Medium-term rentals (MTRs) can be a successful investment strategy, according to Sarah Weaver, an experienced real estate investor, Co-Author of the book 30-Day Stay, and founder of Arya Design Services (opens in new tab). Addressing the problematic oversupply of upscale Airbnbs, Sarah advises concentrating on MTRs in places where there is less competition.
In order to stand out in the market, she emphasizes the significance of presenting a well-furnished and well-photographed unit. In her opinion, understanding market dynamics and positioning your property to meet the needs of potential tenants are the keys to success in MTRs. This entails giving the tenants not only a cozy place to live but also an unforgettable experience.
Understanding the market and tenant demographics
Knowing the market and potential tenants' demographics is vital to any MTR landlord’s success. Sarah uses the analogy of running from a bear (you don't have to be the fastest to survive, just not the slowest) to illustrate the concept of having just enough tenants to make the investment profitable. In her experience, she often gets only two or three renters per year, as many people are moving to the area and need a place to live while they figure out where they want to buy. This approach allows her to maintain high occupancy rates without having to constantly search for new tenants.
Sarah's tenant base is diverse, ranging from people renovating their homes to those wanting to try living in a different area. She also caters to people going through a divorce, individuals in town for internships or medical placements, and construction workers. This diversity in tenant demographics is a testament to the flexibility and appeal of medium-term rentals. It also highlights the importance of understanding the specific needs and lifestyles of different tenant groups.
Tailoring properties to meet tenant needs
Sarah's experiences underscore the importance of tailoring properties to meet tenant needs. For instance, a tenant who is in town for a medical placement may appreciate a quiet, comfortable space to rest and study. On the other hand, a construction worker may need a property that offers easy access to their work site and local amenities.
Furthermore, she mentions the importance of offering flexible lease terms. This can be particularly appealing to tenants who are in a transitional phase, such as those moving to the area or going through a divorce. By offering flexible lease terms, Sarah is able to cater to a wider range of tenant needs, thereby increasing the appeal of her properties.
The rise of digital nomads and their impact on MTRs
Sarah notes the rise of digital nomads and their impact on the medium-term rental (MTR) market. There are 11 million digital nomads in the United States alone, highlighting the significant shift in the work landscape. The growing viability of remote work, combined with a desire for flexibility and travel, has resulted in an increase in the number of digital nomads.
She believes that this demographic reflects the changing work landscape and the increasing feasibility of remote work, making MTRs an appealing option for these digital nomads. Because of the nature of their work, they can work from anywhere, making them ideal tenants for MTRs. They frequently seek comfortable living spaces that can also serve as workspaces, as well as high-speed internet and a quiet environment in which to concentrate on their work.
Advertising and occupancy rates
Sarah mainly advertises her properties on Furnished Finder (opens in new tab)and Airbnb. She finds that the quality of tenants she gets from Furnished Finder is unmatched. They know exactly what they're looking for and are used to the process of moving to a new place. This has resulted in a 97% occupancy rate across all her units, with four of her nine units having a 100% occupancy rate.
Building a reliable team: the key to effective property management
The importance of building a reliable team for managing medium-term rentals (MTRs) can't be stressed enough. Sarah believes that having an investor-friendly real estate agent and a comprehensive vendor list are crucial to effectively managing properties, especially when the landlord is not physically present.
An investor-friendly agent understands the needs and goals of real estate investors and can provide valuable guidance and support. They can help identify potential investment properties, provide insights into the local market, and assist with the purchase process. They can also be a valuable resource in managing properties, from finding tenants to dealing with maintenance issues.
A comprehensive vendor list, on the other hand, ensures that all maintenance and repair issues are promptly and efficiently addressed. This list can include a variety of professionals, from plumbers and electricians to cleaners and landscapers. Having a reliable team of vendors ensures that tenants have a smooth and comfortable stay, which can enhance tenant satisfaction and retention.
Sarah shares a story about a furnace that broke down in one of her units while she was traveling in Guatemala. She explains that when a tenant has a problem, it sets off a chain of events that the team should handle without the landlord's involvement. This allows the landlord to enjoy the freedom and flexibility that real estate investment can offer without being constantly worried about managing their properties. Her team took care of the problem for her tenant quickly, and she was able to continue enjoying her time traveling stress-free.
Maintaining good relationships with vendors
Showing appreciation for your vendor team and building good relationships with them is critical. She suggests asking them what they need and giving it to them, as well as paying them on time. Sarah believes that maintaining good relationships with vendors is crucial to ensuring the smooth operation of your rental property. Vendors who feel appreciated are more likely to go the extra mile to provide excellent service, which can enhance the tenant's experience and increase the likelihood of positive reviews.
Buying properties remotely
Weaver discusses the process of buying properties remotely, a strategy that she believes can be highly effective for real estate investors looking to expand their portfolio in different markets. This approach involves purchasing properties, often sight unseen, relying heavily on the expertise and guidance of an investor-friendly agent.
She emphasizes the importance of having specific deal criteria to make the agent's job easier. This can involve setting clear parameters regarding the type of property, the location, the price range, and the expected return on investment. By providing the agent with clear and specific criteria, investors can ensure that they are presented with properties that align with their investment goals.
However, buying properties remotely is not without its challenges. It requires a high level of trust in the agent, as the investor is often not able to visit the property in person before making the purchase. Therefore, it is crucial to work with an agent who is not only knowledgeable about the market but also understands the investor's goals and can be trusted to act in their best interest.
Furnishing properties with Arya Design Services: enhancing appeal and attracting high-quality tenants
Sarah's company, Arya Design Services (opens in new tab), provides a valuable service to landlords by helping them furnish their properties. The company curates a specific design for each unit, taking into account the property's features, the target tenant demographic, and current design trends. They then order all the items and have them shipped directly to the unit.
This service provides a significant advantage for landlords, as it saves them the time and effort of sourcing furniture and decor items themselves. It also ensures that the property is furnished to a high standard, which can significantly enhance its appeal. A well-furnished property not only looks more attractive in listing photos but can also make potential tenants feel more at home during viewings.
Once the items arrive at the unit, the landlord or someone they hire installs everything. This allows the landlord to have control over the final look of the unit and make any adjustments as necessary. It also provides an opportunity for the landlord to add personal touches that can further enhance the appeal of the property.
Sarah believes that a well-furnished property can significantly enhance its appeal and attract high-quality tenants. A property that is stylishly furnished and well-maintained can attract tenants who are willing to pay a premium for a comfortable and aesthetically pleasing living space. This can result in higher rental income and lower vacancy rates, making it a worthwhile investment for landlords.
The importance of professional photographs
The importance of professional photographs for your listings cannot be emphasized enough. Sarah says they affect the dollar amount you can charge, your occupancy rate, and the quality of tenants you get. Professional photographs can significantly enhance the appeal of your listing and attract high-quality tenants. Therefore, she suggests that landlords consider this a worthwhile investment in their rental business.
The power of automation and streamlining processes
In order to manage MTRs effectively, Sarah emphasizes the value of automation and streamlining processes. She uses a program called Hospitable (opens in new tab), which allows her to send automated messages at specific times to tenants. These messages include crucial information such as how to get to the unit, how to get into the unit, and the Wi-Fi password. By anticipating the needs of the tenants and providing them with the necessary information upfront, she minimizes the need for interaction during the first 24 hours of their stay.
She also uses automated messaging to enhance the tenant's experience. For example, she sends a message recommending a local bistro and what to order there, creating a personalized touch that makes the tenant feel valued. She believes that this level of customer service sets her apart as a landlord.
Sarah also discusses the importance of having a reliable system for handling maintenance requests and other issues. She uses various apps to streamline her MTR process, ensuring that she can manage her properties effectively even when she is traveling. She stresses the significance of systems for front- and back-end MTR management and the importance of professionalizing operations.
Tenant screening and lease management
Tenant screening is obviously necessary in managing medium-term rentals, but that doesn't mean it needs to be difficult. She has an automated message that instructs potential tenants to send proof of employment, a reference, and their driver's license. This initial screening process helps ensure that potential tenants have a stable income source and a good rental history, which can reduce the risk of late or missed payments and potential property damage. Her executive assistant then conducts the reference check, providing an additional layer of screening to verify the potential tenant's reliability and suitability.
When it comes to lease management, Sarah discusses the challenges of managing leases for multiple properties. She keeps her listing open until a lease is finalized to avoid losing potential tenants. This approach ensures that she maximizes her chances of securing a tenant and maintaining high occupancy rates.
Sarah also tailors her leases to each property and tenant. Furnished Finder’s sister site,Keycheck provides both Free Tenant Screening (opens in new tab)and customizable, state specific leases ensuring that both the landlord and the tenant are protected. You can adjust the lease terms based on the specific circumstances of each tenant and property, providing flexibility while ensuring legal protection.