Another great benefit MTR has over LTR

Medium-Term Rentals
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Another great benefit MTR has over LTR

Mitch Davidson
Lender · Asheville, NC · Member since 2020 · 463 posts · 507 votes

I launched an MTR in Asheville, NC in 2018, and have had 13 tenants so far. After the first few turns I realized that compared to LTR the MTR model has a great additional benefit, meaning additional to the increased cashflow. With MTR turns are far less expensive regarding repair and maintenance. With MTR, people aren't moving their furniture, appliances, and other furnishings, some of which might not fit so well in my property, in and out of the home. Combine that with the fact that I have a lease, security deposit (which the tenant is less inclined to forget about due to the comparative shortness of their stay), and a rather small property, and I only need to have the place cleaned when someone moves out. I haven't needed to paint, replace floor coverings, etc. Sure, I've spent on upgrading some furnishings, and replacing a few things that wore out, but I've never had damage or wear and tear. Thus I recommend MTR in this regard. As I've cautioned elsewhere, the model is overplayed in some markets right now, perhaps especially where there are many underperforming STR's, so be careful if you're thinking of launching one.

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Don KonipolBusiness Member
Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
3y
Quote from @Mitch Davidson:

I launched an MTR in Asheville, NC in 2018, and have had 13 tenants so far. After the first few turns I realized that compared to LTR the MTR model has a great additional benefit, meaning additional to the increased cashflow. With MTR turns are far less expensive regarding repair and maintenance. With MTR, people aren't moving their furniture, appliances, and other furnishings, some of which might not fit so well in my property, in and out of the home. Combine that with the fact that I have a lease, security deposit (which the tenant is less inclined to forget about due to the comparative shortness of their stay), and a rather small property, and I only need to have the place cleaned when someone moves out. I haven't needed to paint, replace floor coverings, etc. Sure, I've spent on upgrading some furnishings, and replacing a few things that wore out, but I've never had damage or wear and tear. Thus I recommend MTR in this regard. As I've cautioned elsewhere, the model is overplayed in some markets right now, perhaps especially where there are many underperforming STR's, so be careful if you're thinking of launching one.

The MTR model needs to generate sufficient return in excess of the LTR model in order to justify its increased cost, management and risk. Likewise the STR model needs to generate sufficient return in excess of the MTR model in order to justify ITS increased cost, management and risk. It's a matter of risk vs return and for some lifestyle/management intensity. What's striking to me about the STR model is that in many cases any excess profit goes away if a manager is hired.

Having run all three models I can tell you my personal preferences.  Others of course will feel quite different.  The STR model is MUCH too “hands on” for me.  The LTR model is fine, and I am able to handle the MTR fairly painlessly.  The thing to be sure about with the MTR model is that you account for ALL costs; i.e. furniture depreciates quite rapidly, and turnover creates a lot more repairs and maintenance costs.  Insurance will also be higher (if you’re properly insured) and if you utilize a property manager their fee will be more than LTR.  One of the biggest downsides of MTR vs LTR is that with MTR you’ll never have that long term (5 year +) tenant that rarely calls, keeps the property in top condition, and pays like clockwork, all the while paying off your mortgage, providing you with a consistent cash flow, usually fully tax sheltered.  

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  • Taylor DaschBusiness Member
    Real Estate Agent · Temple, TX · Member since 2022 · 1k+ posts · 700 votes
    3y

    I agree, you get the benefits of a longer lease compared to a STR, the extra cash flow when compared to a LTR, and typically a higher quality tenant as well!

    [email protected]254-718-4249
    Taylor Dasch | EG Realty560 Reviews
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    1Reply
  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    3y
    Quote from @Mitch Davidson:

    I launched an MTR in Asheville, NC in 2018, and have had 13 tenants so far. After the first few turns I realized that compared to LTR the MTR model has a great additional benefit, meaning additional to the increased cashflow. With MTR turns are far less expensive regarding repair and maintenance. With MTR, people aren't moving their furniture, appliances, and other furnishings, some of which might not fit so well in my property, in and out of the home. Combine that with the fact that I have a lease, security deposit (which the tenant is less inclined to forget about due to the comparative shortness of their stay), and a rather small property, and I only need to have the place cleaned when someone moves out. I haven't needed to paint, replace floor coverings, etc. Sure, I've spent on upgrading some furnishings, and replacing a few things that wore out, but I've never had damage or wear and tear. Thus I recommend MTR in this regard. As I've cautioned elsewhere, the model is overplayed in some markets right now, perhaps especially where there are many underperforming STR's, so be careful if you're thinking of launching one.


     100% agree, great strategy just make sure you're researching your market!

    1Reply
  • Nicole Heasley Beitenman
    Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
    3y

    We're preparing to launch our first MTR on May 1st. Thank you for the encouragement!

    3Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    3y
    Quote from @Mitch Davidson:

    I launched an MTR in Asheville, NC in 2018, and have had 13 tenants so far. After the first few turns I realized that compared to LTR the MTR model has a great additional benefit, meaning additional to the increased cashflow. With MTR turns are far less expensive regarding repair and maintenance. With MTR, people aren't moving their furniture, appliances, and other furnishings, some of which might not fit so well in my property, in and out of the home. Combine that with the fact that I have a lease, security deposit (which the tenant is less inclined to forget about due to the comparative shortness of their stay), and a rather small property, and I only need to have the place cleaned when someone moves out. I haven't needed to paint, replace floor coverings, etc. Sure, I've spent on upgrading some furnishings, and replacing a few things that wore out, but I've never had damage or wear and tear. Thus I recommend MTR in this regard. As I've cautioned elsewhere, the model is overplayed in some markets right now, perhaps especially where there are many underperforming STR's, so be careful if you're thinking of launching one.

    The MTR model needs to generate sufficient return in excess of the LTR model in order to justify its increased cost, management and risk. Likewise the STR model needs to generate sufficient return in excess of the MTR model in order to justify ITS increased cost, management and risk. It's a matter of risk vs return and for some lifestyle/management intensity. What's striking to me about the STR model is that in many cases any excess profit goes away if a manager is hired.

    Having run all three models I can tell you my personal preferences.  Others of course will feel quite different.  The STR model is MUCH too “hands on” for me.  The LTR model is fine, and I am able to handle the MTR fairly painlessly.  The thing to be sure about with the MTR model is that you account for ALL costs; i.e. furniture depreciates quite rapidly, and turnover creates a lot more repairs and maintenance costs.  Insurance will also be higher (if you’re properly insured) and if you utilize a property manager their fee will be more than LTR.  One of the biggest downsides of MTR vs LTR is that with MTR you’ll never have that long term (5 year +) tenant that rarely calls, keeps the property in top condition, and pays like clockwork, all the while paying off your mortgage, providing you with a consistent cash flow, usually fully tax sheltered.  

    Private Mortgage Financing Partners, LLC
    WebsiteView Page
    3Reply
  • Mitch Davidson
    OP
    Lender · Asheville, NC · Member since 2020 · 463 posts · 507 votes
    3y
    Quote from @Don Konipol:
    Quote from @Mitch Davidson:

    I launched an MTR in Asheville, NC in 2018, and have had 13 tenants so far. After the first few turns I realized that compared to LTR the MTR model has a great additional benefit, meaning additional to the increased cashflow. With MTR turns are far less expensive regarding repair and maintenance. With MTR, people aren't moving their furniture, appliances, and other furnishings, some of which might not fit so well in my property, in and out of the home. Combine that with the fact that I have a lease, security deposit (which the tenant is less inclined to forget about due to the comparative shortness of their stay), and a rather small property, and I only need to have the place cleaned when someone moves out. I haven't needed to paint, replace floor coverings, etc. Sure, I've spent on upgrading some furnishings, and replacing a few things that wore out, but I've never had damage or wear and tear. Thus I recommend MTR in this regard. As I've cautioned elsewhere, the model is overplayed in some markets right now, perhaps especially where there are many underperforming STR's, so be careful if you're thinking of launching one.

    The MTR model needs to generate sufficient return in excess of the LTR model in order to justify its increased cost, management and risk. Likewise the STR model needs to generate sufficient return in excess of the MTR model in order to justify ITS increased cost, management and risk. It's a matter of risk vs return and for some lifestyle/management intensity. What's striking to me about the STR model is that in many cases any excess profit goes away if a manager is hired.

    Having run all three models I can tell you my personal preferences.  Others of course will feel quite different.  The STR model is MUCH too “hands on” for me.  The LTR model is fine, and I am able to handle the MTR fairly painlessly.  The thing to be sure about with the MTR model is that you account for ALL costs; i.e. furniture depreciates quite rapidly, and turnover creates a lot more repairs and maintenance costs.  Insurance will also be higher (if you’re properly insured) and if you utilize a property manager their fee will be more than LTR.  One of the biggest downsides of MTR vs LTR is that with MTR you’ll never have that long term (5 year +) tenant that rarely calls, keeps the property in top condition, and pays like clockwork, all the while paying off your mortgage, providing you with a consistent cash flow, usually fully tax sheltered.  

    So far, 13 tenants in, all of my tenants have been "that tenant that rarely calls, keeps the property in top condition, and pays like clockwork, all the while paying off your mortgage, providing you with a consistent cash flow." I'm picky I suppose. I get a BG check, credit report, and full application. Then if they seem like a fit, I interview them, call their employer, etc. Also, I make them provide renters insurance, so that my policy is just a landlord one. The furnishings are cheap, so it doesn't make sense to buy extra insurance for them, such as an STR like policy. And I have a security deposit (1 month) to use if need be.

    0Reply
  • Don KonipolBusiness Member
    Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
    3y
    Quote from @Mitch Davidson:
    Quote from @Don Konipol:
    Quote from @Mitch Davidson:

    I launched an MTR in Asheville, NC in 2018, and have had 13 tenants so far. After the first few turns I realized that compared to LTR the MTR model has a great additional benefit, meaning additional to the increased cashflow. With MTR turns are far less expensive regarding repair and maintenance. With MTR, people aren't moving their furniture, appliances, and other furnishings, some of which might not fit so well in my property, in and out of the home. Combine that with the fact that I have a lease, security deposit (which the tenant is less inclined to forget about due to the comparative shortness of their stay), and a rather small property, and I only need to have the place cleaned when someone moves out. I haven't needed to paint, replace floor coverings, etc. Sure, I've spent on upgrading some furnishings, and replacing a few things that wore out, but I've never had damage or wear and tear. Thus I recommend MTR in this regard. As I've cautioned elsewhere, the model is overplayed in some markets right now, perhaps especially where there are many underperforming STR's, so be careful if you're thinking of launching one.

    The MTR model needs to generate sufficient return in excess of the LTR model in order to justify its increased cost, management and risk. Likewise the STR model needs to generate sufficient return in excess of the MTR model in order to justify ITS increased cost, management and risk. It's a matter of risk vs return and for some lifestyle/management intensity. What's striking to me about the STR model is that in many cases any excess profit goes away if a manager is hired.

    Having run all three models I can tell you my personal preferences.  Others of course will feel quite different.  The STR model is MUCH too “hands on” for me.  The LTR model is fine, and I am able to handle the MTR fairly painlessly.  The thing to be sure about with the MTR model is that you account for ALL costs; i.e. furniture depreciates quite rapidly, and turnover creates a lot more repairs and maintenance costs.  Insurance will also be higher (if you’re properly insured) and if you utilize a property manager their fee will be more than LTR.  One of the biggest downsides of MTR vs LTR is that with MTR you’ll never have that long term (5 year +) tenant that rarely calls, keeps the property in top condition, and pays like clockwork, all the while paying off your mortgage, providing you with a consistent cash flow, usually fully tax sheltered.  

    So far, 13 tenants in, all of my tenants have been "that tenant that rarely calls, keeps the property in top condition, and pays like clockwork, all the while paying off your mortgage, providing you with a consistent cash flow." I'm picky I suppose. I get a BG check, credit report, and full application. Then if they seem like a fit, I interview them, call their employer, etc. Also, I make them provide renters insurance, so that my policy is just a landlord one. The furnishings are cheap, so it doesn't make sense to buy extra insurance for them, such as an STR like policy. And I have a security deposit (1 month) to use if need be.

    Good deal. Sounds like you’re running your MTR more like a LTR than a STR.  How often have you needed to replace the furniture - furnishings?
    Private Mortgage Financing Partners, LLC
    WebsiteView Page
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  • Mitch Davidson
    OP
    Lender · Asheville, NC · Member since 2020 · 463 posts · 507 votes
    3y

    @Don Konipol. I haven't had to replace much due to wear and tear. I've upgraded though, to remain competitive in the market. For example, a larger kitchen table, a nicer couch, more attractive curtains, etc. And because most of my tenants have dogs, I provide waterproof furniture covers and get them to sign that they'll keep such on the furniture during their tenancy. 

    1Reply
  • Scott Simpson
    Investor · Bellevue, WA · Member since 2021 · 20 posts · 11 votes
    3y
    Quote from @Mitch Davidson:

    @Don Konipol. I haven't had to replace much due to wear and tear. I've upgraded though, to remain competitive in the market. For example, a larger kitchen table, a nicer couch, more attractive curtains, etc. And because most of my tenants have dogs, I provide waterproof furniture covers and get them to sign that they'll keep such on the furniture during their tenancy. 

    @Mitch Davidson May I ask what market your MTR is in? Brilliant idea for waterproof furniture covers. I hadn't thought of that.

    1Reply
  • Mitch Davidson
    OP
    Lender · Asheville, NC · Member since 2020 · 463 posts · 507 votes
    3y

    Hi @Scott Simpson. My MTR is in Asheville, NC.

    1Reply
  • Conner Olsen
    Real Estate Agent · Austin, TX · Member since 2020 · 1k+ posts · 941 votes
    3y
    Quote from @Mitch Davidson:

    @Don Konipol. I haven't had to replace much due to wear and tear. I've upgraded though, to remain competitive in the market. For example, a larger kitchen table, a nicer couch, more attractive curtains, etc. And because most of my tenants have dogs, I provide waterproof furniture covers and get them to sign that they'll keep such on the furniture during their tenancy. 


     It's so important to make sure your properties are pet friendly. You will have significantly higher demand and simple tricks like this make your furniture last longer. Great idea!

    3Reply
  • Mitch Davidson
    OP
    Lender · Asheville, NC · Member since 2020 · 463 posts · 507 votes
    3y

    @Conner Olsen. Indeed. A huge section of the clientele are single adults, most of which have dogs, at least in my market. I tried to go no pets when I launched in 2018, but quickly learned that I was missing out on the majority of potential tenants. 

    2Reply
  • Martha M.
    NH · Member since 2021 · 17 posts · 11 votes
    3y
    Quote from @Mitch Davidson:

    @Don Konipol. I haven't had to replace much due to wear and tear. I've upgraded though, to remain competitive in the market. For example, a larger kitchen table, a nicer couch, more attractive curtains, etc. And because most of my tenants have dogs, I provide waterproof furniture covers and get them to sign that they'll keep such on the furniture during their tenancy. 

    @Mitch Davidson - the waterproof furniture covers for the pets is a great idea. Can you share where you got them or the brand you’ve used? 
    0Reply
  • Mitch Davidson
    OP
    Lender · Asheville, NC · Member since 2020 · 463 posts · 507 votes
    3y

    Hi @Martha M.. There are many options on Amazon. Different sizes and colors to fit your needs. Typically under $100. I tend to provide the ones that still show some of the furniture in spots where a dog won't touch (i.e., some areas aren't covered). My current tenants bought their own, to cover the entire couch and recliner (i.e., a full wrap). I personally don't like having dogs on furniture, in beds, etc., in my own house. But as I talked to past tenants and prospects about this, I found that most people let their dogs go up on furniture, into their bed, etc. Thus the idea for the covers.

    1Reply
  • Christian LongacrePro Member
    Rental Property Investor · Asheville, NC · Member since 2016 · 67 posts · 62 votes
    3y

    @Mitch Davidson I've also found that allowing pets makes a huge difference in the Asheville market.  I decided to limit the number of pets allowed and their combined weight to reduce the wear and tear on the property.  That strategy has worked well for my properties.

    3Reply
  • Brady D'HontPro Member
    Syracuse, NY · Member since 2021 · 17 posts · 3 votes
    3y
    Quote from @Mitch Davidson:

    I launched an MTR in Asheville, NC in 2018, and have had 13 tenants so far. After the first few turns I realized that compared to LTR the MTR model has a great additional benefit, meaning additional to the increased cashflow. With MTR turns are far less expensive regarding repair and maintenance. With MTR, people aren't moving their furniture, appliances, and other furnishings, some of which might not fit so well in my property, in and out of the home. Combine that with the fact that I have a lease, security deposit (which the tenant is less inclined to forget about due to the comparative shortness of their stay), and a rather small property, and I only need to have the place cleaned when someone moves out. I haven't needed to paint, replace floor coverings, etc. Sure, I've spent on upgrading some furnishings, and replacing a few things that wore out, but I've never had damage or wear and tear. Thus I recommend MTR in this regard. As I've cautioned elsewhere, the model is overplayed in some markets right now, perhaps especially where there are many underperforming STR's, so be careful if you're thinking of launching one.


     MItch, Great post and i appreciate your insight. The travel nurse era is still in full swing and I’ve seen a lot of MTR market their listings to that subcategory of tenants. How’re you listing your MTR’s? Have you used a site such as furnished finder? Thanks 

    0Reply
  • Mitch Davidson
    OP
    Lender · Asheville, NC · Member since 2020 · 463 posts · 507 votes
    3y

    @Brady D'Hont. I haven’t use FF. In the past, I used Zillow, Airbnb, and Craigslist. Now I only use Zillow, in part because I can force all applicants to follow the same process, meaning an app, BG check, and credit check before I’ll consider talking to them. From what I’ve heard, FF doesn’t offer those type of features. 

    3Reply
  • Bonnie Griffin KaakePro Member
    Real Estate Consultant · Denver, CO · Member since 2021 · 661 posts · 389 votes
    3y

    @Mitch Davidson Good post! I once lived in beautiful Ashville years ago. I have own commercial properties in years past. Now, I have a MTR and I also allow pets. I allowed one tenant (relative) to bring two big dogs...big mistake. One was too much of a puppy and damaged rugs and a Lazy Boy reclining loveseat. Now I only accept small pets and limit it to one. I never worry about having it rented. The unit is very close to three hospitals and a dialysis center. 

    If you haven't done a cost segregation study on your rental, STR, MTR, or LTR, you may be leaving money with the US Treasury that you could be using elsewhere to re-invest. Estimates are free and give you enough information to decide if it is worth doing.

    [email protected]303-475-4459
    1Reply
  • Manuel Escalante
    Dallas, TX · Member since 2023 · 2 posts · 1 vote
    2y

    This post might be a bit old but I have a question: 

    How do you list you MTR effectively? I don't feel like Airbnb is the best platform for MTR's, and is there a better alternative than Furnished finder?

    Thanks, 

    Manuel 

    1Reply
  • Mitch Davidson
    OP
    Lender · Asheville, NC · Member since 2020 · 463 posts · 507 votes
    2y

    Hi @Manuel Escalante. I agree that Airbnb is not a good resource. MTR is for tenants not guests, and Airbnb is built for guest stays. Effective MTR requires a bulletproof lease, tenant screening, etc., none of which Airbnb is helpful with. My current MTR has been tenanted with very little gap time for 6 years now. We're on tenant number 14 at this point. And I only use Zillow for advertising, which includes Trulia and Hotpads. For sake of safety in event of a legal dispute I insist that everyone I consider complete the same application. And Zillow's application is pretty good. I won't even talk to the person on the phone until they complete an application. That weeds out most of the unqualified candidates. I digress. If I also list on Furnished Finder in the future, which I may, I'll need to use a third part application app, like RentPrep, and then post a link to the app on Furnished Finder and Zillow. That'll likely be more work and cost, so I'll try to avoid it. Hope this helps.

    1Reply
  • Bonnie LowPro Member
    Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
    2y

    We absolutely love Asheville. We've got an STR in nearby Lake Lure. I can see Asheville being a great fit for MTRs. Who are your most common guests? Are you seeing a lot of traveling medical professionals, digital nomads, or??? I have to agree with your statements about the ease of MTR. We've had maybe 5 days of vacancy in over a year with our property and that was only due to us taking an extra day and a half on our last turn to swap out the water heater. Wear and tear has been almost nil, even for guests with pets. I love this model and look forward to developing more. In fact, we have one under construction now. We have a SFR rental on a large lot with room for an ADU. Fortunately, in California, ADUs are encouraged and we find they make excellent MTRs.

    [email protected]
    1Reply
  • Nicole Heasley Beitenman
    Investor · Youngstown, OH · Member since 2017 · 2k+ posts · 2k+ votes
    2y

    My business partner is very anti-pet. Fortunately we've had plenty of demand while disallowing pets, but I've bookmarked this post should we have to relax our policies. A couch cover is a great idea.

    1Reply
  • Mitch Davidson
    OP
    Lender · Asheville, NC · Member since 2020 · 463 posts · 507 votes
    2y
    Quote from @Nicole Heasley Beitenman:

    My business partner is very anti-pet. Fortunately we've had plenty of demand while disallowing pets, but I've bookmarked this post should we have to relax our policies. A couch cover is a great idea.

    I get that. I'm anti-dog for STR, but I don't think that's an issue for my location. My main issue is that I can't prescreen the situation in advance. For MTR though I like allowing dogs, as I can prescreen the dog (ex: disallow huskies) and protect myself with the lease. For cats though, nothing in the world will make me comfortable.

    0Reply
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