Property Size for Mid-Term in Tucson

[Thomas Nordberg]

I am looking at purchasing several properties to set up as Mid-term rentals in Tucson, ideally around the Hospitals in town to focus on traveling healthcare professionals. I have received conflicting advice on property size, with the options being 

1: finding apartments / sub 1000 sq ft 1/2 BR homes 

2: "Traditional" 3/2 or 3/3 size homes

3: Most Bedrooms / Bathrooms possible

My goal is to focus on renting these out via Furnished Finder and Air BnB

For those of you who have experience in this area, or for those of you who have worked in a field requiring mid term stays, what are your recommendations and thoughts?

Thanks in advance!

Tom

[Nicole Heasley Beitenman]

Quote from @Thomas Nordberg:

I have received conflicting advice on property size

Has this conflicting advice come from fellow local investors? If not, I highly suggest attending some REI meetups/REIA meetings so you're getting feedback specifically from folks in your own market.

That being said, if you're planning on purchasing several, why not go for a variety? Get a MF with small apartment units, get a traditional, and get something larger with multiple bedrooms. You'll figure out what works and what doesn't, and more importantly, you'll figure out what you like and what you don't. 

[Thomas Nordberg]

Quote from @Nicole Heasley Beitenman:

 Nicole,

Great advice, thank you. The advice has come from out-of-market investors, and with that in mind I am definitely getting involved with my local REI Meetup as I get settled in the area. Thanks for the advise!

[Nicole Heasley Beitenman]

Quote from @Thomas Nordberg:

Quote from @Nicole Heasley Beitenman:

 Nicole,

Great advice, thank you. The advice has come from out-of-market investors, and with that in mind I am definitely getting involved with my local REI Meetup as I get settled in the area. Thanks for the advise!

 That's the wisest move. I would always take the advice of an experienced local investor first.

[Evan Kline]

@Thomas Nordberg As Nicole said, try and find local investors. I imagine what's going on is you actually can be successful with each of those property types, people are just telling you their success with one type. Even though MTR's are already a pretty niche market, there are niches in niches.

Small 1 bed units appeal to solo travelers or couples

2 bedrooms units appeal to either 2 small family units traveling together OR work from home folks who want a second bedroom as an office

3/2 and up appeal to people traveling with families or groups traveling together.

the "Most bed/bath" can work if you're contract with agencies who place traveling nurses or folks displaced by insurance claims and the "need" a larger home to satisfy their insurance claim allotment.

Pick one and run with it. You can get super specific of the kind of traveler you want to appeal to. Personally I think 1 bed or 2 bed get you the highest earning potential per sqft, but also our largest MTR property has 5 bedrooms. We tend not to discriminate when we find a good deal... haha. 

[Thomas Nordberg]

I appreciate the niches in niches insight, and overall I think my overall preference is to be diversified within the MTR space. I think by biggest concern about entering the small unit side is just a lack of familiarity with it, and the concern of limited exit strategies. That being said, that's why there are some good deals in that space I suppose, and there is a give and take for everything.  

[Nicole Heasley Beitenman]

Quote from @Thomas Nordberg:

I appreciate the niches in niches insight, and overall I think my overall preference is to be diversified within the MTR space. I think by biggest concern about entering the small unit side is just a lack of familiarity with it, and the concern of limited exit strategies. That being said, that's why there are some good deals in that space I suppose, and there is a give and take for everything.  

I don't know why people think there are limited exit strategies to small properties. Maybe it's just my market, but folks who don't want a lot of space seem to have the fewest options, especially if they don't want an apartment. So even though there's less demand, the supply is SO low that we never have trouble filling a unit. We only purchased small units even before we discovered the MTR strategy. We've had so few headaches with them. 

[Bonnie Low]

I think our understanding of the MTR space is rapidly evolving. While there are still some naysayers who will say "it's not a thing" (it IS), people are finding many, many options for longer term furnished rentals, which is probably why you're getting conflicting advice. Basically, people are finding a way that works for them, their area, and their ideal customer. Some people are going more traditional and targeting travel nurses. This customer typically prefers their own space and is happy with a 1 bed or sometimes 2 bed if they're traveling with a family member. Some people do well renting by the room in a larger house when targeting travel nurses, though the ones who rent a room in a shared home usually are looking to save $ so take that into consideration. Others are targeting digital nomads who want a dedicated office space to WFH for focus time and uninterrupted Zoom calls, regardless of how many bedrooms they require. Still others are focused on insurance placements and families relocating - this is usually your larger and nice homes. Some investors work primarily in and around military bases where the housing stock is typically more blue collar but must accommodate a family. Really, just find what there is demand for in your area and focus on that to begin with. In most cases, if you have a SFH, you're going to have at least two exit strategies: LTR (if the numbers work) or sell if need be.

[Nicole Heasley Beitenman]

Quote from @Bonnie Low:

I think our understanding of the MTR space is rapidly evolving. While there are still some naysayers who will say "it's not a thing" (it IS), people are finding many, many options for longer term furnished rentals, which is probably why you're getting conflicting advice. Basically, people are finding a way that works for them, their area, and their ideal customer. Some people are going more traditional and targeting travel nurses. This customer typically prefers their own space and is happy with a 1 bed or sometimes 2 bed if they're traveling with a family member. Some people do well renting by the room in a larger house when targeting travel nurses, though the ones who rent a room in a shared home usually are looking to save $ so take that into consideration. Others are targeting digital nomads who want a dedicated office space to WFH for focus time and uninterrupted Zoom calls, regardless of how many bedrooms they require. Still others are focused on insurance placements and families relocating - this is usually your larger and nice homes. Some investors work primarily in and around military bases where the housing stock is typically more blue collar but must accommodate a family. Really, just find what there is demand for in your area and focus on that to begin with. In most cases, if you have a SFH, you're going to have at least two exit strategies: LTR (if the numbers work) or sell if need be.

I love this perspective. There was a guy who came onto the MTR forums here maybe 2 months ago and said MTRs don't exist because, generally speaking, anything over 30 days is legally treated like an LTR. Cracked me up. Guess we should all be saying, "My LTR with lease terms between 30 and 364 days" instead of "MTR" when discussing them. 

Also, I think you hit the nail on the head with your advice to find what type of demand a market has to better determine strategy, your target market, and the most suitable types of units for your portfolio.

[Bonnie Low]

Quote from @Nicole Heasley Beitenman:

Quote from @Bonnie Low:

I think our understanding of the MTR space is rapidly evolving. While there are still some naysayers who will say "it's not a thing" (it IS), people are finding many, many options for longer term furnished rentals, which is probably why you're getting conflicting advice. Basically, people are finding a way that works for them, their area, and their ideal customer. Some people are going more traditional and targeting travel nurses. This customer typically prefers their own space and is happy with a 1 bed or sometimes 2 bed if they're traveling with a family member. Some people do well renting by the room in a larger house when targeting travel nurses, though the ones who rent a room in a shared home usually are looking to save $ so take that into consideration. Others are targeting digital nomads who want a dedicated office space to WFH for focus time and uninterrupted Zoom calls, regardless of how many bedrooms they require. Still others are focused on insurance placements and families relocating - this is usually your larger and nice homes. Some investors work primarily in and around military bases where the housing stock is typically more blue collar but must accommodate a family. Really, just find what there is demand for in your area and focus on that to begin with. In most cases, if you have a SFH, you're going to have at least two exit strategies: LTR (if the numbers work) or sell if need be.

I love this perspective. There was a guy who came onto the MTR forums here maybe 2 months ago and said MTRs don't exist because, generally speaking, anything over 30 days is legally treated like an LTR. Cracked me up. Guess we should all be saying, "My LTR with lease terms between 30 and 364 days" instead of "MTR" when discussing them. 

Also, I think you hit the nail on the head with your advice to find what type of demand a market has to better determine strategy, your target market, and the most suitable types of units for your portfolio.

Thanks Nicole. There are always people who resist something new or different. MTR isn't really new, but it IS different. Most of the people who claim it's "not a thing" are not doing it so they're critiquing from the sidelines and seem, oddly, offended by the concept of this niche. I'm actually putting together a blog post on the differences between MTRs and traditional LTRs just to share how they do differ so people new to the space can be better informed and prepared. I'd love to collaborate with you on that if you're interested!

[Nicole Heasley Beitenman]

Quote from @Bonnie Low:

Quote from @Nicole Heasley Beitenman:

Quote from @Bonnie Low:

I think our understanding of the MTR space is rapidly evolving. While there are still some naysayers who will say "it's not a thing" (it IS), people are finding many, many options for longer term furnished rentals, which is probably why you're getting conflicting advice. Basically, people are finding a way that works for them, their area, and their ideal customer. Some people are going more traditional and targeting travel nurses. This customer typically prefers their own space and is happy with a 1 bed or sometimes 2 bed if they're traveling with a family member. Some people do well renting by the room in a larger house when targeting travel nurses, though the ones who rent a room in a shared home usually are looking to save $ so take that into consideration. Others are targeting digital nomads who want a dedicated office space to WFH for focus time and uninterrupted Zoom calls, regardless of how many bedrooms they require. Still others are focused on insurance placements and families relocating - this is usually your larger and nice homes. Some investors work primarily in and around military bases where the housing stock is typically more blue collar but must accommodate a family. Really, just find what there is demand for in your area and focus on that to begin with. In most cases, if you have a SFH, you're going to have at least two exit strategies: LTR (if the numbers work) or sell if need be.

I love this perspective. There was a guy who came onto the MTR forums here maybe 2 months ago and said MTRs don't exist because, generally speaking, anything over 30 days is legally treated like an LTR. Cracked me up. Guess we should all be saying, "My LTR with lease terms between 30 and 364 days" instead of "MTR" when discussing them. 

Also, I think you hit the nail on the head with your advice to find what type of demand a market has to better determine strategy, your target market, and the most suitable types of units for your portfolio.

Thanks Nicole. There are always people who resist something new or different. MTR isn't really new, but it IS different. Most of the people who claim it's "not a thing" are not doing it so they're critiquing from the sidelines and seem, oddly, offended by the concept of this niche. I'm actually putting together a blog post on the differences between MTRs and traditional LTRs just to share how they do differ so people new to the space can be better informed and prepared. I'd love to collaborate with you on that if you're interested!

 VERY interested! I'll reach out.