This is a guest post from the team at Kopa.
If you’re renting your properties as short-term rentals, you’re likely dealing with a lag in bookings due to coronavirus. During periods when fewer people are renting for short-term stays, you can still yield revenue on your vacation rental properties with the help of mid-term stays.
Short-Term Stays vs. Mid-Term Stays
Short-term rentals are home to guests for periods of less than 30 days. They’re popular with vacationers since these guests are usually looking to stay somewhere for a weekend or a few weeks. Remember, these individuals are guests rather than true renters protected by tenants’ rights.
Stays of 1-12 months are considered mid-term stays. However, the term mid-term frequently refers to stays of 3-9 months. If a renter stays in a property for more than 12 months, it’s considered a long-term rental.
Who is Looking for Mid-Term Rentals?
While anyone can rent a property for a few months, the following personas often opt for mid-term rentals.
Interns
When students land non-local internships or co-ops, they need a place to stay for 2-4 months. Students are commonly looking for furnished apartments that fit their modest budgets.
Those Relocating to a New City
When someone first moves to a new city, they often want to explore the area before committing to a long-term lease. Mid-term stays give them time to figure out what neighborhood they want to live in longer term.
Business & Corporate Travelers
When companies send employees to remote assignments, they sometimes look to put them in furnished rental units rather than in hotel rooms. In fact, we predict that business travel will be among the first sectors in the industry to recover post-COVID-19. Since this type of guest often needs a place to stay for a few months, mid-term stays are ideal for them.
When to Rent Mid-Term
As a vacation rental owner, you’re likely trying to make the most out of your investment properties. When deciding whether you should list for short-term or mid-term stays, think about your demand in past seasons.
If you own real estate on the Florida Gulf, you probably typically experience high demand from vacationers in the summer. However, as kids head back to school, fewer families take vacations. To eliminate vacancies during these slower periods and maintain your cash flow, consider listing your property on key booking channels as available for mid-term stays. This will help you attract renters besides vacationers, such as those escaping the cold winter months where they live as well as business travelers.
Since you can charge a higher average daily rate for short-term stays during busy season, you may want to consider offering longer stays at a discounted rate during the slower months.
Are Mid-Term Stays Right for My Property?
In popular tourist areas like Lake Tahoe, there’s usually high demand for short-term rentals. And since these areas are centered around tourism, it would be unlikely for students and professionals to look for housing there. However, given the need for remote workspaces in light of coronavirus, it’s worth exploring the option of mid-term stays at this time.
If you own property in places like Chicago or Seattle, you’re surrounded by major companies, so there’s more consistent demand for mid-term housing.
Examine your past records to determine if your rentals experience any fluctuations due to seasonality. You might notice that summer and winter are peak seasons for short-term rentals, but your property is vacant in the fall and spring, even when you’re using dynamic pricing tools. If this is the case, try listing your property as a mid-term rental during these lag periods.
The Benefits of Renting Your Properties for Mid-Term Stays
Increased rental income: While short-term rentals usually yield more income on a nightly basis, in seasons with 65% or lower occupancy rates, it makes sense to try out mid-term stays. Find the balance that works best for your business.
Reduced check-ins, cleanings and management times: Guests expect prompt responses from property managers and hosts. Even if you have great guests, you still have to handle basic communication and scheduling around the clock for those renting out your listings short-term.
When you rent out your property for mid-term stays, you’ll interact with fewer renters and likely, less frequently. This allows you to take time to vet each renter and make sure you’re comfortable with them living in your property for one month or more. Also, you won’t have to constantly schedule new cleanings and key exchanges.
A lack of amenities won’t hurt you: When looking for vacation rentals, some people consider amenities like a hot tub and beachfront access necessities. However, those looking for a place to stay for a few months usually seek out the basics, like WiFi and cooking utensils.
What Resources Can You Use?
If you want to try listing your apartment rentals as a mid-term stays, try using a listing site. Kopa specializes in mid-term stays in cities like San Francisco, New York, Seattle, and Philadelphia. They verify all renters, collect deposits and rent payments, and offer on-demand support. Airbnb also supports mid-term rentals and has been making an effort to help short-term rentals hosts pivot to longer stays amid coronavirus.
Best Practices
If you decide to rent out your real estate investment properties for mid-term stays, take note of the following best practices.
Be Honest
- When you’re talking to potential renters, be upfront about expectations and availability. If you know you have upcoming bookings, let them know. That way, they won’t expect to be able to extend their stay.
Make the Most of Technology
- Keep track of all your bookings from various channels — both short and mid-term — using a multi-calendar tool.
- Also, make sure to market your listings on social media. Someone is always looking for a place to stay, and you never know who may see and share your listings.
Know Your Market
- You need to know your rental market to figure out the ideal mix of short-term and mid-term stays. By optimizing this mix, you’ll maximize your bottom line. Use an analytics tool to better understand your busiest and slowest periods.
Try Out Mid-Term Stays
As property management companies navigate the challenges of coronavirus, diversifying your portfolio to include mid-term stays during lag periods is one way to mitigate the impact on revenue.