Another great benefit MTR has over LTR

[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.

[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.