Keeping Your Portfolio Profitable Year-Round with Mid-Term Rentals

0:00We chose our market. I'm originally from the Midwest. My family lives in the Midwest and we saw a lot of need there. It's an aging population. It's fairly inexpensive to obtain and to maintain properties there. There's really really large medical campuses and really really large university campuses. So we have demand from medical professionals. Everybody thinks midterm rentals. They think travel nurses, right? That used to be 90% of the demand probably. I I don't know the exact statistic, but it used to be the the vast majority and especially with people the impression everybody got for midterm rentals was you're renting to travel nurses.

0:36Now, there's still a demand for that, but the demand for other use cases has exploded. So, you've got interns, you've got people who are working on developing data centers, you have professors, you have academics, you have relocating families, you have all of these tenant types. So what we saw in this in the markets that we're in in the Midwest, which is the majority of our portfolio, is there is a a need for medical, there is a need for professors and academics. There's a lot of people going there for internships.

1:08And there's also a lot of relocations. So we had a really strong mix. The other nice thing is that my family is there. So if we, you know, we need some boots on the ground, we have it. I think it's really important when you're looking at a at a market to not necessarily look at only the market and the numbers, but also look at what's the story behind that. Right? — If you're coming from the short-term rental world, you think Nashville, people are going there for, you know, a bachelor party, a bachelorette party, you know, San Diego, you're going to go for a beach weekend.

1:44— What are the use cases that's driving someone to Cincinnati? Right? Is it that they're building a whole lot of new data centers. Is it that there is a lot of infrastructure going like what what is causing the the demand from these midterm tenants? It's not going to be a beach weekend, right? But it it it could be that they're building a whole new, you know, a whole new downtown. It could be that there's a new program for, you know, a certain type of medical treatment.

2:15It could be that there was a natural disaster or that it's really prone to natural disasters or it could have been that relocations to that area are spiking and those people need housing for months on end. So, you have to kind of put on your hat and investigate what is taking people to that market. — Yeah, that that totally makes sense. I I advise the same thing and and I think people will get caught up saying, "Well, yeah, there's lots of different reasons people are coming." But I think speaking to one ideal guest is way better than trying to appeal to — 90 different types of guests.

2:54It just you get% get watered down and diluted. So, — so you started with Iowa then when you said the Midwest, that was the Iowa market. Okay. And then you moved into Florida from there. — Yeah. So, we actually our Florida is our long-term rental. We have had the Florida property since the pandemic. That was one of our pre-existing ones. And we've actually been tempted to turn that one into a mid-term rental because there's a lot of relocations in the area. — but we've had a tenant there under a long-term lease. So, but it's always kind of in the back of my mind as an option, which — yeah, — is nice with midterms because if we decide to furnish it, — it's not as heavy of a lift as if we were to furnish a short term, right?

3:35Like we just need more basic furnishings. — We don't need all of like the glitz and the glamour and all of the decor and this and that. We just need — really nice basics. — so that one's kind of like a we could pivot into it — if we decided we wanted to. Yeah. — Got it. Cool. Yeah. And it's so ironic because we started in Indiana, similar probably markets to Iowa. — Yeah. And then we expanded into Florida, Southwest Florida.

4:06You know, a little bit different way of doing it, but similar, you know, similar markets. And — you know, cities are you in in Florida? — we're actually both We have two duplexes that we built that are in Port Charlotte, Florida. So — yeah, ours is in Cape Coral. — Oh yeah. So right down the road. — and so it's nice because opposite seasons. And then also we can use it ourselves. That was kind of the the plan. The cash flow actually is better in the Midwest. — from from our experience, but we still cash flow well in Florida and then also we can we can use it ourselves as well, which — Yeah, exactly.

4:48— So, — but I'm curious from your perspective. So, a lot of people will tell me like when I'm talking to them initially about getting into just real estate in investing in general, it seems like everybody has like an idea of like, okay, I'm like long-term rentals are are what I'm cut out for, you know, because of X, Y, and Z, like perceptions that they have, whether they're true or not, their perceptions or — midterm is the way to go or short-term, you know, I I just want to do short term for and it's all various reasons, but I guess how did you choose midterm and then do you recommend that people just pick one of those or do you see a lot of people doing both short-term and midterm or a combination of of all three maybe?

5:35— Yeah. For us choosing midterm was fairly instinctual because long-term just didn't cash flow the way we wanted to c to cash flow. Mhm. — We were never looking for massive monthly cash flow. Obviously, the more the better, right? But we wanted the what we didn't like about long-term was especially in the markets that we've been in lately, you know, you might make enough to cover your expenses, but if the water heater goes out, if the furnace goes out, a lot of times like then you're underwater for a while, right?

6:07It's a real thin margin. — midterms, we really liked that the the cash flow, the margin is so much more significant. But it's not nearly as intimidating as short-term. Short-term was very intimidating for me. We both, me and my husband both work full-time. We've got kids, we've got hundred animals, it feels like, in our house at any given point. You know, we're running here and there. And it felt like if we're going to do short-term, we're probably going to need a manager. And then at that point, they take the cut that we might as well do a midterm, right? And I know that's that's very that's different for everybody.

6:39Everybody's different markets and and how you can get those numbers to work. What we also liked about approaching with the midterm is that we can flex in and out of short term. — I feel like if you are a short-term rental operator or vice versa, if you're a midterm operator and you are not open to a hybrid method, you are instantly losing out on so much. If you're if you're from a midterm stance, you're you're missing out on a high season potentially. I don't care what your market is, there is a high season.

7:12I don't I don't care if you're in the middle of Nebraska, there is some sort of high season and that high season might be because there is a festival or a fair or whatnot, right, that you can position yourself around. If you're in a vacation market, obviously you have a lot of high season, but you also have some low season. So, I think from a a midterm operator perspective, it's really easy to shift into short-term opportunistically in different times of the year. And for a short-term operator, I think a lot of times in a down season or a time where maybe you want to go on vacation yourself or you're a little burnt out, you need a break, you're trying to back up and focus on growing your portfolio or maybe you've got operational stuff you're focusing on where you need to lift that that management side a little bit.

7:58Shifting into midterm can keep your calendar a whole lot more full. And often times in in the down season for a short-term rental operator be more profitable because you don't have so many gaps, right? You might be taking less on an a average daily rate, but when you've got a 3 month stay, you're coming out ahead of the game if it's if it's the down season. So I think if you are in a midterm or a short term, you have to be looking at at the opportunity for a hybrid there. And and midterm is too easy to not put your cards on the table.

8:32It's it's so easy to list your property on Furnish Finder. It's so easy to start marketing yourself and put yourself inside of that game of opportunity that it's kind of like why wouldn't you? Especially if you're in a market where you have a down season or you know if if you're like I'm focusing on building a duplex, right? I need this property to be a little easier for a while. It's it's a very very easy lift, especially if you're coming from short term. — Yeah. Yeah.

9:03And that's what I love about this is that there's no perfect answer. Like you can customize it to your liking. But but we've kind of done exactly what you you described and it's worked so well for us. Like I'm I mentioned before we got on that I'm at the southern tip of Lake Michigan. So, beautiful place in the summertime. Right now, we just got blanketed with a foot of snow. Yeah. — little little light on bookings. So, it's a perfect time to give a 30-day plus discount.

9:35And we have a whole bunch of midterm renters coming in that — that are workers are building. You know, to your point, there's a big data center going in close by and — traveling nurses, all all that. So 100% occupancy is better than, you know, 20% occupancy in the off season even at a lower rate. So, — and then you have someone in that property too, right? So when you get a foot of snow, you don't have to wonder, oh, I wonder if the utilities are still functioning. I wonder if the front doors snowed shut, right? Like you have someone there.

10:07— Yes. — Who's who's taking care of your property? Cuz they they're living there for two or three months. They're not just staying there for two or three days. They're — it's their home for a while. Like they want to take care of it. — Yeah. Yeah. Exactly. So, I had one other question I was curious about about your properties and then I want to get into some more furnish finder questions, but how did you finance the ones that you purchased? Did you guys use conventional financing or — loans or we used DSCR loans? — Okay.

10:37— and we actually found the the best the best way that we found was through a very small bank. I really love working with small banks when it comes to things like a DSCR loan. It was so small that like the the vice president of the bank who I was working with would just call or text me and be like, "Hey, I need this document." Right. But — yes, DSCR loans are so fantastic and so easy on, you know, the paperwork and the requirements. It just it it — it is a much easier thing than a conventional loan.

11:11— Yes. Yeah. — Yeah. I agree. And a lot of people will go with large DSCR lenders because it just feels easier than making a relationship with a local lender. But those small banks, yeah, I've I've had the same experience. Just great great to work with in a lot of cases. They're way more flexible in a lot of cases, too. So, — I will literally when we're in acquisition mode, I'll I'll send the the Zillow link to the person I work with at the bank and be like, "Hey, would you help me finance this?" And they're like, "What do you you know, what do you think you could get for rent?" And I let them know.

11:42And in five emails back and forth, it's like, "Cool, we're good to go." And they're like, "Oh, we just did one with you eight months ago. Like, we don't really need to redo all this stuff. We're good to go." And I'm like, it's it's just it's about those relationship, right? — Absolutely. Yeah. — So, I guess shifting a little bit to furnish Finders then. I I know a lot of people on here have probably heard of it or heard the term, but I guess can you explain the difference between Furnish Finders and other platforms like an Airbnb or Verbbo? Yeah. So, Furnish Finder is 100% monthly rentals, midterm rentals, same thing, different names.

12:17It's all we do, right? So, on Airbnb, you can rent a property or list a property or for two days or you could rent it for 6 months depending on, you know, the the person's calendar specifics. But on Furnished Finder, it's only a 30-day minimum, right? So the tenants that are coming to our site, the millions of tenants and travelers per year that are coming to our site are specifically looking for a place to stay for 30 days or more. So they are those travel nurses, they are you know academics, they're relocating families, they're displaced families, they're corporate workers, right?

12:52When we're talking about these data centers that that takes a lot of people coming in on contract building it out and then taking off, right? So lots of contract and corporate workers. The other big big difference is that we do not work on a commission model. So Airbnb, we all know you can list your property for free. When you get a booking, they're going to take on average somewhere around 14% between you and the guest. We have flipped that model on its head a little bit because with midterm rentals, it's all about the relationship and we want you to be in control.

13:29So, when you pay $179 to list your property and then when you make a booking, it you get all of the rent, okay? Because it is it's a relationship business. It's kind of like when you think about renting a long-term rental, — right? So, we don't take a commission. We we give you the tools to book it like someone would book a long-term rental. Like we have a screening tool available for an extra cost if you want to have your tenant do a screening lease templates all of those tools if you need them.

14:04You're not required to use them by any means. But really our goal is to make the best matches between tenants and landlords possible so that it's beneficial for everybody. — Got it. Yeah. I was going to ask that about screening because I know with Airbnb you can see, you know, guest previous reviews and a lot of people use that to screen whether they're going to allow a guest to book or not. So, do you recommend doing a full background check as if they're a long-term tenant? — 100,000%.

14:36— Yeah, — I will be like it. It scares me to not do it, right? And and midterm tenants are great. They're traveling because they need to, right? Oftentimes they're they're on a stipen, so they're they're employed. They want to get back home, right? They're fantastic tenants, but you want to know who's at your property for three months. — Like, you want to know, right? You want to know their payment history. You want to know if they have a criminal record. I've only had a a handful of times where something has come back where I'm not comfortable with it.

15:10But I screen every single tenant 18 and up. — Okay. Nice. Yeah. Makes sense. Yeah. Because after 30 days, especially in most states, you know, they have landlord rights and, you know, if they didn't, you know, if you had the wrong tenant or they, you know, didn't move out or something, you'd have to go through that eviction process. So, that would make sense to want to make sure that you're getting a great guest in there. — and I think one other thing that — that scares a lot of people about midterm rentals is they think, well, — I'll get a three-month booking, but then I might have a gap of a month or two before my next booking, you know?

15:46So how do you prevent that? I guess what's what's some best practices for that? — Yeah, it can be tough to and this is unfortunate because a lot of people kind of get scared off in the beginning. Typically people are looking to book their next property about a month in advance. Okay. So, and that can vary. I have had travelers who've reached out and they're like, I need somewhere tomorrow. I've had people who are like, I'm looking for next June. And I'm like, I can't think eight weeks past now. I need you to calm down. Right. But it it so if I list my property today and I say, you know, it's vacant as of today, it might take me a few weeks a month to get a booking.

16:25And that is, you know, an unfortunate way to start your midterm rental experience. So I I always tell people, list it before it's ready. — If you're still furnishing it, I don't care. List it. Right? You can put in the photos, furniture coming soon, right? Or like here's some of the furniture I'm going to be using or message me about questions about the furniture or we're putting finishing touches on it. But get get your name in the hat, right? Get in there, get in the game. Because it might take some time. And the other thing is just it's just basic marketing principles when it comes to marketing your property.

17:01And Airbnb and short-term rental professionals, you guys are the best at this. You guys are the ones who will make a listing that looks really, really, really good, right? And you understand how you might have to tweak your headline, you might have to tweak your photo, you might have to tweak your pricing a little bit here and there, right? But like those are all things that will help you succeed. So the the best thing is making your listing really shine and being active. Okay. So, on Furnish Finder and with midterm rentals in general, since it is based around that relationship, there's going to be some conversations before a booking happens, right?

17:37Or you might get a lead and the lead doesn't seem perfect, but there's a lot of potential to it. So, you could reply and say, "Oh, you know, my property's not available on February 1st, but it is on the 3rd. Could you stay in a hotel for two days?" And they might say, "Yeah, for your property, I totally would do that." Right? So, there's some conversations that happen. So you have to be active and you have to be responsive. But then you're off the hook for usually three months or six months or or quite a while, right? So you might have a gap here and there.

18:08And I do tell people, you know, when when you have a gap, let's say if you have a two week gap, — rent it short shortterm for two weeks, — right? Or maybe now is you have the twoe gap. Maybe now is the time to replace that countertop that you've been procrastinating or upgrade the water heater or any of that deferred maintenance, right? But if you're experienced or at least open to short-term rental, you can totally fill the gaps with short-term rentals, which is so helpful.