Are you new to the world of renting? Are you a landlord looking to diversify your portfolio? Or are you just curious about mid-term rentals?
No matter why you’re here, we’re glad you found us! We’ve put together this guide as an overview of everything you need to know about medium-term rentals.
In this blog, we’ll cover everything from what a mid-term rental is, how to go about their lease agreements, and who uses them. We’ll also talk about the pros and cons of managing mid-term rentals. Let’s dive in!
What Is a Mid-Term Rental?
You’ve probably heard of short-term and long-term rentals, but what exactly is a mid-term (or medium-term) rental? The answer is in the name: a mid-term lease agreement is a rental agreement between a property owner and tenant that lasts for less than one year but usually more than one month.
Ordinarily, short-term rentals last for less than one month (and are sometimes referred to as vacation rentals), while long-term rentals are typically year-long leases. Medium-term rentals fall into that sweet spot of at least one month but average three to nine months.
Mid-term rentals are ideal for landlords in highly populated cities or college towns. In addition to populous metropolises, medium-term rentals work well in areas where seasonal work is common, such as near agricultural centers. They’re also great for prospective landlords who want to get into the rental market but aren’t ready to have a long-term commitment.
Who Uses Mid-Term Rentals?
If you’re pursuing real estate investing, it makes sense that you’d want to maximize your return on investment. Mid-term rentals can offer a surprising return on investment despite frequent turnover. Mid-term rental demand is growing, especially with the post-pandemic rise in remote work creating the profile of a “digital nomad”. And of course, prolonged business trips and vacations will always create demand for flexible lease durations.
Let’s take a look at some of the most common groups of people that use mid-term rentals:
- Traveling nurses: At the height of the pandemic, traveling nurses needed housing like never before, and they’re still in high demand across the country. Rather than shell out exorbitant fees to live in a trendy Airbnb, mid-term rentals allowed nurses to establish a home away from home.
- Students: Students often need somewhere to stay while they attend class. Mid-term rentals provide students with an affordable option that doesn’t require them to live on campus or commute long distances daily.
- Digital nomads: Digital nomads are people who work from home or remotely and travel frequently as a lifestyle choice. They tend to be more transient than other travelers —they may stay with friends or family before finding a new location where they can settle down for a while.
- Business professionals: Many industries require their employees to travel. Some companies host workers in mid-term corporate housing; others seek their own mid-term housing solutions.
Other tenants who may use medium-term rentals include families relocating to a new city and professionals heading to a new place to start an internship. While all these groups may have different reasons for moving, they generally use mid-term rentals because they have reasonably extended short-term housing needs.
What You Need in a Mid-Term Lease Agreement
Mid-term rentals are unique in many ways, which means you’ll need to make sure your lease agreement reflects your specific rental. There are several things to consider when drafting a mid-term lease agreement, including but not limited to:
- The length of stay/occupancy (rental period of one to 12 months)
- The amount of rent
- Security deposit and other applicable fees
- Amenities – utilities like Wi-Fi access and whether the rental house is furnished or not
- Local landlord-tenant laws and regulations
- Tenants’ rights
- The responsibilities of both the tenant and landlord
Generally, medium-term lease agreements may not involve a lot of legal stipulations like traditional leases. However, check your local landlord-tenant laws to make sure you’re abiding by any specific term-based lease requirements. We also recommend that you chat with your attorney or local housing authority before any documents are signed to ensure you’re doing everything by the book.
What Are the Pros of Managing a Mid-Term Rental?
While long-term rentals can be great for owners looking for a steady rental income stream over several years, mid-term rentals offer unique advantages, including:
- You have access to new tenants who may be more willing to work with you and are less likely to default on their lease agreement than long-term tenants who have lived there for several years.
- Unlike short-term housing, you’ll have a more steady cash flow that is less susceptible to seasonal fluctuations.
- You have more flexibility since you don’t have to worry about a long-term commitment.
- Your business is likely to flourish over time if the demand for medium-term rental units continues to grow.
What Are the Cons of Managing a Mid-term Rental?
As with any business venture, there are certain aspects you need to be aware of if you’re going to be handling a mid-term rental, such as:
- Your property is more likely to be used for unethical activities. This is true of short-term and mid-term tenants but is slightly more common with short-term renters because they don’t plan on being there for very long and aren’t as invested in their community or neighborhood. If something unethical happens on your rental properties, it could lead to other issues like vandalism or noise complaints. To combat this, make sure your lease agreement clearly defines acceptable and unacceptable uses of the property, and be sure to screen your tenants thoroughly.
- If you don’t have experience managing mid-term rentals, it can be challenging to find the best tenants. However, there are digital tools you can use to market your listings efficiently. Make sure your rental application is easy to fill-out and professional to attract great tenants.
- There can be more legal issues in managing a mid-term rental than a short-term one. That’s why it’s so important to speak with your attorney or local housing authority before a lease is signed. You need to know the full scope of potential risks to determine if you want mid-term rentals to comprise a share of your real estate investing efforts.
Conclusion
Mid-term rentals offer fantastic opportunities for prospective landlords and seasoned property managers alike. With a wealth of prospective tenants and the flexibility of a shorter commitment, this type of lease can prove to be lucrative. Mid-term rentals are an interesting and exciting way to diversify your investment portfolio, just remember to speak with an attorney or housing authority to confirm mid-term landlord expectations.
