Monthly Rentals for Amazing Cashflow

We all know it's getting increasingly difficult to cashflow. Real estate is continually getting more expensive and are biggest saving grace this past year or so has been that mortgage rates are going the other way and are at historic lows. Even with rents rising rapidly it is still tough to cashflow in most markets, especially hot areas like Austin, TX where I am.

So what do you do? Sit around and wait for things to change? That could be next year, but it could also be in 10 years. Do you really want to wait 10 years to start pursuing your goals? Time is your friend with real estate and every year you sit and wait costs money. You don't get appreciation, you don't get loan paydown, you don't get tax benefits and you certainly have no chance at cashflow.

Check out medium term rentals! STR (short term rentals) are awesome but not legal in all areas, you also may have to pay extra tax even if they are legal and they can be more of a job than an investment. Medium term rentals can be a great mix of STR and yearly rentals. Sure you may have to do a little more work compared to a yearly rental and you'll need to furnish it. But, there is a ton of demand for monthly rentals in most areas. People need monthly housing if they're trying to buy a home, move, for work, for extended vacation and just in emergency situations. In my experience you can make anywhere from 1.5x to 2x what a normal yearly rental would bring in. 

The biggest fear with monthly rentals is vacancy. Vacancy can be an absolute cashflow killer with rental properties. The nice thing about monthly rentals is that you don't need to wait for a tenant to move out or give notice before you start looking to rent again. You can list this unit for rent and potentially have it booked for years! It's not extremely likely that you'll be fully booked that long in advance but just like an STR times begin to fill in as you get good reviews and gain a great reputation.

The most important piece of a monthly rental is filling it and making it look and feel amazing. Remember, in most cases people can and will still leave reviews for your rental with monthly rentals. Don't be cheap when you're furnishing! You don't have to have luxury furniture but it needs to look and feel nice. You'll make that money back quickly when you make the place look great. When you're looking to rent and fill it up as often as possible the nice thing about a monthly rental is that you can post it everywhere! Post on all of the STR sites (Airbnb, VRBO, CHBO, etc.) and all of the long term sites like Facebook marketplace, Zillow and Craigslist. Do everything you can to fill these as often as possible and as always check your local laws. In most places 30 days or more is not considered STR but you also may have an HOA (homeowners association) and they may have their own rules.