What happens after STR?

Question

Hey all,

We are transitioning from STR to LTR. We have a house full of furniture. Does anyone have experience with furnished long term rentals? How marketable are they? Is there demand? And how much should we charge extra for it being furnished? How does one get executive rental business? Thanks for any help you can offer!

Ethan Cooke · Answer

@Laurie Chimento - I have started talking to people about the same thing--using properties as furnished "mid-term" rentals for 30-365 days. These rentals appeal not only to students, but also to local families transitioning to their next LT situation, professionals moving into town, professionals on ST assignment (traveling nurses, visiting professors, etc.). I have heard that for the right audience, you can charge 50%+ more than a regular LT rental because of the convenience and flexibility of furniture and short-term. Two other tips: consider the popular season(s). If summer is high demand, then charge a higher rate. Also, contact corporate relocation companies to tap into their network. Talk to J. Martin here on BP. He has a lot of experience with furnished mid-term rentals.

Devan Mcclish · Answer

@Laurie Chimento If I were you, I would keep your properties STR for as long as possible. People are dumping into the market right now. Also, if you give up that permit, it's gone. I would milk it to the last drop. I fully anticipate a compromise is going to be reached, or a class action suit is going to be filed against the city of Nashville. Don't have a knee jerk reaction to this!BUT, if you really want to change your strategy - use AirBnB as a platform for a corporate rental (over 30 day rental). No permit is required. No use and sales tax on your income. People need this. Stay under 2,000 a month if possible and you will get it quite often

John D. · Answer

I have a good friend that does well in the Baltimore market with what we call "medium term" furnished rentals. His average tenant stays a few months, many are new to the area and want to live somewhere for a few months before deciding on where to sign a longer term lease, or where to buy. As well as people that are only planning on being in the area for a few months to take a specific class at the University, or help a sick relative at a nearby hospital, or to accept some type of temporary position Johns Hopkins University. He gets around 50% more then a normal unfurnished 12 month lease would command, the furniture is inexpensive, and vacancy low now that he's got the hang of it. Personally I am not sure if I would deal with the headache for an extra $500 or so per door per month, but it seems to be scaling well for him, so will likely make sense once he has a few dozen units operating under this model and has all of the details documented and tasks outsourced. I believe the location of his units and their proximity to Hopkins, BSFA, etc. are key pieces to his success and owners with units in other areas in Baltimore may not command that premium. I get a few inquiries here and there for people looking for a seasonal / month to month furnished rentals in my primary market (the greater Palm Springs area) but we make so much money short term (average stay is 3-4 days) it never seems to make sense to take a longer term contracts that pay significantly less. At least for the cities I operate in. There are definitely owners in neighboring cities that have heavily restricted short-term rentals where their city or HOA does not allow a rental for less then 30 days, that have fallen back on seasonal rentals. I know in many cases they can charge more for a 6 month furnished rental, then they would get for an entire year renting as a conventional rental on an annual lease.

Sean Davidson · Answer

You don't need a permit to rent out your house for more than 30 days, but you are technically required to register with the city. You have to basically send in a piece of paper with contact information and pay a tiny amount of money every year. No approval process, just registration. But I'm with Devan.. if you already have a permit, I would rent that thing out on airbnb until they dragged you kicking and screaming to long term.

Ethan Cooke · Answer

@Laurie Chimento - I'm glad it's helpful. I do not know if any special permit is needed to host 30+ day rentals in Nashville although I suspect not. Try googling "Tennessee landlord-tenant law", "Nashville LL-T law" and "furnished homes for rent Nashville" (to ask landlords). In San Francisco which is not very landlord-friendly, no special permit is needed since any 30+ day rental (whether furnished or not) is considered a long-term rental. A few more tips:- use a lease for each rental (Google "furnished apartment rental lease")- get a security deposit (in SF you can collect a deposit equal to 3 months' rent or less, or 2 months if unfurnished)- get insurance just like a regular rental

Laurie Chimento · Answer

Thank you, @Ethan Cooke!This is exactly the kind of info I'm needing! I just reached out to J. Martin. If the TN State legislature doesn't reverse this type 2 STR ban Nashville is implementing by mid next year, there may be a lot more people trying to figure out what to do with this asset. You don't happen to know what kind of permit is needed for a mid-term rental do you? I suppose every city may be different. Thanks for all your help!

Paul Sandhu · Answer

College students might be interested in a furnished LTR. Make them sign a 12 month lease. That covers 2 semesters and a summer semester.

Laurie Chimento · Answer

Nashville, TN

John Underwood · Answer

I would think most people looking for a long term rental except maybe a very young person or family would have most of their furniture, even an executive would want their own furniture.You could market it both ways with furnished at a higher rate.You could sell or store your furniture if not needed.

Andrew Wong · Answer

What is your target market for long term furnished rentals?