Real Estate Investing Strategy: How to Set up, Operate Midterm Rentals

Zeona McIntyre had a lot of success doing short-term rentals between 2012 and 2014.

Thanks to Airbnb, “I went from college student to financially independent in two years,” the 37-year-old Boulder, Colorado-based real-estate investor told Insider.

She continued buying and setting up Airbnb units through 2019, when she first experimented with long-term rentals in a quadplex she bought in Florida.

“I was getting burnt out on short-term rentals,” said McIntyre, who had also started investing in St. Louis, Missouri. The prospect of filling a unit with one tenant who would stay for 12 months or more seemed like less work than dealing with new guests a couple of times per month.

There’s a trade-off, though: While managing a long-term rental is more passive than running Airbnb units, “they don’t do great cash flow,” she explained.

That’s why she calls mid-term rentals the “sweet spot” in real-estate investing, since they’re still easier to manage than short-term rentals and produce better cash flow than long-term rentals.

Mid-term rentals, which she defines as 30- to 90-day stays, didn’t come on her radar until after the pandemic hit in 2020 and sent her Airbnb business in a tailspin.

“I was ramping up for a busy summer season,” she recalled. “Some of my places were booked all the way through May. But when Covid came around in March, Airbnb said, ‘we’re going to let everyone cancel for free.’ I saw one or two cancellations at first and then it was everything — all of my bookings canceled at once.”

That’s when she decided to test out mid-term rentals, which she’d heard about through one of her friends who was doing it and catering specifically to travel nurses.

“I was really open to doing whatever I needed to get my properties rented,” said McIntyre. She considered going all-in on long-term rentals at the time, but ultimately decided to try the mid-term space after seeing some requests for month-long bookings on Airbnb. “I had a police officer for a while, and some relief workers and nurses started to come in and I thought, ‘I wonder if I can make this work consistently enough.'”

She started listing her properties on Furnished Finder, which helps travel nurses and other traveling professionals find temporary housing. She also continued using Airbnb, which allows hosts to list their properties for monthly stays.

“I realized there are tons of people looking all the time for longer stays — and longer stays are kind of awesome because people don’t need as much from you,” she said. “They’re okay to go buy their own toilet paper and change the batteries because they’re living there. It was a whole different vibe from short-term rentals and way less stressful.”

Today, more than three years after the pandemic hit, “it’s my preferred method,” said McIntyre, who owns 12 units across nine properties, according to settlement statements viewed by Insider, and has published a book, “30-Day Stay,” to help other investors find and operate mid-term rentals. “My bread-and-butter is these mid-term rentals. I want a longer tenant in there and I don’t want to have to think about it for three months.”

She broke down three key advantages that come with operating 30- to 90-day stays.

1. They offer generous cash flow for relatively passive work

Mid-term rentals essentially offer the cash flow opportunity that Airbnb properties can without the hassle of dealing with constant tenant turnover, said McIntyre.

While short-term rentals are generally considered one of the most lucrative real estate investing strategies, operating them can also be the most hands-on.

In McIntyre’s experience, “there can be these emergencies that come out of nowhere and you feel like you’re always putting out fires. The toilet might get clogged at 9pm on a Friday when you’re out to dinner with your friends and you have to deal with it. I just felt attached to my phone. It was like a ball and chain.”

Whereas, with mid-term stays, “if you don’t hear from the person in the first few days while they’re learning the home, you may not hear from them for three months,” she said.

Of course, a long-term tenant is likely going to be the least amount of work but, if you go that route, you might sacrifice cash flow.

“Often, when people are investing in long-term rentals, they’re okay with $100 to $200 a month in profit per unit,” she said. “That could easily get eaten up by one big expense. Or, if your tenant only stays for one year instead of five, you might need to paint the walls and do upgrades between tenants that end up costing so much that you’re not actually making any money on the place at the end of the day.”

Especially with higher interest rates today, which increase your monthly mortgage payment and can impact your bottom line, “long-term rentals are just hard,” said McIntyre. “In a lot of places with high home prices, and with the higher interest rates, often the mortgage is going to be more than what you could even charge for rent. They’re a bet and you may need to have 50 rentals before you could quit your job.”

In her experience, the same property that may produce $200 in cash flow per month from a long-term tenant could earn up to $1,000 per month from tenants doing 30- to 90-day stays.

“Mid-term is this little sweet spot where it’s not as much work as a short-term rental,” she said. “But you still get a healthy amount of cash flow.”

2. The bookkeeping is easier

A mid-term rental is much simpler to run than a short-term rental on various levels.

“With short-term rentals, you’re buying a lot of supplies for the home and you’re having rent payments come in every time someone stays in the house, which is often three to four days at a time,” said McIntyre. “You’re having a bunch of payments coming in and out, between your cleaners and rent and supplies, so you may have 50 things going in and out of your bank account in one month.

“It can be a bookkeeping nightmare.”

Having longer-term guests also gives her more time to plan ahead for tenant turnover and make sure the space is constantly rented.

“I check in with guests a month before check out and ask if they’re going to extend or not,” she said. “A lot of times people do. And if they don’t, I have a good month to find the next tenant.”

3. Tenants take better care of the space and there are fewer regulations

In McIntyre’s experience, short-term Airbnb guests tend to treat the space more like they would a hotel: “People are a lot more careless.”

However, with longer stays, “tenants feel a certain amount of pride of rentership,” she said. “They’re willing to work with you and take care of the home.”

Finally, hosts might have an easier time doing mid-term rentals than short-term depending on where their properties are located.

A handful of local governments have started to crack down on short-term vacation rentals. Honolulu, for example, has passed regulations like banning rental stays under 90 days, while Aspen, Colorado has proposed new taxes on short-term and vacation rental properties. And the local rules and regulations are constantly changing.

“Short-term rentals have been under scrutiny and the ever-tightening regulations are constantly changing,” noted McIntyre. “But there is sort of this magic number that, as soon as a listing is over 30 days, these rentals get classified into a long-term rental bucket and then you don’t have the extra taxes or have to have a short-term rental permit.”

Don’t let that completely scare you off from short-term rentals. “A lot of states are still allowing people to do short-term rentals,” she added. “Just know the laws first so that you know your guidelines of how you can operate.”