Pricing Strategy for Converting Successful STR to MTR

Medium-Term Rentals
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Pricing Strategy for Converting Successful STR to MTR

Maria W.
Member since 2022 · 20 posts · 3 votes

Hello! The HOA for my STR investment property will be voting on banning STRs soon. If the vote passes, 3-month stays will be the minimum. I'd like to convert it to a MTR but I'm having difficulty coming up with a pricing strategy for it. I've come up with a price per room rate, but wondering if I should advertise it as an entire house on Furnished Finder instead of separate rooms?

Here are some details about the property:
-Located in Gulf Breeze, FL (12 min to Navarre Beach and 20 minutes to Pensacola Beach)
-4/2 with bonus sunroom, in-ground pool, waterfront lake views (I don't see any other properties for rent that include a pool + waterfront views so this property is unique)
-Earned $16k as an STR for its first year for May-July 2023
-The high-end LTR rate for this type of property is around 3k in my area

Here is the Airbnb listing
Here is the pool master BR listing on Furnished Finder (I haven't added the other rooms yet since I'm still not sure if the room-by-room strategy is best)

Questions:
-Should I list the entire home on Furnished Finder instead of listing separate rooms? 
-How do I price the entire house? Is it just as simple as adding up my separate room rates or am I missing something? So ($2000 + $1800 + $1600 + $1400= $6800/month) 

I'm going to reach out to hospital staffing recruiters, insurance agencies, and construction companies in my area but I need to make sure my pricing strategy is nailed down first. 

Thanks in advance for any help! :)


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Jamie Banks
Real Estate Consultant · Reston, VA · Member since 2022 · 513 posts · 521 votes
3y

I would do some digging on Furnished Finder, Hello Landing, and Zillow (look up furnished properties) to see what comparable properties are listed at. You can also go to Furnished Finder's stat's page to understand the supply in your market to understand the inventory of room rentals vs. whole home rentals. 

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  • Maria W.
    OP
    Member since 2022 · 20 posts · 3 votes
    3y

    Doing more research, it seems like this particular property would work best in this order:
    1. Insurance companies hosting displaced families
    2. Traveling Nurses (room-by-room strategy)
    3. Construction Workers (probably a last resort since I read other threads about needing space for construction vehicles and wear and tear on the place). 

    1Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    3y

    @Maria W. you are probably correct but with a 4/2 you are probably better off long term or selling unless the  Insurance strategy works for you.  Traveling health care prefer not to share bathrooms and unless your area is in high demand smaller units are better.  I would search your area on the front page of FF and see demand then look at rented units. 

    1Reply
  • Bonnie LowPro Member
    Lender · Asheville, NC · Member since 2016 · 1k+ posts · 1k+ votes
    3y

    HOA's can be so problematic! This is really a bummer that this is happening to you. Have you looked into whether or not your HOA would allow you to rent-by-room? With the kinds of restrictions they're imposing, I wouldn't be surprised if rent-by-room also is not allowed. That would leave you with renting out the entire place. You may get some traction with insurance placements, but here's the thing: they often start with 30 day contracts. While they typically extend, it's common for your initial contract to be for 30 days. So that wouldn't work with your HOA restrictions. You might also network with local Realtors. You might have some luck finding families that are relocating and looking for temporary housing who are willing to sign the min. 3 month lease. Just a thought.

    [email protected]
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  • Matthew Masoud
    Investor · Orange County, CA · Member since 2014 · 363 posts · 408 votes
    3y

    I'd get on Furnish Finder and see what others in the area are charging for similar properties.

    From my experience renting by the room does not tend to work well for traveling nurses unless the room has a private restroom.

    Your best bet is either renting long-term or building a relationship with insurance companies to house claims.

    It'll take time and quite a bit of calls but insurance claims are quite rewarding reservations

    0Reply
  • Ron Brady
    Rental Property Investor · Burlington County, NJ · Member since 2019 · 540 posts · 771 votes
    3y

    Sorry to hear this.

    With a 3 month min stay and your vacation location and amenities, I candidly think your trying to make a STR-style property fit the MTR-niche where it doesn't work well.

    0Reply
  • Zach Edelman
    Lender · New York, NY · Member since 2022 · 1k+ posts · 1k+ votes
    3y

    Unfortunately the industry is honestly missing a platform like Air DNA but for MTRs that consists of this data. Definitely a viable concern that a lot of STR hosts that get hit with regulations and want to translate to MTRs are undergoing.

    0Reply
  • Matt Jones
    Real Estate Agent · Pensacola, FL · Member since 2014 · 379 posts · 307 votes
    3y

    We have a couple of STR's locally, one 2 bed and one 4 bed. The demand for MTR seems higher for 1 & 2 bedroom rentals so splitting up by the bedroom would probably work well but I have doubts about the demand on furnished finder for the full 4 bedroom house.

     Insurance companies, families moving to the area or just between houses in the area that need a medium term option or possibly military rent by the room(although GB isn't super close to any of the area bases) could all be a good strategy.  If you want to go MTR then advertising on all of the channels plus to snow birds would probably be the right strategy.

    0Reply
  • Maria W.
    OP
    Member since 2022 · 20 posts · 3 votes
    3y

    Thanks for the feedback and advice everyone. I've been watching Jesse Vasquez's videos and I think I'll try to contact insurance companies to get on their radar and be persistent. He was successful with renting out one of his homes to families who were displaced and they loved the amenities like the pool and other things that made the property feel like home. I'd rather pursue that niche and not just settle and make it a LTR. The property has so many unique features and I'm definitely not going to sell it just because of the HOA just yet.

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

    Hello! The HOA for my STR investment property will be voting on banning STRs soon. If the vote passes, 3-month stays will be the minimum. I'd like to convert it to a MTR but I'm having difficulty coming up with a pricing strategy for it. I've come up with a price per room rate, but wondering if I should advertise it as an entire house on Furnished Finder instead of separate rooms?

    Here are some details about the property:
    -Located in Gulf Breeze, FL (12 min to Navarre Beach and 20 minutes to Pensacola Beach)
    -4/2 with bonus sunroom, in-ground pool, waterfront lake views (I don't see any other properties for rent that include a pool + waterfront views so this property is unique)
    -Earned $16k as an STR for its first year for May-July 2023
    -The high-end LTR rate for this type of property is around 3k in my area

    Here is the Airbnb listing
    Here is the pool master BR listing on Furnished Finder (I haven't added the other rooms yet since I'm still not sure if the room-by-room strategy is best)

    Questions:
    -Should I list the entire home on Furnished Finder instead of listing separate rooms? 
    -How do I price the entire house? Is it just as simple as adding up my separate room rates or am I missing something? So ($2000 + $1800 + $1600 + $1400= $6800/month) 

    I'm going to reach out to hospital staffing recruiters, insurance agencies, and construction companies in my area but I need to make sure my pricing strategy is nailed down first. 

    Thanks in advance for any help! :)


    All good answers posted.  But, your big problem is the 90 days. If it were 30 days minimum you’d still be able to get enough rental “differential” to make short stays worth it.  With 90 days you’ve essentially have a furnished LTR.  The difference between a 12 month or 6 month lease and a 3 month lease furnished rental rate won’t be enough to cover the cost of vacancies, renting, damage, preparation, and additional wear and tear.  You need to pencil out rates for LTR furnished.  In Tempe, AZ I was able to obtain $4200 monthly for a 1850 SF 2 BR condo, while the rental rate unfurnished was around $2800 - $3000.  BUT, the furnishing were total, down to towels, sheets, and silverware, and the total cost of furnishing the condo was about $40k.  So I had a renter who demanded a top end place, but was willing to pay.  She ended up signing a 12 month lease, and stayed for 6 years.  

    The bottom line is your ROI.  If it’s too low as a LTR you may want to consider a sale.  Btw, if you threaten legal action you may get the HOA to “grandfather” you in for a “transition” period.  Another approach is to “sell” your STR to the HOA as a place for condo owners visitors to stay during visits.  You can offer a preferred rate to anyone visiting relatives and the building may want to designate your condo as available for these visits.  Of course when not rented out or visitors, you’ll have the right to rent it to anyone you choose.  Try to negotiate with them, if not use the “hammer”. Your “property rights” are just as justified as those of your neighbors.  Good luck. 
    Private Mortgage Financing Partners, LLC
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    1Reply
  • Maria W.
    OP
    Member since 2022 · 20 posts · 3 votes
    3y

    Thanks @Don Konipol! I was thinking about asking to be grandfathered in but wasn't sure how to approach that with the HOA. I could threaten legal action when I send the paperwork in with my vote.

    Just to clarify, the property is a single-family residence (not a condo). I like the idea of pitching to the HOA about having my place be a go-to place for family visiting. I had a neighbor come up to me when I was landscaping outside and he inquired about my listing since he thought it would be nice if his family was down the street from him rather than at a hotel. I won't go down without a fight though that's for sure lol. 

    0Reply
  • Jamie Banks
    Real Estate Consultant · Reston, VA · Member since 2022 · 513 posts · 521 votes
    3y

    I would do some digging on Furnished Finder, Hello Landing, and Zillow (look up furnished properties) to see what comparable properties are listed at. You can also go to Furnished Finder's stat's page to understand the supply in your market to understand the inventory of room rentals vs. whole home rentals. 

    1Reply
  • Maria W.
    OP
    Member since 2022 · 20 posts · 3 votes
    3y

    Thanks, @Jamie Banks. I haven't heard of Hello Landing before so I'll check that out. I created a spreadsheet and calculated the average rents for comparable properties on Zillow and Furnished Finder. I think I'm getting closer to my target pricing as I do more research. Here are the stats from FF for my particular area. From these stats, does it mean that more entire homes are sitting vacant compared to rooms?

    0Reply
  • Jamie Banks
    Real Estate Consultant · Reston, VA · Member since 2022 · 513 posts · 521 votes
    3y
    Quote from @Maria W.:

    Thanks, @Jamie Banks. I haven't heard of Hello Landing before so I'll check that out. I created a spreadsheet and calculated the average rents for comparable properties on Zillow and Furnished Finder. I think I'm getting closer to my target pricing as I do more research. Here are the stats from FF for my particular area. From these stats, does it mean that more entire homes are sitting vacant compared to rooms?


     DM me and I'll send you my hello landing referral code and get you connected with one of the reps!

    I think whole home is your best bet unless there's a significant traveling medical professional or student population. Larger homes tend to take more leg work to get rented on MTR though. You'll want to list with insurance companies through ALE Solutions and Sedgwick

    0Reply
  • Mason WeissBusiness Member
    Realtor · Phoenix, AZ · Member since 2021 · 524 posts · 240 votes
    3y

    Hey @Maria W., one other idea is you could list the whole house on Zillow for free as a furnished rental and gage interest at different price points. I find most of my MTR tenants through Zillow and you can easily change the monthly rate to see how it impacts demand. 

    If you are able to rent the whole house for a monthly rate of $5,500, it might be more advantageous if you do not want the tenant turnover headache. 

    [email protected]480-818-7745
    0Reply
  • Maria W.
    OP
    Member since 2022 · 20 posts · 3 votes
    3y

    Thanks for that advice, @Mason Weiss. I do plan on listing the house on Zillow with an increased rate and then "short-term" and "furnished" in the keywords/description. Do I need to list separate rates for 3-month, 6-month, and 12-month or would I just list $5,500 and see who bites? Also, is there a formula to calculate each one?

    0Reply
  • Mason WeissBusiness Member
    Realtor · Phoenix, AZ · Member since 2021 · 524 posts · 240 votes
    3y
    Quote from @Maria W.:

    Thanks for that advice, @Mason Weiss. I do plan on listing the house on Zillow with an increased rate and then "short-term" and "furnished" in the keywords/description. Do I need to list separate rates for 3-month, 6-month, and 12-month or would I just list $5,500 and see who bites? Also, is there a formula to calculate each one?

    I would list it as a 3 month minimum in the description and see if you get any bites, if not lower your monthly rate until you find your sweet spot.

    [email protected]480-818-7745
    0Reply
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