Any success with midterm rentals in DFW area? (Arlington, specifically)

[Chandler Johnson]

I am considering converting a long term rental of mine in Arlington into a mid-term rental. I know there are several hospitals nearby which might bring in traveling nurses , but I am not sure how to know how much demand really exists. 

For that reason, I wanted to check if anyone has had success with midterm rentals in the Arlington/broader DFW area? What is the best way to get an idea of whether a mid-term rental will be successful or not? Thanks for the advice! 

[Bruce Lynn]

I'm sure there are people making this a success.  A few challenges I see:

Travelling nurse/medical staff days have been cut way way back.  It's expensive for hospitals, so we're seeing a lot less of this kind of staffing.  Many of the hospitals or staffing agencies that were providing this during Covid with generous housing stipends, no longer provide stipends.

When I follow some discussions on places like Furnished finder, it seems like there is a big disconnect on pricing.  What I generally see from owners I think is fair.  Including utilities, services like lawn mowing, furnished, short term, etc...there are higher costs and you should be compensated for that.  However, my impression from potential renters is that the prices should be close or at long term pricing.  They feel like owners are taking advantage of them.  I also see a lot of disconnect in areas like the tenant is not here to see the place, but doesn't want to pay a non-refundable deposit to someone they don't know on a place they haven't seen.

Not sure how you know the numbers, but at one point, maybe a couple of years ago when the drop off of STR or implementation of more city restrictions on STR, everyone wanted to jump on the MTR bandwagon. Not sure how that all worked out, but seemed like way too many people wanted to try that.

I always wonder about vacancy.  Let's say you have a month of vacancy between 3-3month tenants.  That means you're only occupied 75% of the time.  Can you bump your margins up enough to cover that over and above LTR?  Is 25% vacancy realistic?  If my number is wrong, what number would you pick?  How successful do you think you can be reducing vacancy and getting back to back to back occupants on MTR?

If you are going to do it, you might wait to see if Trump will reimplement bonus depreciation.  That might make a big difference if you can write off all your upgrades/furniture in year one.  I kind of expect this will happen, but a lot going on right now, so that may be on the backburner.  Don't hear a lot of people talking about that right now.

Do you have any inside connections to hospital HR or insurance company placement agencies that would give you a leg up in improving your occupancy?

The other thing that would concern me is the amount of hotel rooms being dumped on DFW over the next year or two. At one time I heard a number like 20,000 rooms coming on line this year.  I think there are already a lot of hotels struggling.   That could potentially create some competition on pricing for you that could be very tough to overcome.  Not sure MTR are mutually exclusive with extended stay or even just nightly stay hotel rooms, but if they price their rooms aggressively, like apartments are right now giving away 2-3 months free rent, that could be tough on you.  

[Bruce Lynn]

I'm sure there are people making this a success.  A few challenges I see:

Travelling nurse/medical staff days have been cut way way back.  It's expensive for hospitals, so we're seeing a lot less of this kind of staffing.  Many of the hospitals or staffing agencies that were providing this during Covid with generous housing stipends, no longer provide stipends.

When I follow some discussions on places like Furnished finder, it seems like there is a big disconnect on pricing.  What I generally see from owners I think is fair.  Including utilities, services like lawn mowing, furnished, short term, etc...there are higher costs and you should be compensated for that.  However, my impression from potential renters is that the prices should be close or at long term pricing.  They feel like owners are taking advantage of them.  I also see a lot of disconnect in areas like the tenant is not here to see the place, but doesn't want to pay a non-refundable deposit to someone they don't know on a place they haven't seen.

Not sure how you know the numbers, but at one point, maybe a couple of years ago when the drop off of STR or implementation of more city restrictions on STR, everyone wanted to jump on the MTR bandwagon. Not sure how that all worked out, but seemed like way too many people wanted to try that.

I always wonder about vacancy.  Let's say you have a month of vacancy between 3-3month tenants.  That means you're only occupied 75% of the time.  Can you bump your margins up enough to cover that over and above LTR?  Is 25% vacancy realistic?  If my number is wrong, what number would you pick?  How successful do you think you can be reducing vacancy and getting back to back to back occupants on MTR?

If you are going to do it, you might wait to see if Trump will reimplement bonus depreciation.  That might make a big difference if you can write off all your upgrades/furniture in year one.  I kind of expect this will happen, but a lot going on right now, so that may be on the backburner.  Don't hear a lot of people talking about that right now.

Do you have any inside connections to hospital HR or insurance company placement agencies that would give you a leg up in improving your occupancy?

The other thing that would concern me is the amount of hotel rooms being dumped on DFW over the next year or two. At one time I heard a number like 20,000 rooms coming on line this year.  I think there are already a lot of hotels struggling.   That could potentially create some competition on pricing for you that could be very tough to overcome.  Not sure MTR are mutually exclusive with extended stay or even just nightly stay hotel rooms, but if they price their rooms aggressively, like apartments are right now giving away 2-3 months free rent, that could be tough on you.  

[Robin Smith]

Most travel nurses and medical professionals are looking for a 1 bed / 1 bath unit, not just a room, and definitely want a washer and dryer. (I have a mid-term rental and follow several travel nurse social media pages.) So if you have a 4 bed / 3 bath setup, that crowd may not be your target market.

Furnished Finder has a helpful stats page you can check out (landlord tools?) : since it only includes MTR listings, it gives you a good sense of what's available in your area, how many people are searching there, and other useful insights.

[Chandler Johnson]

Thank you, Bruce and Robin! These are helpful perspectives and tips.