Mid-term Rentals - Are They Just Right For You?

[Kathleen Osborne]

I loved the Goldilocks story when I was little. Papa Bear’s bed was too hard, Mama Bear’s bed was too soft, but Baby Bear’s bed was just right. Finding my real estate niche has kind of been my own Goldilocks story (even though I have gray locks now).

My first rental was my parent’s trailer near a lake that I bought from the estate after it sat on the market for a year with only low ball offers. I poured in $3,500 for new flooring and blinds throughout, repaired the heat pump and applied elbow grease and paint. I bought it by refinancing my own home at the time with a lower interest rate than I’d been paying.

Eight months after the purchase, I hired a property manager and my very first tenants moved in. They stayed for about 30 months. I replaced the front door after they moved out and the next tenant moved in for about 18 months. All in all, not a bad investment. I offered the 2nd tenants an option to buy, but they were not willing to pay market value. A few months later, I listed the property for sale by owner on Zillow for more than market value and within two weeks had a full price offer.

Single family rental was just right for that point in life. But I wanted more. I wanted multi-family with good cash flow and appreciation in value. To be crystal clear, I wanted a quadplex for under $350,000 in a good neighborhood within a mile of our largest hospital. For months I made offers over asking only to get outbid by buyers willing to skip the inspection or pay all cash. It felt like Papa Bear’s too hot porridge (too hot market). Like Goldilocks, I kept trying until I found something else just right for me at the time. I had to “settle” for a triplex. However, it was under $300,000.

The cash flow was tight, so I decided to try self-managing. That has gone well. I inherited good tenants except they all prefer to pay by check or money order rather than signing up for Rent Redi. One set of tenants moved out in October 2021. I immediately hired some handymen and HVAC guys. Four months later, this unit is freshly painted, well heated and cooled, improved with the addition of a washer, dryer and dishwasher, and fully furnished.

I listed it on Furnished Finders for a monthly rate I felt a little guilty about. Less than a week later and five inquires later, I had a signed lease and my first traveling medical professional moves in next weekend. I’ve opened up dates on Furnished Finder for a week after this first tenant’s lease ends and raised the rent just a tad to see what the market will bear. The guilt is gone. No one is being force to sign a lease for rent higher than they are willing to pay.

So, you may be wondering how my Goldilocks reference comes full circle. I don’t want to self-manage a short-term rental and the city won’t let me. The rents on long term rentals are not high enough to get cash flow where I need it to be. But this mid-term rental market is just right (for me, for now).

Good luck on your own hunt for the just right market for you. Set your goals, know where you are willing to shift on those goals and shoot for the goal.