Mid-term rentals

The rental management is more intricate than people think it is when trying to raise the net operating income (NOI) of a multifamily property. There is many ways (3) to earn rental income. 

The one that most people know of and do is long term rentals which happens when renting an apartment for 12 months. This is common, it answers a very common necessity, requires very little management efforts and always has a great amount of potential tenants. This is the way financial institutions value a property, by seeing the yearly rental income, deducting all expenses, calculating the capitalization rate and the net operating income. This is the most common way to proceed but the least profitable way. 

A way that is gaining popularity is short-term rentals. This rental type is often more lucrative than yearly rentals but comes with a lot more work, management and expenses. The apartments must be fully furnished, cleaned after every guests, managed on booking platforms and the price will change weekly or daily depending on the location, the listing visits and what is happening in your area. There is also more and more regulations to limit this type of rental. Great examples of limitations are found in New York City or San Diego. Even though that rental type typically earns more than yearly leases, they also involve a lot more work! 

There is another rental type that is the least talked about, not regulated and the least common but has a lot of potential. This rental type is called mid-term rentals. The hard thing about mid-term rentals is where to place listings, how to get consistent rentals and who will stay in the property. Most of the work is needed at the beginning when setting this up. Mid-term rentals are often used by corporate or business people, who need to stay in a location, insurance clients who are living problems in their homes like water damage, fire, damage or big accidents or travel nurses who often move from a location to another. This is the most lucrative rental type but the most difficult to learn about, setup and be consistent with. 

This is why doing business with a great management company will create amazing advantages depending on your specific needs, goals or interests. If the property was acquired as an investment and you have little time to manage it and no need for it, long-term tenants are the way to proceed. Was the property acquired as an investment property? It might be a great idea and more profitable to do short-term rentals. That way you will increase your rental income, have the ability to make sure bookings are blocked in advance to renovate, maintain or manage and be able to use it whenever. Was the property acquired as a vacation home during retirement? In this case short-term rental is the best option also. You can block periods of time when you want to stay in the property and you can earn enough to limit your expenses and even make a profit if it’s well styled, furnished and managed. 

The way that is the least known is a hybrid model that we manage. We will create a short-term listing and a midterm listing. We can get mid-term guests that require little management or guidance for multiple months and short-term rentals between the mid-term clients. That requires great management but is the most profitable by far!