Why Midterm Rentals
Medium-term rentals provide landlords with a stable income stream for a longer period of time with significantly lower operating costs and wear and tear compared to short term rentals. Each resident pays a security deposit, signs a lease, and is screened with a formal background check, credit report, proof of income, with employment and landlord references required, which is difficult to do in short term rentals.
Medium-term rentals often have lower vacancy rates compared to short-term rentals, where turnover is frequent. Properties that come fully furnished and equipped with essential amenities are in high demand and low supply, especially at an “affordable” price point for those earning between $100k-$200k per year.
Furnishing the rental delivers outsized ROI per dollar spent when compared with the existing net yield of a property as a long term, unfurnished asset. Deco Vaquero’s case studies show that a fully furnished, value add investment results in a 2-3% increase in stabilized yield on cost, which increases the net operating income, relative to the asset’s performance as an unfurnished long term rental.
Medium term rentals are not yet commoditized from a quality perspective in the same way long term rentals are. To that end, well located, walkable, medium term rentals, with interior design that is unique and high end has less price sensitivity than its long term unfurnished counterparts, as there are fewer comparables, resulting in less price discovery and higher revenues.
Medium-term rentals (30+ days) face fewer regulatory challenges compared to short-term rentals, which are subject to stricter rules and zoning regulations. In areas where short term rentals are banned, medium term rentals are the best and highest use for former AirBnBs.
Medium-term rentals allow tenants to experience the local culture and community in a way that hotels often cannot provide. Medium term renters demand locations that provide walkable access to attractive retail such as coffee shops, bars, and concert venues. Tenants enjoy the opportunity to live in residential neighborhoods, shop at local stores, and interact with neighbors, offering a more authentic experience of the community.
