Recap of Episode 120: The Golden Opportunity of Midterm Rentals: A Real Estate Investor’s Guide

Real estate investors are always looking for ways to maximize returns while minimizing risk—and if you’re not already exploring midterm rentals, now’s the time to dive in. Combining the stability of long-term leases with the higher yields of short-term rentals, midterm rentals offer an incredible opportunity for landlords looking to expand their portfolios and optimize their returns. Let’s break down why midterm rentals might just be the golden opportunity you've been waiting for.

What Are Midterm Rentals?

Midterm rentals are leases that typically span from one to twelve months, filling the gap between the security of long-term rentals and the flexibility of short-term vacation rentals. These rentals are particularly popular with traveling professionals—think healthcare workers, corporate employees on temporary assignments, or individuals relocating for work.

What makes midterm rentals so appealing for real estate investors is that they offer higher profitability than long-term rentals, but with far less volatility than short-term rentals. Essentially, you get the best of both worlds: the financial stability of a longer commitment with the higher rental rates typically associated with shorter-term stays.

From Long-Term to Midterm: A Real-Life Investor Success Story

Many landlords, like Jesus Jimenez from our latest podcast episode, are making the shift from traditional long-term rental strategies to the more lucrative midterm rental market. Jesus started out with long-term townhouse rentals but began to notice a growing demand for midterm options, particularly among traveling nurses and other professionals who needed housing for extended stays.

However, as with any major business decision, convincing a partner to take a leap of faith into a new investment strategy can be tricky. In Jesus's case, his wife, an accountant, was hesitant to embrace the midterm rental approach, preferring the more predictable nature of long-term leases. So, how did Jesus handle this? He came up with a creative, low-risk solution to test the waters.

Jesus proposed an innovative form of arbitrage—not by renting someone else's property, but by treating one of their existing townhouse properties as a midterm rental while continuing to pay themselves the usual long-term rent. This way, they maintained the financial stability his wife craved while also testing the more profitable midterm rental model.

This clever approach worked. By running the numbers and showing their own property’s success as a midterm rental, Jesus was able to ease his wife’s concerns, and together they saw the potential for even greater financial rewards. His story is a perfect example of how creative thinking and testing new strategies on a small scale can open up new avenues for growth.

The Steps to Transition into Midterm Rentals

If you’re interested in following in Jesus’s footsteps and making the shift to midterm rentals, here’s a step-by-step guide to help you get started:

Conduct Market Research: Understanding your local market is essential when exploring midterm rentals. You’ll need to identify periods of higher demand (such as during the winter months or when traveling professionals are in town) and tailor your strategy accordingly. Websites like FurnishedFinder.com/stats provide valuable data and resources to help you pinpoint the best opportunities in your area.
Embrace Flexibility: One of the key benefits of midterm rentals is the ability to switch between different types of rental strategies. Jesus employs a hybrid strategy, where he rents properties as midterm rentals during the winter months and switches to short-term rentals during the summer (May to October) to take advantage of peak demand. This flexible approach helps ensure consistent revenue year-round.
Partner with Experienced Co-Hosts or Property Managers: If you’re just starting out and don’t have the time to manage the day-to-day operations, consider partnering with a co-host or property manager. This is a great way to ease the burden of managing multiple properties. Jesus, for example, found success by collaborating with local superhosts who helped manage the properties when he was unable to handle the tasks himself.
Leverage Technology for Efficiency: Modern technology can make the process of managing midterm rentals more streamlined and less time-consuming. From tools like KeyCheck for tenant screenings and lease agreements, to property management platforms that allow for virtual operations, tech solutions can save you time and reduce the risk of operational errors.

Key Advantages of Midterm Rentals

So, why should you consider midterm rentals? Here are some of the key advantages:

Higher Yields: Midterm rentals can often yield returns up to twice as high as long-term leases, making them an attractive option for landlords looking to maximize their investment potential.
Consistent Occupancy: With the longer duration of leases, you’re less likely to experience vacancies compared to short-term rentals, where tenants might only stay a few nights or weeks.
Predictable Income: Midterm rentals offer more stability and predictability compared to short-term rentals, whose income can fluctuate due to seasonal demand or changes in the market.

Tips for Success in Midterm Rentals

If you're ready to jump into the midterm rental market, here are some essential tips for ensuring success:

Effective Marketing: Professional staging and high-quality virtual tours can help your property stand out. Highlight key amenities that appeal to your target market, such as proximity to hospitals, public transportation, or corporate offices. Remember, the clearer and more appealing your listing, the higher your chances of securing quality tenants.
Detailed Financial Planning: As Jesus’s story highlights, a solid financial plan is crucial. Use detailed spreadsheets to forecast income, expenses, and potential ROI. This will not only help you manage your finances but will also help you make informed decisions when it comes to scaling your investments.
Utilize Technology: Employ tools like KeyCheck for tenant screenings and lease agreements. This simplifies operations, offering seamless management without geographical constraints.
Multi-channel Listing: Mirror Jesus’s strategy to list properties across multiple platforms like Furnished Finder and Airbnb, ensuring maximum visibility and occupancy.

Why Now is the Time to Invest in Midterm Rentals

With the rise of remote work and an increase in temporary relocations for both work and leisure, the demand for midterm rentals is growing. This trend shows no signs of slowing down, which means now is an excellent time for investors to tap into this niche.

Whether you’re an experienced investor looking for new opportunities or a first-time landlord exploring different rental strategies, midterm rentals offer a unique opportunity to build a sustainable and profitable portfolio.

Ready to Dive In?

If you’re ready to explore the world of midterm rentals, start by checking out FurnishedFinder.com for listings, data insights, and resources. And don’t forget to listen to episodes of The Landlord Diaries Podcast, where you can learn more from experienced landlords who have successfully navigated the world of midterm rentals.

By embracing this unique rental strategy, you can maximize your investment potential, reduce vacancy rates, and increase your profitability. Happy investing!