Mid-term rentals are quickly becoming the hottest niche in real estate. From an impressive 25% year-over-year increase in longer stays following the Covid-19 pandemic to the CEO of Airbnb declaring 30+ days bookings will be the focus of the company’s growth going forward, it is undeniable that having a strong mid-term rental strategy will be of vital importance to any budding or established property manager.
In this article, we will be going through everything you need to know when it comes it mid-term rental property management, medium term rental strategy, and how to grow your mid-term rental business using market research and effective marketing on mid-term rental listing sites.
How can I switch from short-term to mid-term rentals?
To begin, it is important that we are clear on the basics: yes, mid-term rentals (or MTRs for short) tend to be overall less profitable than short-term rentals (STRs). However, their strengths lie elsewhere, specifically in their exceedingly high rates of occupancy.
They also tend to cater to a more select group of guests than STRs generally do, including traveling professionals, visiting students, and digital nomads. For this reason, many property owners make the switch from STR to MTR: higher occupancy rates means more stable income without the headache of constant guest turnovers and unexpected holiday parties.
That being said, there is a way to get the best of both worlds. Depending on the seasonality of your rental market, it could be worth operating as either an STR or an MTR, depending on the time of year.
For example, if you happen to own a property in a college town, you might consider leasing it out as a mid-term rental to students during the school year before switching to a short-term model during the summer months. Markets like these lead many property managers to operate using a 60%/40% split of STR and MTR leases in the same rental.
But no matter what strategy you go for – whether a full MTR or an MTR/STR hybrid – it would be wise to do the following before launching your new venture:
- Study your market. At the end of the day, not every market is ideal for MTRs, so you want to make sure that yours is before you make any changes to the way you manage your rentals. According to RentalScaleUp, MTRs fare the worst in vacation and resort markets, where most guests will be seeking shorter stays the vast majority of the time. In contrast, MTRs thrive in places like business hubs and university towns, as these tend to attract traveling professionals and students respectively. For some of the best MTR markets out there, you can check out our list of favorites here.
- Be aware of local laws. As always, you should make sure that the local laws in your market of choice allow for MTRs. Some areas restrict longer-term rental bookings, while others favor them over short-term rental models. Guests may also benefit from different protections and legal covers depending on the length of their stay, so it would be good to familiarize yourself with those as well.
- Create a business plan. Once you have confirmed that your MTR venture is viable, it is recommended to create a business plan where you clearly delineate any switches between MTR and STR operational periods. If you are switching from a STR to a MTR model, you might also have to adapt your prices, as guests tend to expect to pay a lower rate per night at a MTR than a STR. According to an analysis by Intellihost, this difference in rates can be as stark as a 50% reduction, although it can vary from location to location.
- Prepare a lease agreement. As part of your planning process, it is very important that you craft a clear and concise lease agreement for your tenant to sign before they move into your property. This document will outline any house rules, what utilities you will or will not cover, and how maintenance issues will be dealt with. Talking through your lease agreement with your tenant before they move in to clarify any questions they may have will be sure to save you many a headache in the future!
- List your property as a MTR. Once you are ready to take your first steps into the world of MTRs, you can easily list your properties online, including platforms more commonly associated with shorter-term rentals, such as Airbnb. If you already list a STR on Airbnb, you can easily turn it into a mid-term only rental by establishing new minimum and maximum booking parameters within the platform itself.
How can I increase mid-term rental leads and revenue?
Whether you have already launched your MTR business or are just dipping your toes in to check if they may earn a spot in your portfolio, it is always wise to keep a few tips in mind to give your rentals the best possible chance at success.
- Invest in useful appliances and amenities. It is important to remember that MTR guests will be making a home out of your property, at least for a little while. As a result, investing in household appliances such as washing machines, microwaves, and dishwashers, as well as amenities like super-fast WiFi, will pay dividends when it comes to attracting potential guests to your rental.
- Target your rental to a niche group of guests. Related to the above point: think about what kind of guests are most likely to be interested in your property, and try to market to them. If your rental is in a college town, perhaps students could be a good niche to target, so make sure your rental counts with a cozy study area. If your rental is in a busy city, think about targeting business travelers, pointing out nearby coffee shops or places to get clothes freshly pressed after a long flight. You can also target relocating families by pointing out the safety and friendliness of the neighborhood in which your MTR is located. If one niche is not working out, try switching to another. It is all up to your and your market, so make the most of what you’ve got!
- Highlight what makes your rental special in your listing. In other words: do not bury the lede. You’ve gone through all the trouble of making your property the perfect destination for a mid-term tenant, so state that clearly in the title and description of your listing. You should also take care to mention specifics that might appeal to your guests, such as the closeness of your property to places of interest (eg: universities, business districts, etc), the distance to the nearest grocery store, convenient transport links, or quiet neighbours. Remember: your guests will be living in this property for some time, so think about what convenient features can make your rental feel like home.
- List your MTRs on specialized platforms. Airbnb is great, and is still a good option for MTR owners. However, listing your property on a platform that caters specifically to MTR seekers can be a fantastic way to tap into that market niche right away. Also, consider listing your property for corporate housing. At Truvi, we have put together a list of some of our favorite MTR rental platforms to get you started on your mid-term rental journey!
- Make sure your listing LOOKS good. No matter where you list your property, make sure the pictures you use really show it off. Hire a professional photographer to takes pictures of your property if you can, and make absolutely sure to show off all the appliances you invested money on! A good shot of a kitchen with a dishwasher clearly visible will put your listing above every other MTR that did not think to highlight their assets like you did.
How can I grow my mid-term rental business?
If and when your MTR takes off, no one will blame you for wanting to grow your business to new heights. If this is you, then congratulations! Adding new properties to your portfolio can be an exciting prospect, but it also takes a fair amount of work and consideration.
Firstly, you should consider what markets you would like to expand into, as it is wise to diversify your portfolio as much as possible. If you already have one MTR geared towards digital nomads in a hip part of town, why not opt for a property near a hospital you can aim towards traveling nurses? Or a house in a quiet suburb where a family might be able to wait out their own home renovations? Whatever angle you take, just make sure it is not already overly-represented in your existing portfolio.
Speaking of your existing portfolio, it might also be worth considering whether any of your other properties might work better as a MTR, or as a STR/MTR hybrid. Perhaps there are aspects of market seasonality you are not fully taking advantage of, or perhaps you would like to guarantee a higher degree of occupancy than what you would get with a solely STR model. This can also be a good way of diversifying your client base without going through the (expensive!) trouble of acquiring a new property.
Our final piece of advice if you are planning to grow your MTR business is this: automate as much as you can. Having a good property management system (PMS) under your belt to manage all your bookings in one place will help you keep your business organized and functioning smoothly. Tools like Truvi’s automated guest screening service will also help you manage guest quality, combining easy check-in processes with keeping your property safe. Finally, investing in a smart lock can be convenient for cases when you cannot be around to hand your keys to a new tenant in person, saving both you and your tenant a headache.
How can I protect my mid-term rentals?
To conclude, it is worth discussing how you can protect your MTRs, especially as you scale your business.
As mentioned previously, it is very important to write a clear lease agreement for your tenant to sign, as this will establish what your responsibilities are throughout the duration of the tenancy, as well as what your tenant’s responsibilities will be in turn. A lease agreement is your key to avoiding future misunderstandings, so make good use of it!
Some MTR owners also opt to purchase insurance plans for their properties, usually in the form of landlord insurance with some additional protection packages attached. The good news is that these forms of insurance tend to be cheaper than what you would get for a STR, as these kinds of properties are considered higher risk than MTRs. The bad news is that very few insurance providers sell plans specifically geared towards MTR owners – hence why most opt for landlord insurance instead. We discuss this MTR insurance in depth in this article, which also mentions a few of the MTR insurance providers currently in the market.
But if you can’t find an insurance policy that works for you, don’t despair. There are other services that can help you keep your property safe from damage and fraud. Damage waivers, for example, can give you and your tenant peace of mind knowing that potential accidents have already been covered. Taking a deposit from your guest at the beginning of their stay is another option, giving you a pool of funds to use when it comes to fixing damaged property or cover cleaning costs once their stay ends.
Truvi’s Damage Protection Service is also an option in this regard, as it covers damages from US$500 to US$5,000,000. Thanks to its Swift Resolution Process, you can also expect a fast turnaround in every decision, usually within 5 business days, all of which can be easily managed through Truvi’s online platform.
We protect against:
- Stained linens
- Smeared towels
- Unintentional guest damage
- Unsolicited smoking damage
- Unapproved party damage
- Delivery expenses of replaced items
We don’t protect:
- Cosmetic damage
- Pet damage
- Wear and tear
- Management fees
- Maintenance expenses
- Approved party damage
Finally, Truvi’s Guest Screening Service can protect your property from problematic tenants by validating private information like a guest’s name, email, and address. This is particularly important for MTRs: tenants will be staying at your property for a while, so it is important to make sure they are deserving of your trust. With Truvi’s guest screening service, you will be able to tailor your guest screening process to your needs, flag suspicious bookings, screen guests against an internal watchlist, and protect yourself against last minute bookings.
Above it all, Truvi and our services scale with your business! No matter how many properties you add to your portfolio, we will be right there with you, working flexibly to keep your business working smoothly and safely.
