the property manager themselves.
| Covered | Not Covered | |
|---|---|---|
| Physical damage to the property caused by weather conditions | X | |
| Physical damage to the property caused by vandalism or burglary | X | |
| Legal liabilities | X | |
| Loss of income due to necessary property repairs or unrentability. | X | |
| The tenant’s property | X | |
| Repairs to major systems | X | |
| Damage caused by the property owner | X | |
| Normal wear and tear | X |
But of course, insurance plans can vary significantly from provider to provider, so make sure to read every insurance plan you come across carefully. If there is anything in particular you would like to be covered, it might also be worth reaching out to the insurer so they may consider any extra costs that might incur in their quote.
What is the difference between short-term and mid-term rental insurance?
It is worth pointing out that, in a market where STRs and LTRs are the norm, few insurance providers make a point of differentiating between STR and MTR insurance. Steadily Insurance and Proper Insurance are amongst the few that acknowledge the latter.
In general, STR tends to be more specialized than MTR insurance, as well as 10-70% more expensive. This is because STRs attract a higher level of risk than MTRs due to the quick turnaround of guests they accrue.For this reason, property managers seem to prefer protecting their MTRs with landlord insurance, a less specialized type of insurance aimed at LTR owners. Moreover, some add extra insurance packages, such as umbrella policies, for extra protection.
| MTR Insurance (or Landlord Insurance) | STR Insurance |
|---|---|
| Lower risk | Higher risk |
| Tends to be cheaper | Tends to be 10-70% more expensive |
| Covers damage to the property, legal liabilities, and loss of income. | Covers the same as MTR insurance, as well as other specialized liabilities, such as excessive utility usage and liquor liability. |
Other questions to consider…
Guests VS Tenants: What is the difference?
While laws vary from state to state and country to country, most guests can begin to claim tenant status after just 29 days of renting a property in the United States. This change in label comes with new legal requirements that both the guests/tenant and the property manager should be aware of.
| Legal Agreement | Duration of Stay | Payment | Legal Rights | Responsibility for the Well-being of the Property | |
|---|---|---|---|---|---|
| Guest | No | Short-term, usually just a few days. | A bulk payment that covers the duration of their stay. | They have the right to stay in the property for the stipulated time, with none of the legal protections of a tenant. | The property manager. |
| Tenant | Yes: a lease agreement or rental contract based on a booking agreement | Longer-term, usually anywhere from a month or longer. | Regular rent payments. | Tenants have the right to a safe and habitable environment, as well as protections against being asked to leave. | The tenant in collaboration with the property manager, es stipulated in a tenancy agreement. |
As per the table above, most of those who rent an MTR will be tenants, not guests, granting them a number of legal rights and an increased responsibility over the property. However, because MTRs tend to occupy a relatively uncommon middle-ground between STRs and LTRs, some tenants will not realize that their responsibilities are different in an MTR than in an STR. Likewise, it can be hard for a property manager to find the line between what is their responsibility and what is down to the tenant.
“Who Cleans the Tub?”
It might seem like a silly question, but “Who cleans the tub?” can serve as a good example of the differences in responsibility between tenants and property managers within different rental agreements. In an STR, it is the property manager’s responsibility to clean the tub, given the constant turnover of guests and the expectations of most hospitality laws around the world. In an LTR, it is straightforwardly the tenant’s responsibility to clean the tub.
But who cleans the tub in an MTR?
In this context, such a seemingly simple question might become trickier to answer. While one tenant might think that the responsibility of cleaning the tub is theirs after a month into a new rental, another might think it takes three.
This situation can easily incur some danger. Imagine that not cleaning the tub leads to mold accumulating on the walls of the bathroom. If that mold makes the tenant sick, who is liable for the damage, the property manager or the tenant themself?
To avoid these kinds of tub-related conundrums, it is very important that property managers lay these terms out clearly in a rental agreement for the tenant to read and sign. That way, responsibilities amongst parties will be clear from the get-go.
What are the best alternatives to mid-term rental insurance?
Damage Protection
Because MTRs occupy a somewhat grey area in the property market, it is especially important to make sure that they are well protected against any kind of damage, intentional or unintentional.
For this reason, property managers should consider safeguarding their mid-term rentals through services like Truvi’s Damage Protection Service, which covers damages from US$500 to US$5,000,000.
Truvi’s Swift Resolution Process means that, if your property is damaged, you can simply log into our platform and submit a resolution request.
What’s more, you can expect a fast turnaround, typically within 5 business days.
We protect against:
- Stained linens
- Smeared towels
- Unintentional guest damage
- Unsolicited smoking damage
- Unapproved party damage
- Delivery expenses of the replaced items
We don’t protect:
- Cosmetic damage
- Pet damage
- Wear and tear
- Mid-term rental management fees
- Maintenance expenses
- Approved party damage
Guest Screening
Guest screening is a process used to validate private information, like a guest’s name, email, and address, and protect your properties from fraud and criminal activity. It consists of running checks to ensure your guests are using real personal data to be eligible for damage reimbursement and to build trusting relationships between you and the people you host.
Screening your guests is particularly important for MTRs, given these tenants are not always liable to the same checks that protect LTR property managers by law. They will also be staying at your property for a longer period of time, meaning it is important for you to make sure they are deserving of your trust.
Truvi’s guest screening services can protect you from:
- Chargebacks. When a guest goes through the screening process, they leave a digital footprint that can serve as proof of their stay in the property. This can be used to minimize the risk of chargeback scams.
- Property damage. Screening your guests for past property damage incidents will allow you to flag or refuse bookings from potentially troublesome renters, keeping your property safe. Validating their name and contact information will also make it harder for them to evade damage reimbursement charges.
- Complaints from neighbors. Guest screening will help you safeguard your property against guests who may engage in illegal activities or exhibit antisocial behavior, such as throwing large and unwanted parties.
You can screen your guests manually or use automation tools like the Truvi platform to do it. With Truvi’s guest screening service, you will be able to tailor your guest screening service to your needs, flag suspicious bookings, screen guests against an internal watchlist, and protect yourself against last minute bookings.
How using both maximizes your protection
Of course, Truvi’s guest screening and damage protection services work best in tandem: screen your guests to minimize your risk of renting to a problematic tenant, then protect your property against any accidents that may take place later.
