MTR #4 Maximizing Your Rental Income with Insurance Midterm Rentals

The number 2 question I get asked is "How much should I my MTR insurance property?"

Hey there, former med pro here! I get it!  The struggle is REAL trying to balancing work and life. But I gotta say... real estate investing has been a total game-changer for me. I used to be a pharmacist, working non-stop, until I discovered a strategy that changed everything.

You won't hear many people talking about this, but it's a huge market worth over $1.3 trillion in 2021. And guess what, busy pros like us are the perfect people to take advantage of it and get our time back!   

We're able to get STR income without all the hassle, and get to help families!! ... by hosting homeowners who've been displaced from their homes, and the insurance company is footing the bill. This is as close to passive income that you're going to get. 

This strategy has worked well for our large homes in suburban markets.  

How Much Can the Insurance Company Pay

To determine how much insurance can pay for temporary housing in case of a claim, it is crucial to understand the coverage D in the homeowners insurance policy, also known as loss of use coverage. Coverage D typically covers 25-30% of the dwelling per claim per 12 months. The property value and the market rate can provide some context in determining the allowance from the insurance company, but it is important to note that one should not ask for the insurance policy from the potential guests. Instead, understanding the market can give you a good estimate of what the insurance can pay.

The Benefits of Working with Insurance Clients

One of the biggest advantages of working with insurance policyholder midterm rental guests is the ability to secure close to short-term rental (STR) rates. This is because insurance companies are the ones paying and their pockets are deep. 
These clients tend to have longer stays, reducing the time and effort required to clean and prepare the property between guests.  

Maximizing Your ROI with a Tax Strategy

Working with short-term rental guests allows you to maximize your return on investment (ROI) with a well-designed tax strategy. My advanced tax strategy includes material participation and bonus depreciation, which has helped me and my husband retire in our early forties and purchase multiple homes. This combination of tax strategies has significantly increased the ROI on our properties and boosted our cash flow.  If you're looking to meet the material participation requirement in the first year, it can be difficult if you're only hosting mid-term rental guests. My suggestion (I'm not a tax advisor-this is not legal or financial advise)  is to focus on short-term rentals in the first year and then introduce midterm rentals in the second year.

In conclusion, working with insurance clients is all about working smarter, not harder!  With longer stay and increased cash flow, MTR insurance guests offer a wealth of benefits. With careful calendar management and a well-designed tax strategy, you can maximize your ROI and secure a steady stream of income from your STR properties by adding insurance MTRs to the mix.