Mid-Term Rental Guide: Strategies for Property Owners

The mid-term rental market isn't just growing; it's booming! Did you know that in 2023, there was an astonishing 94% year-over-year increase in nights sold for 30+ day bookings in the U.S.?

This rise is driven by a growing demographic of digital nomads, remote workers, and students, all seeking flexible housing solutions. With mid-term rentals, property owners are tapping into 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.

Imagine being a part of this thriving market. 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, for example, the possibilities are diverse and lucrative.

If you're intrigued by the potential of mid-term rentals and want to learn how to navigate this growing market successfully, keep reading. We'll guide you through the essentials of tapping into this growth opportunity, ensuring you're well-equipped to make your investment a resounding success.

What is a mid-term rental?

Mid-term rentals strike a balance between flexibility and stability, offering leases that usually span from a few months to just under a year. They are ideal for an extended stay without the commitment of long-term contracts.

Here are the core characteristics of this kind of lease:

• Duration: Typically ranges from 1 to 12 months.
• Tenant type: Attracts individuals like professionals on temporary assignments, college students, traveling nurses, or those in between permanent residences.
• Furnishing options: Often includes furnished options, easing transitions for tenants.
• Utilities: Commonly come with utilities included, simplifying monthly payments.

Medium-term rental agreements provide tenants with more permanence than month-to-month rentals, which are commonly used for vacations or business trips, while still allowing for flexibility.

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.

The mid-term rental market demographics

The rise in mid-term rentals is largely due to the fact that they cater to a wide variety of renters, particularly those seeking flexibility and convenience in their living arrangements.

Key demographics include:

1. Remote workers and digital nomads: With the ability to work from anywhere, these professionals often seek mid-term rentals for a blend of stability and mobility without a long-term commitment.
2. Transitional groups: People in transitory periods in life, such as students, relocating employees, or those between life stages, find mid-term rentals ideal. They offer a balance between a temporary stay and a long-term lease, without the pressure of a permanent move.
3. Travelers and seasonal visitors: For those who travel due to seasonal work or leisure, mid-term rentals provide a perfect solution during off-peak seasons. Places with dynamic pricing, like San Francisco, see a shift in rental demand aligning with these seasonal fluctuations.
4. Cost-conscious renters: Those looking to avoid the high costs of short-term rentals and the commitment of a long-term lease find mid-term rentals a cost-effective option. They often come furnished, reducing moving expenses and offering a 'ready-to-live' experience.

Property owners can tailor their offerings 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.

Advantages of mid-term rentals

In this section, we explore the distinct advantages of mid-term rentals and how they are transforming the dynamics of both the short term rental market and long-term leasing. This segment of the rental market offers unique opportunities for property owners and provides unparalleled flexibility for tenants, making mid-term rentals a trend to watch in the real estate sector.

Surging popularity among diverse renters

A growing demand, popularized by Airbnb, ensures rental properties remain consistently filled, appealing to a wide range of prospective tenants.

Balance of stability and flexibility

These rentals offer a unique blend of stability and adaptability. With options like month-to-month leases, they cater to the needs of college students and professionals on temporary assignments. This flexibility is advantageous for both renters and property owners, as it allows for adjustments in response to housing market fluctuations.

Attracting high-quality tenants

Mid-term renters typically include responsible professionals seeking medium-term stays, often preferring fully furnished spaces in college towns or new cities. Such tenants are likely to take good care of the property, reducing the need for frequent repairs and maintenance.

Lower turnover costs, higher efficiency

Compared to short-term rentals, mid-term leases generally involve lower turnover costs. They require less frequent cleaning and upkeep than their short-term counterparts, making them efficient, especially in high-demand rental markets.

Long-term stability without the commitment

Mid-term rentals offer the benefits of long-term tenants without the long-term commitment. This arrangement is ideal for both parties, as it provides a sense of security and consistency for the owner while giving the tenant flexibility.

Ideal for corporate housing needs

These rentals perfectly align with the needs of corporate housing, offering medium-term solutions for employees in transition or on temporary projects. This market segment appreciates the convenience and comfort of a home-like setting when they're staying somewhere for a few weeks to several months.

Lease agreements tailored to medium-term needs

The lease agreement for mid-term rentals is specifically designed to cater to the unique needs of medium-term renters. This tailored approach ensures both parties understand and agree to the terms, fostering a transparent and mutually beneficial relationship.

The challenges of mid-term rentals

While mid-term rentals are an emerging trend in the real estate market, they also come with specific hurdles for property owners. From the nuances of tenant acquisition to the intricacies of managing furnished properties, understanding these challenges will help interested real estate investors navigate this segment effectively.

Intensified tenant search efforts

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.

Reduced income compared to short-term options

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.

Less stability than long-term rentals

Mid-term rentals don't offer the same level of income stability as long-term rentals. Long-term leases provide a steady rental income stream with less frequent tenant turnover. In contrast, mid-term rentals may require more frequent marketing and tenant search efforts to avoid income gaps due to vacancies.

Furnishing and upkeep requirements

Unlike long-term housing, which may be unfurnished and considered a permanent home by tenants, mid-term rentals are typically furnished. This means additional expenses for furnishing and maintaining the property, including appliances and essential household items, which can be a significant consideration for rental property owners, as this demands more upfront costs.

Potential for frequent turnover

Mid-term rentals experience more frequent turnover compared to long-term rentals, leading to 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.

Balancing market demand and availability

The demand for mid-term rentals can fluctuate based on location and season, making it challenging to maintain consistent occupancy rates. This variability requires a strategic approach to pricing and marketing, especially in areas with a high concentration of housing rentals, such as Cape Cod, which has seen a huge increase in short and mid-term rental options.

Navigating month-to-month lease complexities

While month-to-month leases offer flexibility, they can also introduce uncertainties in rental income. Property owners must adeptly navigate these agreements to ensure a balance between tenant satisfaction and steady income.

How to succeed in the mid-term rental market

To thrive in the mid-term rental market, rental property owners should master the art of adapting to diverse tenant needs and ensuring exceptional living experiences to optimize a rental property's appeal and profitability.

Understand your target demographic:

• Whether catering to business travelers, new residents, or people relocating for work, tailoring your property to meet their specific requirements. About 40% of individuals move for better career opportunities or increased earnings, with the most willing movers being in the 25-44 age range.

Deliver a superior rental experience:

• Maintain a clean and well-kept property, addressing any wear and tear proactively.
• Equip your rental with essential amenities like high-speed WiFi and laundry facilities.
• React quickly to maintenance requests, demonstrating your commitment to tenant comfort.
• Build positive relationships with tenants, encouraging high ratings and referrals.

Strategic pricing and lease flexibility:

• Research average rental rates in your area.
• Tailor your pricing based on unique property features and location advantages.
• Offer adaptable lease terms, including month-to-month leases or discounts for longer commitments.

Navigate legalities and local regulations:

• Familiarize yourself with zoning laws relevant to mid-term rentals.
• Secure all necessary permits and licenses to rent out your property legally.
• Get legal advice to ensure your property meets safety standards and regulations, especially if you're a private landlord.
• Stay updated on changes in tenant laws and regulations to maintain legal compliance.
• Ensure a clear and thorough medium-term rental lease agreement covering aspects like rent payment, security deposits, and property damage policies.

Proactive management and tenant screening:

• Implement a thorough screening process to ensure reliable and responsible tenants.
• Regularly inspect the property for any needed repairs or upgrades.
• Establish clear communication channels for tenants to raise concerns or maintenance issues.

Safeguard against property damage and financial risks:

• Collect a reasonable security deposit to cover potential damages.
• Consider insurance options that cater specifically to mid-term rental properties.
• Develop a contingency plan for unexpected vacancy periods or legal disputes.

By investing and focusing on these key areas, you can enhance your prospects for success in the mid-term rental market and build a profitable and sustainable mid-term rental business.

Best place to list your medium term rental property

Effectively listing your medium-term rental property is key for attracting the right tenants and maximizing your occupancy rates. The best platforms to list your property cater to specific market segments and offer features that align with the unique needs of medium-term rentals.

Here are some top recommendations:

1. Airbnb: Known primarily for short-term listings, Airbnb has also become a popular choice for medium-term rentals, particularly because of its global reach and user-friendly interface. Airbnb allows you to set minimum and maximum stay requirements, making it easier to target medium-term tenants.
2. VRBO: Similar to Airbnb, VRBO caters to a wide range of rental properties, including those suited for medium-term stays. Its audience is typically looking for vacation homes but it's an excellent platform for medium-term listings as well, especially in tourist-friendly locations.
3. Furnished Finder: This platform specializes in rentals for traveling healthcare professionals and other business travelers looking for stays of a month or more. It’s particularly suited for landlords offering furnished properties and seeking reliable tenants.
4. Kopa: Tailored for medium and long-term rentals, Kopa focuses on furnished rentals, making it an ideal choice for landlords aiming at professionals, students, or anyone in need of temporary, furnished accommodation.
5. Facebook Marketplace: With its vast user base, Facebook Marketplace is a great place to list your rental. It allows you to reach a local audience efficiently and free of charge. You can also use targeted Facebook groups dedicated to housing and rentals in your area.
6. Craigslist: Despite its simplicity, Craigslist remains a popular choice for rental listings and can be particularly effective for medium-term rentals. Its broad audience and local focus can help you connect with potential tenants in your area.
7. Nestpick: Targeting expats, professionals, and international students, Nestpick is an aggregator that lists furnished, medium-term rental options in over 200 cities worldwide.
8. Corporate Housing by Owner (CHBO): If your property is suited for corporate tenants, CHBO specializes in furnished rentals for business professionals, offering another avenue to reach a specific tenant demographic.

When listing your property, make sure to provide clear, high-quality photos, detailed descriptions, and all necessary information about lease terms, amenities, and any unique features of your property. Being transparent about what you offer and what you expect from tenants will help attract the right matches for your medium-term rental.

Exploring alternative tenancy lengths

We briefly touched on mid-term vs. short-term and long-term tenancies, but let's discuss them in more detail. While mid-term rentals present a burgeoning opportunity for property owners, understanding and navigating the broader spectrum of tenancy lengths can further enhance a rental strategy.

This exploration does not detract from the value mid-term rentals offer but rather situates them within a wider context that includes short-term and long-term options.

Each tenancy length has unique benefits and challenges, and the choice largely depends on the property manager or owner's objectives, market dynamics, and the level of commitment they are willing to make.

• Short-term rentals: These typically last for a few days to a few weeks. The most apparent advantage of short-term rentals is the potential for higher rental income per day. This model is particularly suited to tourist-heavy areas or cities with large events that drive temporary housing demand. However, the higher income potential comes with increased management intensity, greater turnover costs, and the need for continuous marketing efforts to ensure consistent occupancy.
• Long-term rentals: Tenancies extending beyond a year offer the most stability in terms of occupancy and income predictability. This option appeals to property owners looking for a more "set it and forget it" model, reducing the effort in constant tenant turnover and marketing. However, it also means committing to a fixed rental income for the duration of the lease, with less flexibility to adjust rates in response to market changes.

Evaluating market dynamics

Careful market analysis should inform the decision to focus on short-term, mid-term, or long-term rentals. Factors such as local demand patterns, seasonal fluctuations, and the competitive landscape play key roles in determining your property's most lucrative and manageable tenancy length.

Beyond market considerations, aligning with tenant preferences can guide property owners in choosing the optimal tenancy length. Engaging with prospective renters and understanding their accommodation needs can provide valuable insights into the demand for different rental durations.

Exploring alternative tenancy lengths allows property owners to position their rental offerings in the market strategically. By understanding each rental duration's unique characteristics and requirements, landlords can make informed decisions that align with their investment goals, market conditions, and tenant needs.

Ultimately, a flexible approach considering a spectrum of tenancy lengths can optimize a property’s rental potential and ensure a diversified and resilient rental portfolio.

Deciding your path in the mid-term rental market

As a property owner or manager, your venture into mid-term rentals differs significantly from traditional rental approaches. Success lies in efficiently managing tenant turnover and meticulously maintaining your property.

Property owners need to assess whether the property's location aligns with the demand for mid-term tenancies. This demand is often influenced by professional or academic cycles. Furnished properties typically have a higher appeal in the mid-term rental market, but landlords should weigh the initial investment against the potential increase in rental income.

Lease flexibility is a significant factor, as it attracts a variety of tenants seeking non-traditional lease lengths. Align your financial goals accordingly: higher rental rates may offset the costs associated with higher tenant turnover.

Navigating the intricacies of the mid-term rental market requires balancing flexibility, attracting quality tenants, and handling the practicalities of increased management and potential instabilities. For those looking to streamline this process and enhance their success, Azibo offers comprehensive solutions tailored to the needs of mid-term rental investors. With the right tools and strategies, your journey in the medium-term rental market can be both profitable and rewarding.

Mid-term housing FAQs

What makes a good mid-term rental?

A good mid-term rental offers convenience, is well-furnished, strategically located, and flexible in lease terms, catering to the specific needs of temporary residents.

What is a medium-term lease?

Also known as a mid-term rental, a medium-term lease typically spans from 1 to 12 months, offering greater flexibility than long-term leases, ideal for temporary or transitional housing needs.

What does MTR mean in real estate?

In the real estate market, MTR stands for mid-term rental, referring to properties rented for durations longer than a vacation stay but shorter than a traditional lease.

Is 3 months considered a short-term rental?

No, a 3-month period is generally not considered short-term in the context of housing leases; it is more often referred to as mid-term.