How to Choose the Right Strategy for Your Rental Property
Yesterday, I got a call from a client with a question that I hear often. Her property is in a location that prohibits short-term rentals, but she had two solid options: go the Long-Term Rental (LTR) route with an unfurnished, year-long lease or furnish the property and list it as a Mid-Term Rental (MTR) catering to 30-day or month-to-month tenants.
At Island Stays Hawaii, we take pride in helping our clients make the best financial decisions for their properties. That means giving them the full picture—not just what serves our business model. For this particular client, the numbers made MTR the clear winner. But the decision isn’t always that simple.
In this post, we’ll break down:
• What MTRs are and who they’re for
• The pros and cons of LTRs and MTRs
• How to make the right choice for your property
• Common mistakes to avoid
What is a Mid-Term Rental (MTR)?
Think of MTRs as the Goldilocks zone between short-term and long-term rentals. These are leases with 30-day minimum stays, catering to guests who:
• Don’t want the commitment of a year-long lease
• Value a furnished space (think: no U-Haul trucks or IKEA marathons)
• Are in transition or working temporarily in the area
Common MTR Guests:
1. Travel nurses (hospitals are their hubs)
2. Corporate professionals on extended work assignments
3. Digital nomads seeking a fresh view for their Zoom meetings
4. Retirees testing out new locations
5. Students (especially grad students or interns)
6. Military personnel between stations
Why Choose an MTR? (Pros)
1. Higher Income Potential
MTR guests pay a premium for flexibility and convenience. Furnished spaces often fetch 30-50% more than their long-term, unfurnished counterparts.
2. Flexibility for Owners
Need to use your property for a few weeks? No problem. MTRs allow owners to block out availability, something that’s nearly impossible with LTRs.
3. Minimalist Guests
Most MTR tenants travel light. They’re not moving in with 20 boxes of kitchen gadgets and a sectional sofa.
4. Location-Specific Demand
Properties near hospitals, tech hubs, or scenic destinations are magnets for MTR tenants.
5. Shorter Commitment
No more sweating over a problematic tenant stuck in a year-long lease. If an MTR guest doesn’t work out, they’ll be gone in a month or two.
When LTRs Make More Sense (Cons of MTR)
1. No Demand for MTRs
If your property isn’t near a hospital, corporate hub, or tourist destination, MTR demand might be nonexistent. Research platforms like Furnished Finder or Zillow to check.
2. Furnishing Costs
Turning an empty unit into an MTR-ready property can cost $5,000-$15,000 or more, depending on the size and quality of furnishings. If your projected revenue doesn’t justify this expense, stick with LTR.
3. Higher Vacancy Rates
Even in high-demand areas, assume 15% vacancy for MTRs. Compare this to LTRs, which sometimes have tenants renewing for years.
4. More Work for Owners
MTRs require more tenant turnover, maintenance, and management. If you’re self-managing and time-strapped, this could be a dealbreaker.
Why I Recommended MTR for My Client
For this particular client, the numbers spoke for themselves. Based upon available comps I projected her options as follows:
• LTR Option: $3,100/month (unfurnished, year-long lease)
• MTR Option: $4,800/month (furnished, 30-day minimum stays)
That’s a 55% increase in monthly revenue. With that kind of boost, she’d cover furnishing costs, pay a property manager, absorb the occasional vacancy, and still pocket more money in the end than if she went the LTR route.
If her MTR projections had only shown a 20% increase, the LTR might have been the smarter play. Always aim for significant upside before making the switch to MTR.
Things to Remember
1. Don’t Overlook Vacancy
Both LTRs and MTRs have vacancy. Assuming 100% occupancy for LTRs or ignoring downtime between MTR guests will skew your projections.
2. Furnish Smartly
Quality furnishings drive higher rates. Opt for durable, stylish furniture—it’s an investment, not a splurge.
3. MTR Isn’t Passive Without Help
If you’re aiming for passive income, hire a reliable property manager. Managing MTRs solo can quickly feel like a second job.
Final Thoughts
MTRs can bridge the gap between stability and profitability, offering higher returns than LTRs while avoiding the chaos of nightly rentals. But they’re not a fit for everyone or every property.
Action Steps:
• Run the numbers. Account for furnishing costs, vacancy rates, and management expenses.
• Research your market. Use platforms like Furnished Finder or Airbnb to gauge demand.
• Consult a property manager. Their expertise can save you time and headaches.
In the end, the best choice depends on your goals, property, and tolerance for involvement. MTRs offer a unique opportunity to maximize your property’s earning potential while maintaining flexibility. They strike a balance between the high-revenue promise of short-term rentals and the stability of long-term leases, making them an ideal choice for properties in the right location with the right audience. If you’re willing to invest in quality furnishings and management—or hire someone to do it for you—MTRs can transform your property into a high-performing asset that adapts to shifting market demands.