Much like the rise of hybrid work, the travel and housing industry has seen a rise in the need for mid-term rentals.
Whether you’re currently a short-term rental host or considering diving into this fast-moving market, mid-term rentals can offer a profitable opportunity. In this guide, we’ll explore the ins and outs of mid-term rentals, including what they are, how to manage them, and why they are beneficial for both hosts and investors.
What are Mid-Term Rentals?
In short, mid-term rentals are longer than a short-term stay but still shorter than a traditional year-long lease agreement. Typically, a mid-term rental lasts between one and six months. Everything else about the stay is relatively the same—guests still expect fully furnished properties, host availability, and everything else that comes from hosting rental properties.
Mid-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 are looking to travel to a “home base” for a few weeks (or months) to work during the day and explore on the weekends.
That said, 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 mid-term rentals generally include:
- Business Travelers: Business travelers may need corporate housing to stay in a city for an extended period of time for work. Medium-term rentals provide a more affordable and comfortable corporate housing alternative to hotels.
- Digital nomads: With more people working remotely, digital nomads are constantly on the move and looking for mid-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 lease agreement.
- Travel nurses: Traveling healthcare professionals like nurses have been looking for mid-term housing options for many years. They generally take a contract in a new city every three to six months and, therefore, can’t commit to a long-term lease. It’s a booming industry from which mid-term investors can benefit.
- People relocating: People or families relocating for work or school may need a place to stay while they search for a permanent home.
Simply put, the mid-term rental market caters to those who need temporary housing for a variety of reasons but require more stability and less expense than daily or weekly vacation rentals.
Legal and Zoning Considerations for Mid-Term Rental Properties
If you’re new to hosting, it’s important to be aware of legal and zoning considerations. Each city has its own unique set of legalities, and it’s important to perform due diligence to ensure your mid-term and short-term vacation rentals are in compliance.
Additionally, some cities may have different restrictions on short-term housing vs. medium-term rentals. These regulations can include:
- Rental length restrictions
- Licensing requirements
- Occupancy taxes
- Residential zoning
Failure to comply with local regulations can result in hefty fines and penalties. To avoid any legal issues, do your research, secure all proper permits, and register your rental with the appropriate authorities.
Benefits of Investing in Mid-Term Rentals
Investing in mid-term rentals can offer a variety of benefits not commonly found in traditional rental or vacation rental investments. Key advantages include:
1) Increased Occupancy Rates and Reduced Turnover Costs
Mid-term rentals are a great way to keep your hosting calendar full. Since your guests require accommodation for weeks to a few months at a time, you’ll have far fewer vacant days than traditional short-term rentals.
Plus, longer stays mean lower turnover costs. Since there won’t be a rotating door of guests you won’t need to pay for your regular cleaning crew. Of course, you could offer mid-stay cleanings to mid-term rental guests for an additional fee.
2) Potential for More Income With Less Effort
Booking a guest for an extended stay requires less effort on the property owner or host’s end. Managers can essentially get a guest checked in and simply be available to answer any questions throughout the stay. Tedious tasks like check-ins, pre-arrival communications, and attracting new renters will be fewer and farther between.
Additionally, the nature of mid-term leases allows hosts and investors a steady rental income stream. With solid weeks or months of booking, it’s easy to know what income to expect. The only downside of this predictable income is the inability to change the nightly rate if the mid-term rental market conditions change within a short period.
3) Fill the Gaps Outside of Peak Seasons
Mid-term rentals can bridge 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 close the rental income gap between high and low seasons that short-term rental hosts typically see.
A mid-term rental strategy can provide hosts and investors with a secure income while minimizing the level of day-to-day property management. By targeting a different audience, you can keep your rental property occupied and earn more income without the stress of constantly attracting prospective tenants.
Pricing Strategies for Mid-Term Rentals
Developing an effective pricing strategy for mid-term rentals requires careful consideration of factors that can influence your property’s demand and profitability. The below tips can help set you up for success:
1) Analyzing Market Rates and Competitor Pricing
It’s important to regularly research mid-term rental prices in your area. This information can tell you if you’re pricing your property too low or too high or if you’ve found the sweet spot. Tools like Mashvisor are helpful in this endeavor.
When analyzing this data, you’ll want to keep in mind how your amenities stack up with your competition. Do most rentals have a pool or access to a gym? Consider what your rental does or does not offer when comparing competitor pricing.
2) Utilize Dynamic Pricing by Adjusting Prices Based on Duration of Stay, Seasonality, and Demand
It’s important to consider seasonality when pricing your mid-term rentals. For example, if your rental caters to skiers in Aspen, you’ll want your highest rates during ski season. During the offseason, consider lowering your prices to attract longer-term renters.
Additionally, it’s a good idea to offer discounts for longer stays. This can incentivize mid-term renters to book with you and increase your overall rental income.
Finally, keep an eye on demand in your area. If there is a high market demand for mid-term rentals during a particular time of year or for a specific event, consider adjusting your prices accordingly. For instance, many short-term and mid-term rental hosts saw demand skyrocket when singer Taylor Swift’s tour came through their city.
Must-Have Items and Amenities in Your Mid-Term Rentals
Since your mid-term guests will be staying for longer than a weekend, it’s important to offer certain amenities that’ll mimic the comforts of home. Here are some must-have items and amenities that you should consider offering:
- High-Speed Wi-Fi: Essential for both leisure and business travelers. Ensure your internet connection is reliable and fast enough to support multiple devices simultaneously.
- Laundry Facilities: Mid-term renters highly value the convenience of having a washer and dryer in their unit or access to communal laundry services. Be sure to include laundry instructions in your house manual.
- Full Kitchen: A kitchen stocked with cookware, utensils, and appliances (including a refrigerator, stove, and microwave) allows guests to prepare their own meals. Kitchens are especially important for those looking to save cash on longer stays.
- Comfortable Workspace: Many mid-term renters may be working remotely. Providing a designated space with a desk, comfortable seating, and adequate lighting can dramatically improve their stay. If they’re not comfortable working, they might consider terminating the agreement!
- Air Conditioning and/or Heating: Having a way to control the inside temperature is vital for a long-term stay.
- Quality Bedding and Towels: Investing in high-quality bedding and plush towels is a must for mid-term rentals. Remember, these guests aren’t “dealing with it” for a weekend but rather for weeks or even months.
- Smart TV or Streaming Services Access: Entertainment options are crucial. A Smart TV or a device that allows guests to access streaming services with their own accounts can be a great addition.
By providing these key amenities, you can ensure that your mid-term rental stands out in a competitive market and caters to the needs and preferences of a diverse range of tenants.
Challenges of Mid-Term Rentals
Mid-term rentals, while lucrative, come with their own set of challenges that can affect success. Addressing these concerns proactively can help ensure smoother operations and sustained success.
Vacancies
One of the most pressing concerns for mid-term rental hosts is filling vacancies. Having your property sit empty means lost revenue.
To combat this, consider diversifying your listing across multiple platforms to increase visibility. Additionally, offering a flexible medium-term rental lease or discounts for longer stays can attract more mid-term tenants.
Maintenance
Regular maintenance ensures that your rental property remains in top condition and can prevent costly repairs down the line. Implementing a regular cleaning and inspection schedule can help catch issues early.
Building a reliable network of service professionals (e.g., plumbers, electricians, cleaners) you can call on for quick fixes is essential. Consider booking mid-stay cleanings to give staff a chance to check out the property and ensure everything is in order.
Tenant Disputes
Despite thorough vetting, disputes with guests can arise. Establish a strong communication plan from the start, and ensure your rental agreement outlines all policies and expectations. Keeping a record of all communications can be beneficial should disputes escalate.
Final Thoughts: Short-Term Rentals or Mid-Term Rentals?
At the end of the day, hosting short-term and mid-term rentals has the potential to be a fantastic business investment. Of course, mid-term rentals come with their own unique set of benefits and challenges.
Choosing between the two options ultimately depends on your goals and priorities as a host and property owner. Whether you value consistent 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 constantly strive for improvement. By staying up-to-date on industry trends and proactively addressing any issues that arise, you can ensure a successful mid-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.