Mid-term rental pricing

[Ryan Daulton]

I am new to investing and am about to purchase my first rental.

How do I determine the median rent for MTRs in my zipcode?  All the BP calculators I've seen are based on LTRs.  What I've searched so far for MTR pricing: FF, Airbnb, AirDna.  Also, does anybody else get http error 404 when using FF?

[Ko Kashiwagi]

Are there PMs managing MTR specifically in that area? I like to compare 3 things when I do these types of research:

1. Software - plug it into AirDNA and FF

2. Comps - looks at LISTED rentals in that area for sanity check as softwares can be off

3. Talk to investors & PMs in that area

[Nick Zupec]

Hi Ryan. Because MTR is a unique hybrid somewhere between LTR and STR, I haven't found an easy way to get a rent estimate. I usually pretend that I am a traveler or renter searching in that market. I will look through all of the major platforms (Furnished Finder, Airbnb, Zillow, etc.) and see how much furnished MTR units are going for. I'll track studio, 1BR, 2BR, etc. as well as location and how nice they are finished. This may also fluctuate by season in some markets. Then you can see where your property would fall in relation to the comps (or if you are bringing a property online, you can see what you have to do to get to the higher range of the comps). Its kind of like doing a comparative market analysis. And I just checked and Furnished Finder is working for me at https://www.furnishedfinder.com/

[Ryan Daulton]

Wow, FF is working for me now too!  Another idea I had was to ask area property managers how much they think the going rate is for MTRs.  The FF rates in my zipcode are higher than I expected and their quality is less than what I'm bringing online!  How could I determine how much demand there is?

[Matthew Metros]

Check your competition on Furnished Finder. That should give you an idea of how much you can potentially charge. 

I would also suggest using Pricelabs to create a comp-set and filtering for 29+ days to see the listings in your market that require 29 or more days.

Here is a great article: https://help.pricelabs.co/portal/en/kb/articles/using-pricel...

[Ryan Daulton]

Is a Pricelabs comp-set called the revenue estimator on their website?

[Nick Zupec]

Quote from @Ryan Daulton:

Wow, FF is working for me now too!  Another idea I had was to ask area property managers how much they think the going rate is for MTRs.  The FF rates in my zipcode are higher than I expected and their quality is less than what I'm bringing online!  How could I determine how much demand there is?

Determining demand can be tricky too if you don't already have an MTR in that market. If you know a good PM that does MTRs, that's a great route to go. Take them to coffee and pick their brain. We haven't found many PMs in our area that do much with MTRs (they are all either LTR or STR focused). We didn't have any idea if there was demand in our market so we started with one property just to see how it would go and it booked in 2 days. We added a 2nd one and both were solidly booked so we added 2 more haha. We are in a small market so we were very surprised to consistently fill 4 and now we are looking to do 4 more.

That may not be the best strategy given the cost of getting an MTR set up, so here is another approach. Look on Furnished Finder at your market 8 or 9 months in advance. I wouldn't expect much to be booked yet that far out. Find a few properties that are your closest competition (similar size, location, finishes). Then reset your search to 2 weeks out and see how many of them are still available. If they are all booked, there should be plenty of demand for you. If most of them are available, I would be a little more concerned. You could do the same thing with 30+ day stays on Airbnb. While it is variable, most of our booking requests come around 4 weeks in advance.

[Ryan Daulton]

This is a marvelous idea!

[Nicole Heasley Beitenman]

When I was starting, I found a resource in FF that suggested pricing $300-500 above LTR rates. I started at $500 over LTR rates and bumped it up $50 in between each tenant until I felt like I hit the ceiling.

[Miguel Del Mazo]

Nick and Nicole are offering great advice.  MTRs are not LTRs or STRs,but rather they are their own little hybrid. 

My take on this is to underwrite purchases based on expected LTR rents (I like rentometer and the BP's own rental estimator), but start charging 1.5x that rent for your MTR. Go up as you are able between tenants. Our experience has been that most tenants book about two weeks out from a vacancy, so don't slash the price of your MTR too soon to your next ecpected vacancy(you will get nervous, I promise). Respond to "unmatched housing requests" as well as other tenant leads. You may learn a lot of valuable information about what people are looking for in your area. Lastly, running an MTR is partially hospitality (like STR), but it is also a sales position (like all commerce). Anyone in sales knows, you are going to have to be prepared for a lot of "Nos" to get to the "Yes".