Best Places to invest for Mid Term Rentals with cash flow and appreciation

[Rajesh Kasturi]

Hi All, 

What are the best cities to invest in midterm rentals which will cash flow and appreciating year over year? 

[Chris Seidler]

Ours is in a rural area with strong seasonality and lots of regional vacation travellers going out for a weekend or maybe a week. We are within a few hours drive of several metros. We do a mix of STR & MTR. MTR brought in 75% of the gross and more of the net due to lower cleaning fees for turning over the STR.

For gross numbers we brought in about 1.2% of the ARV value in monthly rent this year which is decent based on the rules of thumb at least. On paper we were slightly in the red but much of that is due to one-year expenses/repairs & allowable transportation costs to get up to the property for work days ourselves. For CY25 I realistically think we'll be somewhat in the black with about ~3-6% ROI/COC now that much of the initial rehab is settling down and we have our systems in place.

We were very pessimistic (realistic?) with our estimates for both income & expenses on this property.  Sure enough the rehab ran over budget (we had a large contingency that was used up -- some due to contractor malfeasance, some due to pulling the trigger on big repairs like a new roof) and the revenues were right around expectations, maybe slightly below.  Because we were clear eyed going in it has worked out ok.  If we had gone with more optimistic assumptions then it would have been a very disappointing year financially at least.

Every market is unique.  But I'd be shocked if people are getting significantly better numbers in similar "regional destination" type areas.  I think if you're in it for the money, location in a decent sized metro with a lot of transient work force would be key.