As with the rise of hybrid working, the travel and housing industry has seen an increase in the need for medium-term rentals.
Whether you’re currently a short-term rental host or thinking about diving into this fast-moving market, medium-term rentals can provide a lucrative opportunity. In this guide, we’ll explore the ins and outs of medium-term rentals, including what they are, how to manage them, and why they’re beneficial for both hosts and investors.
What are medium term rentals?
In short, medium-term rentals are just that Longer than a short-term stay but still shorter than a traditional one-year lease. Typically, the average rental lasts between one and six months. Everything else about accommodation is relatively the same – guests still expect fully furnished properties, host availability, and everything else that comes with hosting rental properties.
Medium-term housing has become a particularly popular alternative to both short-term rentals and long-term rentals with the rise of remote work. Many guests look to travel to a “home base” for a few weeks (or months) to work during the day and explore on the weekends.
However, there is a wide range of guests that those already in the short-term rental market will want to cater to. These potential guests looking to find medium-term rentals generally include:
- Business travelers: Business travelers may need corporate housing to stay in the city for an extended period of time for work. Medium-term rentals provide businesses with a comfortable and affordable alternative to hotels.
- Digital nomads: With more and more people working remotely, digital nomads are constantly on the move and looking for medium-term housing options.
- Families on vacation: Some families may choose to stay in a mid-term rental for an extended vacation. These longer housing rentals give them the flexibility to explore and enjoy their destination without having to commit to a year-long rental agreement.
- Travel nurses: Mobile healthcare professionals such as nurses have been searching for mid-term housing options for many years. They usually get a contract in a new city every three to six months, so they can’t commit to a long-term lease. It is a booming industry that medium-term investors can benefit from.
- Transport of people: People or families moving for work or school may need a place to stay while they search for a permanent home.
Simply put, the medium-term rental market caters to those who need temporary housing for a variety of reasons but require more stability and lower expenses than daily or weekly vacation rentals.
Legal and zoning considerations for medium-term rental properties
If you’re new to hosting, it’s important to be aware of the legal and zoning considerations. Each city has its own unique set of legal rules, and it is important to do your due diligence to ensure medium- and short-term vacation rentals are in compliance.
Additionally, some cities may have different restrictions on short-term housing versus medium-term rentals. These regulations can include the following:
- Rental term restrictions
- Licensing requirements
- Occupancy taxes
- Zoning of residential areas
Failure to comply with local regulations can result in hefty fines and penalties. To avoid any legal problems, do your research, secure all the appropriate permits, and register your rental with the relevant authorities.
Benefits of investing in medium term rentals
Investing in medium-term rentals can provide a variety of benefits not typically found in traditional rental investments or vacation rentals. Key advantages include:
1) Increased occupancy rates and reduced turnover costs
Medium term rentals are a great way to keep your hosting calendar full. Since your guests need to stay for anywhere from weeks to a few months at a time, you will have significantly fewer vacant days than traditional short-term rentals.
Plus, a longer stay means lower turnover costs. Since there won’t be a revolving door of guests, you won’t need to pay for the usual cleaning staff. Of course, you can offer mid-stay cleaning services for mid-term rental guests for an additional fee.
2) The possibility of obtaining greater income with less effort
Booking a guest for an extended stay requires less effort on the part of the property owner or host. Managers can basically check in the guest and are available to answer any questions throughout the stay. Daunting tasks like check-in, pre-arrival communications, and attracting new tenants will be fewer and far between.
In addition, the medium-term nature of leases allows hosts and investors to receive stable rental income. With weeks or months at a time of booking, it’s easy to know what income to expect. The only downside to this projected income is the inability to change the nightly rate if medium-term rental market conditions change within a short period.
3) Filling gaps outside peak seasons
Medium-term rentals can fill the gap in demand between the high tourist seasons and the slow season. Renting mid-term rentals to college students, business professionals, or digital nomads can help bridge the rental income gap between high and low seasons that short-term rental hosts typically see.
A medium-term rental strategy can provide hosts and investors with a secure income while reducing the level of day-to-day management of the property. By targeting a different audience, you can keep your rental property occupied and earn more income without the stress of constantly attracting potential tenants.
Pricing strategies for medium term rentals
Developing an effective pricing strategy for medium-term rentals requires careful consideration of the factors that can affect the demand and profitability of your property. The following tips can help set you up for success:
1) Analyze market prices and competitors’ prices
It is important to regularly research medium-term rental prices in your area. This information can tell you if you are pricing your property too low or too high or if you have found the right place. Tools like Mashvisor are useful in this endeavor.
When analyzing this data, you need to keep in mind how your amenities stack up against your competitors. Do most rentals have a pool or access to a gym? Consider what your rental does or does not offer when comparing competitors’ rates.
2) Take advantage of dynamic pricing by adjusting prices based on length of stay, seasonality and demand
It is important to take seasonality into account when pricing medium-term rentals. For example, if your rental is for skiers in Aspen, you’ll want to get the highest rates during the ski season. During the holiday period, consider lowering rates to attract long-term renters.
In addition, it is a good idea to offer discounts for longer stays. This can incentivize medium-term tenants to book with you and increase their overall rental income.
Finally, monitor demand in your area. If there is high market demand for medium-term rentals during a certain time of year or for a specific event, consider adjusting prices accordingly. For example, many short- and medium-term rental hosts saw a spike in demand when singer Taylor Swift’s tour came through their city.
Must-have items and amenities for your mid-term rentals
Since your midterm guests will be staying longer than a weekend, it’s important to provide certain amenities that mimic the comforts of home. Here are some items and amenities you should consider offering:
- High speed wifi: An essential for both leisure and business travelers. Make sure your internet connection is reliable and fast enough to support multiple devices simultaneously.
- Laundry facilities: Medium-term renters highly value the convenience of having a washer and dryer in their unit or access to shared laundry services. Be sure to include washing instructions in your home manual.
- Full kitchen: A kitchen equipped with cookware, utensils and appliances (including refrigerator, stove and microwave) allows guests to prepare their own meals. Kitchens are of particular interest to those looking to save money on longer stays.
- Comfortable work space: Many mid-term tenants may work remotely. Providing a designated space with a desk, comfortable seating, and adequate lighting can greatly improve their stay. If they are not comfortable with the work, they may consider terminating the agreement!
- Air conditioning and/or heating: Having a way to control the interior temperature is vital for a long-term stay.
- High quality bedding and towels: Investing in high-quality bedding and plush towels is essential for medium-term rentals. Remember, these guests don’t “deal with it” over the weekend but for weeks or even months.
- Access smart TV or streaming services: Entertainment options are crucial. A smart TV or device that allows guests to access streaming services with their own accounts can be a great addition.
By providing these basic amenities, you can ensure that your mid-term rental stands out in a competitive market and meets the needs and preferences of a diverse group of tenants.
Challenges of medium term rentals
Although medium-term rentals are profitable, they come with their own set of challenges that can impact success. Proactively addressing these concerns can help ensure smoother operations and sustained success.
Vacancies
One of the most pressing concerns for rental hosts in the medium term is filling vacancies. Leaving your property empty means lost revenue.
To combat this, consider diversifying your list across multiple platforms to increase visibility. In addition, offering a flexible medium-term lease or discounts for longer stays can attract more renters in the medium term.
maintenance
Regular maintenance ensures your rental property stays in top condition and can prevent costly repairs in the future. Implementing a regular cleaning and inspection schedule can help catch problems early.
Building a reliable network of service professionals (such as plumbers, electricians, and cleaners) who you can call for quick repairs is essential. Consider booking cleaning services mid-stay to give staff a chance to check on the property and make sure everything is in order.
Tenant disputes
Despite careful inspection, disputes can arise with guests. Create a strong communication plan from the beginning, and make sure your rental agreement outlines all policies and expectations. Keeping a record of all communications can be helpful if disputes escalate.
Final Thoughts: Short-Term Rentals or Medium-Term Rentals?
Ultimately, hosting short and medium-term rentals has the potential to be a great business investment. Of course, medium-term rentals come with a unique set of advantages and challenges.
Choosing between the two options ultimately depends on your goals and priorities as a host and property owner. Whether you value steady rental income or flexibility in your own schedule, there is a long-term rental strategy that can work for you.
Ultimately, the most successful rental owners are those who adapt to their target market and continually strive to improve. By staying on top of the latest industry trends and proactively dealing with any issues that arise, you can ensure the success of your medium-term rental business. Overall, do thorough research, consider all factors, and make an informed decision based on your specific goals and priorities as a host.
