House Hacking: Your Property As A Mid-Term Rental

While short-term and long-term rentals, have kind of been the main ways to house hack in recent years, there's a newer method that has emerged probably over the last decade or so, called the mid-term rental. 

Today we'll talk about, what mid-term rentals are, how they compare to short and long term rentals, and why you should seriously consider a mid-term rental on your house hacks

So what is this so called mid-term rental method

It's pretty easy to remember. It's a mix between short-term and long-term rentals, smack dab right in the middle of the two. mid-term rental.

This method caters to a specific set of circumstances, though.

Unlike short-term rentals, which are typically geared towards travelers staying for days, a weekend or longer than a week or two - 

and unlike long-term rentals, which are leases set typically for 12 months or more - 

mid-term rentals offer that flexible housing solution in the middle of the two, for people or businesses who require housing anywhere between 2 and 8 months, typically.

So you're probably thinking, who would sign an agreement for 2-6 months, or Who Benefits from Mid-Term Rentals?

Well, mid-term rentals have gotten big in recent years, due to the constant evolution of what the workplace looks like, and also employment.

Remote or hybrid work has always been around, but you've probably seen a bunch of stuff in recent years, about people wanting to work from home, travel for work, hybrid jobs, etc.

Covid really changed how and where people wanted to work, and transportation and ease of access to travel has also been a big change as well. 

So with all things considered - remote work and short-term job assignments have become more prevalent, with companies finding this to be more cost-effective and also, expanding their business footprint to other markets. With more people in recent years looking for this type of work, like traveling nurses, construction crews, consultants, and business executives for example, often need temporary housing solutions for periods ranging from that 2 to 8 month time frame.

So mid-term rentals fill this gap, providing a comfortable place to temporarily live during their assignments, and also give a feeling of "home away from home" as opposed to the previous alternatives like hotels, motels, and even airbnb.

And one of, if not, the primary benefits of mid-term rentals, is that the tenants' employers typically cover the rent - not the employee or person living there - which is typically the case for short and long-term house hacks or rentals.

These corporations with traveling employees already have set aside designated budgets for housing, and that gets handed off to you, the landlord.

Which is huge! It's about as close as it gets to guaranteed rent, and that's something you always have to consider or worry about with long-term tenants not paying, or paying on time. Heck, that's an issue with short-term as well - but you get the point

The company, not the employee there for work, is on the hook for rent. Big big big

With that, 

While long-term rentals provide steady income, and a long-term time frame locked in of consistent rent -  mid-term rentals can offer higher rental rates.

Like I said, these corporations are willing to pay for their employees' housing, and often have larger budgets set aside for housing compared to individual tenants.

Now this doesn't allow you, the house hacker or landlord, to start hiking up the rental rates and charging an insane price. That is how not to do this. 

If you remember from a video videos back where I talk about "being in a partnership with the bank and the government"? This is another scenario where you're in a partnership with a company. You find ways you can both benefit.

For example, lets say your house hack is bringing in $2,000 per month in rent as a long-term rental, or $24,000 per year.

If you airbnb, you might bring in double that, somewhere around $4,000 over the course of a month, depending on occupancy or vacancy.

Now, with mid-term rentals, you might approach the company and say, you'll charge $3,000 per month during the contract period they assign.

So it benefits you as the landlord or house hacker, in that you're getting paid more per month than you would with long term - Plus, you don't have that constant turnover like you do with short-term rentals.

The business paying for the housing also benefits because it's cheaper for them, than a hotel or short-term rental for their employees. If mid-terms weren't around, that company may pay $4,000 or MORE per month, at an airbnb or hotel - and on the other end, they aren't locked into a 12 month lease either, where they still have to pay for the vacancy or vacant months remaining, after that job or work from the employee is done.

It's a win-win for both parties, a partnership - if you will :)

But yeah, I c=kind of already touched on it but with the extended stay of mid-term tenants, or longer periods than short-term, this not only reduces vacancy periods - but also has less frequent turnover-related expenses.

This is one of the main reasons people don't get into Airbnb or short-term, because the costs of cleaning crews, set-up, property management, and all of those other expenses needed that you otherwise wouldn't have to worry much about with long-term house hacks.

A lot of those short term expenses are now cut out, you have higher rental income coming in, and that rental income is more secure coming from a business

Now if you don't want to rent out to a traveling nurse, or a construction crew, whoever - here is another option

Depending on your location and where your house hacks are, mid-term rentals can be for other uses, like a vacation home

In regions with consistent good weather year-round, this is super popular in warmer climates - 

like those "Snowbirds" who go down south during winter months up north, mid-term rentals are perfect for those people who go down for 2-6 months until it gets a little warmer where they're from.

This is house hacking to a T!

Even if you're not actively buying places each year or two, you could rent your place out during those winter months to help offset some of your mortgage. Or heck, it might pay for the whole thing!

You can go look up on airbnb or vrbo, and see there are some places that rent for like, $20,000 or $40,000 PER MONTH. Sounds crazy, but it's not uncommon at all.

A lot of people would rather pay $60,000 or whatever, to stay in the warmer climate for multiple months every year, than buy a vacation home only to live in it for those few months.

In Central Iowa, we see mid-term rentals used for those traveling nurses, construction workers or crews, out of town developers, professors, teachers, and even the state fair for people who come to town for 2-3 months to prep for things they're involved in the fair for.

But with all of this considered here as we wrap this up, these mid-term rentals offer a major opportunity to house hackers or even investors in general.

They're less risky than short-term rentals, they typically provide more rental income than long-term rentals, they're relatively easy to manage and don't require that constant attention to the place as opposed to airbnb or short-term, and  lastly, also benefits the renter AND the company paying for rent.

If this sounds like something you're interested in, please reach out! I think its a major untapped market in Central IA and i think a lot of people could benefit from this when trying to figure out what to do with your house hacks.