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Mid-Term Rental Property Management Guide - From Setup to Success
Are you curious about the potential of mid-term rentals and how they can provide consistent income while avoiding short-term rental restrictions? This guide covers everything from setup and legal requirements to marketing strategies, helping you attract reliable tenants and maximize your rental income.
When major metropolitan cities like New York and San Francisco began cracking down on Airbnb and short-term rentals, many property owners faced a tough choice. They could give up their rental income. They could change focus to other destinations. Or they could become traditional landlords, sacrificing the profitable business they had already invested in, one that was generating a steady rental income stream.
But what if there was a middle ground, a strategy that worked around the restrictions and opened doors to steady, lucrative opportunities? Here comes a solution: medium-term rentals, or monthly stays.
Real estate investors are increasingly switching to this rental model for several compelling reasons. In this article, we'll explore the most effective strategies for managing medium-term rentals.
Also, we'll show you how to market these properties to attract reliable tenants who not only pay well but also take good care of your property.
How Are Mid-Term Rentals Legally Defined?
A medium-term rental is defined as any stay lasting 30 days or longer. Monthly stays can be extended, with leases typically renewed on a month-to-month basis. While most medium-term rental agreements span between one and twelve months, they can last longer. For example, you might have a contract with a construction company to house their workers throughout a project's duration.
From a legal standpoint, what are medium-term rentals? How do they differ from traditional long-term rentals? Medium-term rentals are uniquely positioned between short-term vacation rentals and traditional long-term leases.
Unlike vacation rentals, they fall outside the scope of strict short-term rental regulations that some cities have implemented. It means the medium-term rental model remains legal even in areas with bans on short-term rentals.
These rentals differ from traditional long-term rentals in several key ways, which is why they're considered a distinct category. They typically require less paperwork, offer more flexible lease terms, and come fully furnished.
There is one important caveat, though. Medium-term rentals are regulated by standard landlord-tenant laws since they're technically long-term leases. But the shorter commitment period and specific uses, such as corporate housing or temporary relocations, set them apart from a conventional long-term lease.
Advantages of Mid-Term Rentals
Mid-term rentals offer plenty of benefits. Here are some reasons to add them to your rental portfolio.
Consistent Income and Fewer Vacancy Periods
Renting out your property for a full month provides a stable income. If you manage a vacation rental and deal with seasonal ups and downs, this can mean a great benefit for you. During slower periods, it's tough to keep the calendar fully booked. Choosing monthly rentals guarantees a 100% occupancy rate, making your income more predictable.
Lower Maintenance Costs
Frequent guest turnover demands a well-organized system where your cleaning team is readily available. On the flip side, maintaining a property under these conditions comes with higher costs. Renting mid-term helps you avoid these hurdles and cut down on expenses.
Avoiding Regulatory Challenges
Short-term rentals have been affected by recent regulatory challenges in big cities. Some urban areas are restricting and banning STRs, claiming they impact the availability of regular housing. Luckily, medium-term rentals don't fall under the STR category.
Growing Market Demand
Brian Chesky, CEO of Airbnb, stated in an interview that stays of 30+ days account for 17% of the company's revenue and are on an upward trajectory. Both on Airbnb and through other platforms, the market for this type of property has been expanding to include a diverse range of guest categories.
Diversified Tenant Pool
Who typically needs or prefers to stay for one month or longer? While these tenants aren't considered long-term renters, they come from various backgrounds. Business professionals such as construction workers, travel nurses, and those with time-sensitive contracts often seek mid-term rentals. Additionally, remote workers who have embraced a lifestyle of extended travel are also key prospects. Keep reading to learn about other ideal tenants for your property and how to find them.
Flexibility in Leasing
Mid-term rentals involve a lease agreement on a month-to-month basis, with the option for renewal each month. On Airbnb, hosts are protected by the long-term cancellation policy, which ensures that guests typically cannot cancel their reservation without incurring a fee.
Hybrid Strategy Potential
Mid-term rentals can be easily combined with short-term stays, creating a hybrid strategy to boost rental income and maximize occupancy throughout the year.
Identifying the Ideal Tenant in the Mid-Term Rental Market
While there are a few reasons why people may need monthly accommodation, it's good to understand that many of these groups are not tourists and could act in a price-sensitive manner. When you understand who your ideal tenant or monthly guest is, you can adapt your pricing strategy and other marketing activities to cater to them.
These groups of people are seen as mid-term tenants:
Remote Workers - Online workers are a relatively new but growing category. Monthly rentals suit their busy schedules, providing the opportunity to travel while working and enjoying home-like amenities. They can work in a comfortable, quiet environment with strong WiFi and explore the area during their off-hours.
Healthcare Professionals and Other Contract Professionals - Healthcare professionals like travel nurses often seek cost-effective housing near hospitals or clinics. Mid-term rentals are perfect as they come fully furnished, eliminating the hassle of moving in and out.
Construction Workers - Construction workers often have accommodations arranged by their employer or the contracting company overseeing the project. They usually rely on established connections, local property managers, or corporate housing providers to secure accommodations.
People in Between Homes (e.g., moving, renovating, or waiting for a permanent lease) - People who are renovating a house, or searching to buy a new one. If people are displaced due to natural disasters or fire, many insurance policies will cover temporary living expenses.
College Students - Most college students sign leases for the academic year, typically around 9 to 12 months in college towns. Some may seek shorter leases during periods of internships or summer programs.
Business Travelers - Extended work trips, and conferences - business professionals need flexible housing options when they travel for work.
Tourists on Extended Stays - Tourists who want to settle in for weeks or even months, enjoying the local culture and lifestyle without the rush of typical tourist visits.
Setting Up the Property for Mid-Term Rentals
An effective rental strategy starts long before you list your property on Airbnb (or rent it out through other channels). It begins with market analysis and cost planning.
Location Analysis
Researching local market demand is important for any real estate project, especially short and mid-term rentals. Still, these two categories have distinct differences. First, consider the type of guest. As we outlined earlier, monthly rentals attract specific types of people. Short-term lodging is primarily for tourists and visitors.
A property manager can research the proximity of key locations to prospective tenants. College students will likely search for housing near academic buildings. Travel nurses will be interested in locations close to hospitals. By thinking strategically about your prospective renters, you can anticipate their needs.
Furnishings and Amenities
Midterm renters typically expect fully furnished accommodations. They need convenient, fully-equipped accommodations for daily living. It includes an on-site, ready-to-use kitchen, washer, dryer, reliable Wi-Fi, workspace, and other amenities. Create a home-like environment and functionality to ensure your tenants feel comfortable, settled, and able to focus on their work or personal needs during their stay.
Investment Costs
Mid-term and short-term rentals come fully furnished, so you will need an initial investment to set up a property. Factor in furniture costs, cosmetic improvements, decoration, appliances, and amenities.
Best Practices for Mid-Term Property Management
Managing mid-term rentals comes with some challenges, but overall, it's less demanding than dealing with frequent turnover of short-term guests.
Invest in Quality Amenities
When property owners are furnishing a rental, the natural impulse of each business owner is to keep costs down. But it's worth spending a little extra on good-quality items. Cheap furniture and appliances break down faster, leading to more frequent repairs and replacements.
Set up a quality standard by selecting mid-range brands with positive reviews for durability.
Prioritize Property Maintenance and Regular Inspections
Maintenance costs can pile up if issues aren't addressed in a timely manner. If you're renting out a property for one or a few months, you can set an agreement beforehand that you or your cleaners will come once a month to perform regular cleaning, maintenance, and handle wear and tear.
This isn't a requirement, of course, but many experienced Airbnb hosts have made it a standard practice in their business.
Insurance Considerations for Mid-Term Rentals
Property owners must obtain insurance that covers the property, building, and any personal property, such as appliances and furniture. This policy typically includes liability coverage for injuries that occur on the property. It's essential to inform your insurance provider that the property will be used as a mid-term rental, as this may impact the coverage.
You should discuss if they offer a separate policy for this rental model. There are two basic types of coverage:
- Landlord insurance for long-term rentals
- Short-term rental insurance
Check with your insurance company to understand how they handle mid-term and hybrid STR-MTR rental models.
Managing Multiple Properties
If you're expanding your portfolio and planning to have a team managing multiple properties, strong organization is key. Keeping a list of preferred contractors, using remote monitoring tools, and creating a detailed maintenance checklist are effective ways to stay on top of property management.
Balancing daily maintenance, guest communication, and marketing activities is much easier with the right PMS software.
Using a PMS for Short Term and Mid Term Rentals
Implement software for property management, to simplify operations and communication. Mid-term rental PMS overlaps with short-term rental software, such as iGMS. This tool simplifies management by synchronizing calendars across platforms like Airbnb and VRBO.
Solutions like iGMS allow you to manage multiple listings across platforms while also supporting direct bookings. All guest and mid-term tenant communication is centralized in a unified inbox, helping you stay organized. Features like automated guest/monthly tenant messaging and task management lighten the workload for property managers. This way, it is much easier to oversee multiple properties.
Stay Compliant With Local Regulations
Understand and adhere to local tax rules, zoning laws, and permitting requirements. Zoning laws dictate areas where STR can operate, which is important if you combine STR and MTR renting models. Sometimes you need a special permit issued by local authorities.
To understand mid-term rentals, it's important to study the residential tenancy laws in your state, as MTRs fall under long-term lease regulations.
Transparent Communication with Tenants and Lease Agreement
Mid-term rentals require formal lease agreements that clearly outline the terms of tenancy and comply with local housing laws.
Prepare this agreement in advance and have it reviewed by a lawyer to ensure it aligns with residential tenancy law and protects your business. Having everything documented, signed, and professionally checked provides peace of mind in any situation that may arise.
Be proactive in addressing tenant concerns and maintain open communication to build trust and a positive experience. Include clear procedures for handling tenant conflicts, security deposit disputes, or damage claims.
Marketing Strategies for Mid-Term Rentals
Once you define your ideal mid-term tenants, you'll need to determine whether demand exists. Perhaps there’s a hospital, a college, or another point of interest nearby. If your property is close to a hospital or clinic, you will cater to traveling nurses or medical staff.
Competitor analysis will also show if monthly stays are already in demand in the area. If they are, explore the reasons and motivations behind bookings and gain insight into pricing strategies that resonate with your tenants.
Let's explain how to promote your mid-term rental listing and ensure your prospective tenants notice it.
Set Competitive Pricing
Platforms like Airbnb make it easy to explore competitors and analyze their pricing strategies. If you combine short-term with mid-term stays, the typical approach is to offer a discount on the base price calculated by individual nights. For monthly stays, a discount of 30-40% off the regular daily rate is fairly standard. Airbnb suggests setting your monthly discount to match your expected vacancy rate.
For example, if your property is almost always occupied and only 20% vacant, offering 20% off the normal price would work well.
Keep in mind that some of your prospective tenants, like travel nurses, are cost-sensitive, and Airbnb may not be their preferred platform for finding accommodations.
Market Your Property on Airbnb and Beyond Airbnb
Now, let’s explore the major platforms where you can list mid-term rentals. While some are widely used for nightly stays and appeal to a broad audience, others cater to more specialized markets.
The ideal platform for you is the one that best serves your target market segment and, secondly, the one that offers the greatest exposure to a larger pool of potential tenants.
Airbnb - World-famous and widely used for short-term bookings, Airbnb also allows you to book monthly stays. When guests search for a monthly stay, they can easily see the discount applied to the total price.
Vrbo - Another short-term and mid-term platform where you can list your house. On Vrbo, hosts are listing entire houses, typically for groups of tourists and families.
Furnished Finder - This website is known as the go-to place for travel nurses and medical staff who book 30 days and more. Furnished Finder allows nurses to communicate directly with property owners.
Corporate Housing by Owner (CHBO) - This platform is specifically targeting the corporate housing market. This allows property owners to reach business travelers and professionals looking for mid-term accommodations.
Nestpick - This website lists furnished apartments and mainly targets expats, professionals, and international students. They have apartments listed in cities from all around the world. Nestpick shows 3 million listings from over 200 providers like Spotahome, ErasmusU, Students.com.
Blueground - Companies like Blueground operate as a property management company rather than just a listing platform. When property owners partner with Blueground, the company takes on the responsibility of managing the entire rental process, which includes: furnishing, management, marketing. Blueground specializes in providing furnished apartments for mid-term stays. It caters to business travelers and expatriates.
Create Standout Listings
Every listing on Airbnb and similar platforms requires you to write a description. This is your opportunity to implement your strategy for attracting guests.
Highlight features such as walkability, access to local amenities, and specific aspects your target mid-term tenants would appreciate.
To attract relocating families or those undergoing home renovations, emphasize kid-friendly spaces, safe neighborhoods, and proximity to schools or parks.
Corporate professionals and remote workers are looking for comfortable accommodations for extended stays. Offering amenities like high-speed internet, ergonomic workspaces, and easy access to public transportation will make your property stand out.
If you're near a university, your mid-term rental could appeal to graduate students, visiting professors, or researchers. Furnished housing within walking distance of campus or public transportation will attract this audience.
Professional photography is another (or should we say first) element that will make your listing stand out and get more clicks.
Build a Network and Negotiate Directly
Building strong relationships with relocation firms, hospitals, construction companies, and corporate housing agencies allows you to secure long-term, direct bookings.
Airbnb and other platforms do a great job exposing your property to a vast number of people, but they charge you a booking fee or ask you to pay an annual membership to use their platform.
Relocation firms, insurance companies, and corporate housing agencies actively seek temporary accommodations for their clients. Direct negotiations give you more flexibility with pricing, terms, and conditions.
Also, having a professional network means building trust, establishing long-term collaboration, and generating new referrals through word-of-mouth recommendations. These professional relationships often lead to more stable, predictable bookings with less turnover and marketing effort.
Implement a Hybrid Strategy
You might be wondering about the biggest advantage of this rental model. The key benefit of monthly stays is flexibility. You can absolutely combine mid-term rental properties with vacation rentals.
When does this hybrid strategy work best? It works like a charm in places with obvious seasonality. During high-demand seasons, you can easily book out your calendar with short-term stays. This approach allows you to maximize your cash flow and increase revenue.
During slower seasons, you can pivot to accepting mid-term tenants. This strategy helps you avoid the biggest revenue killer: vacancy. Maintaining the highest possible occupancy rate is a primary goal in the rental business, and a hybrid approach proves to be a winning strategy.
Scaling Short-Term Vacation Rentals
Growing a short-term rental portfolio comes with some operational challenges like the cost of cleaning and maintenance. No matter how high your rental income is, you also want to save on resources and balance the cost-income ratio.
That's why many business owners decide to have at least one portion of the portfolio under the mid-term lease. It is called portfolio diversification. This way, you're not relying solely on the high demand of tourists and weekend getaway travelers. Mid-term rentals open the doors to an alternative you can turn to during low seasons or if a city decides to put restrictions on short-term rentals.
Your other important ally in growing your rental business is iGMS, a property management system designed from the ground up for short-term (and mid-term) rental management. Here's how we help you manage your properties:
- Automatic scheduling for cleaners and team members
- Automated messages and a unified inbox that displays all guest communications
- A channel manager that prevents double bookings
- Market insights with AI-powered analytics
