Women Invest in Real Estate WIIRE 015: Midterm Rental FAQs with Amelia & Grace
Hello friends! Welcome to episode 15 of the Women Invest In Real Estate podcast. This week we are super excited to be fielding some FAQs that we often receive from our followers on Instagram. We’re going to answer some of these questions and hopefully help you out on your REI journey.
The FAQ Lineup
When purchasing a property, should a mid-term rental work as a long-term rental first, numbers-wise?
Our take: Absolutely. It should definitely function as a long-term rental first, at least enough to where it's going to cover your mortgage, your insurance, your property taxes, and your utilities. At the very least, you want to break even.
What is the difference in amenities/supplies in an MTR as compared to an STR?
Our take: We each provide a ‘starter pack’ of items such as paper towels and toilet paper, but in the long term we don’t provide these for the entire stay. We consider what they need to have a comfortable first couple of days while they get settled in, move in their clothes, buy groceries, to have a nice day.
If you know you could get $X for midterm rental, what would you pay for the property?
Our take: We want to cash flow $200-400, or ideally as a long-term rental. As a bare minimum, we consider the 1% rule when analyzing deals.
Where should I list my midterm rental and how do I find tenants and comps for monthly MTR rates?
Our take: FurnishedFinder. You can check out comps and find tenants all in one place. We also recommend AirBNB to help fill gaps between bookings as well.
What value do you use for vacancy when running your numbers in MTR versus LTR?
Our take: Amelia uses 8%, for MTR, even though we've found that it's significantly less than that. But again, she runs her numbers very conservatively and she also has some gaps in between bookings (maybe a week or two here or there) which adds up. Also consider that some banks, when you're underwriting larger deals like five+ units, they'll usually actually require a 10% vacancy in your underwriting. They simply want to see that the property still functions even if there is up to a 10% vacancy for the year.
Do your units have washer/dryers? We have no room for hookups and I'm pretty sure it will be a hard pass for some people, with others expecting cheaper rates.
Our take: You pretty much answered your own question. We recommend checking out FurnishedFinder for the specific area you’re considering and see if there are listings available that don’t have hookups for washer/dryer and it will show what is available. If they're all available right now, that means people don't want them. If they're not available for another two or three months, it means they are getting booked, so you could probably go for it. For Amelia, her units don't have washer/dryer, but there is a washer/dryer in the unit in a shared room. However, it is a hard pass for some people to not have a washer/dryer in their unit, and that's okay.
We also recommend taking a play from our friend Britt’s playbook and getting creative by offering a laundry service for an upcharge. Our friend Jess got creative by offering pet care because she lives on the premises and works from home. This is a game changer for travelers with pets, especially traveling nurses who work long hours.
How do you get a hold of insurance companies to offer your an MTR for insurance claims?
You actually can call the adjusters at insurance companies. They have a department that's called a re-homing or re-housing department, and insurance companies will place displaced families in your units and pay for their housing. This is also an option to offer to local realtors to offer to people who have sold their houses and are still in between homes.
If you want to dive deeper into what we just touched on in this episode check out our MTR Profit Academy, which gives you the A to Z on how to start a midterm rental and successfully rent it out.
Have more questions? We would love to hear them! Shoot us an email or DM us on Instagram.
Thanks for tuning in, we’ll catch you in the next episode!
Resources:
- Join the MTR Profit Academy
- Connect with us on Instagram
- List your MTR on FurnishedFinder
- Fill your gaps using Airbnb