Looking to purchase first rental..... Do would anyone recommend MTR or STR?

Question

I have gone back and forth about what kind of rental I start with. Was thinking a single family home 2 to 3 beds. Was wondering about starting in the Mid-Term rental area rather than STR. Yes I have pondered the Full year rental and that would do mortgage and give me a little extra, but thought MTR or STR might do better. Also, can you rent out each room for MTR? thanks for whom ever may lead in the right direction.

Gary Nelson · Answer

It depends on your market and how hands-on you want to be. STRs can bring in higher revenue but require more turnover, guest management, and keeping up with regulations. MTRs offer steady income with fewer turnovers, making them more passive. Start with a competitor analysis—see what STRs and MTRs in your area are charging and their occupancy rates. STRs can be lucrative, but if vacancies worry you, MTRs may be a better bet. Either way, running the numbers and knowing your local demand is key.

David Butler · Answer

To me, the answer depends on both the property and what are your super powers--i.e. where do you have a competitive advantage?  I don't feel there is one answer to this question as every property is different and what are your goals, how much time do you have to manage, what are your strengths when it comes to working the trades, people skills, etc as that will help drive towards your super power.  A STR is probably going to take more day to day time to manage than LTR--do you have the bandwidth to handle more demands?  What are your long term goals with real estate?  Are you looking to quite your W2 job--STR might get a leg up because of the STR loophole in becoming a real estate professional?  All of these things may well point to the best direction for you.

Shawn Ackerman · Answer

@Duane A. Snow Milwaukee is a great market to invest in. There is a great selection of SFR's and MFR's. I'd say consider split testing the SFR and LTR approach.  You can try this with a duplex.  Location will matter oncourse so be mindful of that.  Is your strategy more monthly income focused or appreciation?

Alan Asriants · Answer

MTR and STR operate more like a business. A lot of it has to do with how you advertise, your ammenities and features, and your track record. To stand out in the STR space especially you need to be very well accredited and offer and great and unique product. This requires a lot of marketing and intial investment into your furniture, activities, etc.

A lot of people think that buying a property and listing it on AirBnB is somehow going to make them better returns. Its a skill and a business. Not necessarily an investment.

The reality is that you need a lot of time and money up front to get your project started and you need to really work on building your credibility. Just think about yourself when you choose to stay at an airbnb. Do you stay at the sketchy looking log cabin for 300/night or do you go for the super well done cabin with a pool table, sauna and hot tub for 450/night - oh and they have a ton of reviews and listed as a super host.

if you want to have steady cash flow and steady returns to INVEST into real estate then ditch the idea of MTR and STR and get a LTR in a decent area

If you want to own a business than go for the STR or MTR model. But business returns are not immediate and take time and money to grow.

Duane A. Snow · Answer

Hi Marcus,

Thank you for the response. I do know the market and shortage for LTR purposes. I live in Walworth by Lake Geneva. People do not want to STR Lake Geneva because of all the regulations the local government are making. I know Milwaukee has UW-Mil. and Marquette so thought a good put together MTR. There is hospitals for VA, Private, and public sectors, plus a lot to do in the area. Love AJ Bombers, and 3rd street market. That is not including Bucks games/stadium concerts and events plus the Brewers. So just weighing options when I do purchase in a month or so.

Thank You

Andy

Marcus Auerbach · Answer

Milwaukee's STR space is getting saturated, especially if you have nothing special to offer. Most STRs are generic, cheap homes with lots of paint and trendy but cheap furniture. Consumers pick up on that. The properties are often flawed and no well-suited for a family to live there long term (lot's of bedrooms, but tiny living room, no yard, no garage etc), that's why they sold for a discount an get used as STR. Long term that makes them tough to sell to anyone else but an STR investor.

There are much fewer quality STRs available to rent, so that's one way to differentiate. And then you got the vacation rental market. The problem with southern Wisconsin is that we don't have reliable snow coverage anymore, so you are limited to the summer season and will sit vacant for the winter. Or you go north, which makes you a lot more remote, far away from the next Home Depot, and a long drive for everyone, but opens you up the snowmobile and ice fishing season.

IMO the most important thing is to buy quality real estate, no matter how you rent it. We have a chronic housing shortage in Milwaukee. Home prices have doubled in the last ten years and we are still well below the national average.

Shiloh Lundahl · Answer

@Cristiana Rios we own three properties in Costa Rica. Where are your properties located?

Cristiana Rios · Answer

Okay, yes you are in the right direction; making sure that there is convenient transportation is key to getting clients. Location is the most important variable when it comes to choosing an investment property. Before you decide to do STR or MTR, I would see what type of guests are visiting. This would depend on the nearby attractions within 5 miles radius such as hotels, hospitals, shopping malls, amusement park, government building, major corporations, schools, etc.

Once you know WHY people are traveling to WI, you will be able to decipher which direction to lead into.

For an example; if it is by many corporations and more corporate/commercialized-- then MTR would be better. If it is mostly enternmaint/ more catered towards then I would do STR

Duane A. Snow · Answer

Hi Cristiana,

I am looking in a few areas. Milwaukee, Janesville, Madison in WI.

Travel: all have uber services, but best in Madison and Milwaukee, rental cards, and busses in all.

Duane

Cristiana Rios · Answer

Hey Duane,

I’m Cristiana, and I’ve spent the last 10 years building and leading teams in the short-term and mid-term rental industry across Airbnb, VRBO, Furnished Finder, Booking.com, and 20+ other platforms. Managing 25 properties worldwide, I’ve scaled operations to generate $1M+ annually, which led to acquiring a hotel in Costa Rica.

Beyond operations, I specialize in connecting investors to exclusive, off-market opportunities through my extensive network. To guide you in the right direction, with whether STR or MTR is better suitable; I have a few questions:

- Where are you located?

- What major cities are nearby?

- What drives travel demand in these areas?

Looking forward to helping you navigate the best direction!