Real Estate Investing Guide: Medium Term Rental Strategy

I’ve already covered many real estate investing strategies including short term rentals and Airbnbs as well as long-term options. One thing I haven’t covered yet are medium term rentals, that is, shorter leases that offer a faster ROI compared to long-term renting. With that said, here’s what the medium term rental strategy entails and how you can get started with your first income property investment!

What Is Medium Term Renting? 

Most simply put, a medium term rental is a residential lease that lasts longer than 30 days yet shorter than a year. That period between one month and up to 12 months is generally considered a mid-term rental period. Moreover, medium term renting is also known as “corporate housing” where tenants occupy the place for a few months instead of years. In most cases, a mid-term lease lasts around three to nine months.

The question is, what makes medium term renting a more preferred option over long term or short term renting? Many investors pursue Airbnb investments as the rental model that ensures the fastest ROI. However, there are many benefits to doing a long-term rental as well. What’s great about medium term renting is that it gives you the best of both worlds.

The Benefits of Medium Term Renting

There are several reasons why medium term rentals might be the best choice for you.  For starters, the demographic around medium term rentals is generally more responsible and trustworthy. Namely, the people who most commonly rent units for several months are people who travel to places for business purposes (corporate employees). These are the kind of tenants you can trust and rely on, meaning there wouldn’t be many issues to worry about.

Moreover, mid-term rent is usually more expensive than long-term rent. Besides, people who are looking for such rental options are prepared to pay higher rates for a well-furnished and luxurious place. In some cases, medium-term tenants convert to long-term tenants if they end up finding an opportunity to stay in the city or switch residencies. In this scenario, you might be able to find perfect high-paying tenants and turn your unit into a long-term rental as well.

It is also important to mention that medium-term rentals are always going to be highly sought after. People who travel to different cities for a couple months would rather pay for a mid-term lease than pay the daily rates at hotels, as this can end up being a lot more expensive. Overall, a medium term rental investment is a highly flexible type of investment since you can choose to change your strategy at any time. If you’re having trouble finding long term rentals, you can always start looking for short term tenants or mid term ones, which would secure you a higher profit over time. 

How to Start Medium Term Renting

If you’ve already taken the first step toward owning an investment property, you’re on a good path to start renting it mid-term. However, even if you’re starting from scratch, the whole process from start to finish is not as difficult as you might think it is. The first step would be to research the market you’re interested in and calculate how much money you would need for your initial property investment.

After that, find a way to secure that capital, whether through a mortgage deal or another financing option. You can consider setting up a joint venture to split the costs and responsibility of making an investment. However, keep in mind that you would be splitting the profits as well. Once you’ve got the financing covered, you will be ready to negotiate for the best price and finally close the deal.

While it might sound simple, this is going to be the most time-consuming part of the process. After all, you will have to focus on property walkthroughs, in-depth inspection, the entire negotiation process, and all the paperwork going back and forth between the lawyers of both parties. 

After signing the deal, you’d usually go through the process of renovating the property before you start renting it out. That’s where the actual strategy comes in as you start to market the property and bring in the tenants.