Medium Term Length Pickiness?

Question

Hi all,

My wife and I just started renting out our furnished unit the beginning of this year and were lucky enough to get a tenant in right at the start of the year until the middle of June 2023. With that being said, we have been acting a bit picky by only pursuing 3 month long stays or more with our current search for someone else. Should we not care as much and start including 1 month stays in consideration?

We are housing hacking a duplex with this strategy, so I suppose the turnover (though way less than an AirBNB) is what we are worried about since we do all the cleaning ourselves.

Our main focus has been reduction of vacancy. We have learned that it is way less comfortable for us to have AirBNB guests as opposed to medium term renters that we get to know more beforehand. (We had a 1 night AirBNB stay on New Year's Eve the day before our medium term tenant came in). We really want to just fill gaps as much as possible with 30+ day stays.

What are your strategies for filling vacancy gaps? Do you target FF leases first and then fill in with AirBNB? I find that we end up denying AirBNB longer stay requests because it leaves weird amount of gaps that would be easier to fill with a FF lease first and then with shorter AirBNBs.

Thank you for taking the time to respond.

Jamie Banks · Answer

I would definitely advise on taking all medium term rental lengths. One, it will broaden the guests you can service. While travel medical professionals have 13 week contracts other travels such as digital nomads tend to stay a month.

To avoid gaps I only allow bookings a month in advance and if I’m vacant I limit that window to 2 weeks. Having a booking policy in place (even if just to keep yourself accountable) has helped me grow my portfolio and stay occupied. A few days of vacancy here and there is okay, make sure you account for it by keeping some reserves aside.

Also wanted to mention that it’s great that you’re able to clean the unit yourself. You can collect other income by charging for cleaning but performing the task yourself to cut down cost. I always try to maximize my other income as much as I can!

Allen Duan · Answer

I love your strategy of househacking and STR/MTRing the other unit. That's what I want to do too.

Seems like your question is about how to decide what mix of MTR and STR bookings to take. Airbnb is just a platform and you can get both types of bookings from there. If you want to minimize turnovers, definitely stick with 30+ day bookings and try to keep the vacant gaps small. Then you can choose to STR those gaps if you're ok with more turnovers at that time. Keep in mind your goal isn't just maximum occupancy, it's maximum income (I assume). So if you have the opportunity for a higher value booking that creates some gaps, that might be worth it. This requires you to think about your pricing strategy for 30+ day bookings, rather than keeping it a fixed rate for all dates and booking requests.

I'm in Los Angeles so I envy that you have the option for STR bookings. That would help us maximize our income for the properties we manage if we could fill our gaps that way. I've had to come up with different strategies to manage vacant gaps without the option of STR bookings.

Colleen F. · Answer

@Tyler Haanen  if you stay full like that ok but sometimes you have travelers with contract extensions or those who stay in hotels first that won't meet your 90 day minimum.  You are looking more for continuous occupancy with people who stay a month or more.  I am not sure if you can block your calendar on airbnb further out in the future so you don't get requests months in advance. If you are using FF most of those requests will come weeks ahead of time not months and some people will want to extend their stay a week or two before they leave.

Bonnie Low · Answer

It sounds as if your main priority is to have fewer gaps because you want to generate as much revenue as possible vs. prioritizing lower turnover. It's good that you're clear on which is more important to you. Depending on how strong the longer stay demand is in your area, you may need to gap fill with shorter stays. Personally, I will prioritize 13 week stays over 30 day stays. This is because I prefer dealing with fewer guests, vetting and lease up is less frequent and so is turnover. That's the sweet spot for me. So I'll accept a gap in order to book a longer stay. If you can't get BOTH a full calendar and less turnover, you're going to have to choose between the two. When I started down the MTR path I looked at what my unit would rent for as an LTR and then set my pricing for it as an MTR. I need to have it booked about 7.5 months/year to earn what I would earn as an LTR. Anything above that is bonus. This helped me determine how aggressive I needed to be on keeping it booked. It just so happens it stays fully booked with 13-week stays, but if I had a gap of a few weeks or even a month or two over the course of a year I'd be ok with that because I'm still hitting my goals. Sounds like you're doing the right things.

Medium Term Length Pickiness?

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