Mid-Term Rental vs. Short-Term Rental: What Investors Need to Know

Learn the pros and cons of mid-term rentals vs. short-term rentals to help you choose the right real estate investing strategy.

Gemma Smith
Last Updated
August 7, 2023
Mid-Term Rental vs. Short-Term Rental: What Investors Need to Know

With so many real estate investment strategies out there, it can be difficult to know which one is right for you. Some investors operate short-term rentals, such as Airbnbs, while others prefer investing in long-term rentals, such as multifamilies. However, there’s a third option emerging in the market called mid-term rentals.

Mid-term units are rental properties listed for more than one month but less than twelve. They’re great options for guests who need temporary term housing for more than a few weeks but aren't willing to sign a long-term lease. This kind of living arrangement is common among travel nurses, digital nomads, and business professionals on assignment, such as outbound sales representatives.

Hosting a mid-term rental can be beneficial for traditional investors because these kinds of rentals tend to command higher rents than long-term rentals. If you’re interested in moving away from long-term rental but aren’t sure if short-term rentals are for you, mid-term rentals may be the way to go. Learn more about what investors need to know before making the shift. 

What is the difference between a mid-term rental and a short-term rental? 

Before jumping into the mid-term rental market it’s important to understand that the length of stay is the main difference between short-term and mid-term rentals. Mid-term rentals are classified as 1-12 months stays while short-term rentals are considered stays of 30 days or less. Most mid-term guests will stay between 3-6 months while short-term guests usually stay either a few days or a couple of weeks. 

Where should I host a mid-term rental?

Mid-term rentals are popular in densely populated cities, college towns, and areas with seasonal work, such as agricultural fields. Guests are often looking for a place to stay while moving to a new city, completing an internship, or working under contract. All of these tasks take at least a couple of months to complete, making mid-term rentals an ideal option for many individuals in transition.

These types of rentals are especially popular among individuals and families looking to relocate to a new city for family or work. Changes in family dynamics, such as the declining health of a parent, and job offers can happen rather quickly. People don't always have enough time to look for a new home. Instead, they'll stay at a mid-term rental while they continue to shop for the right place.

Securing long-term accommodation in competitive rental markets such as New York City and San Francisco can be especially difficult. Mid-term rentals offer guests the opportunity to establish some form of stability while house hunting without being tied to a long-term lease agreement.

Who uses mid-term rentals?

Long-term rentals attract more permanent residents while short-term rentals tend to attract vacationers. Mid-term fall somewhere in the middle. They usually attract temporary residents who are traveling for business, pleasure, or a combination of both. Here are some of the most common groups of people who use mid-term vacation rentals:

Tenants moving to a new city: As mentioned above, those in the process of moving will need a stable place to stay while they close on a house or find the ideal apartment.

Traveling nurses: Traveling nurses work on assignments lasting 2-26 weeks. The standard traveling nurse contract is 13 weeks.

Students and interns: Many students move away from home to go to college or complete an internship but aren’t excited about living in a dorm. Mid-term rentals provide college students with flexible living accommodations while they complete their studies. Common periods during which they stay are:

  • mid-August to mid-December
  • mid-January to mid-May
  • late-May to early-August

Digital nomads: Freelancers, remote workers, and entrepreneurs who don’t need to go into an office every day can travel while they work. They often need accommodation for one month or more to be able to explore a new area while maintaining their work schedules. 

Business professionals: Companies will often send their employees to train, hire, or complete a long-term task in another city. These employees need a place to stay for a few weeks or a few months while they’re on assignment.

5 benefits of mid-term rentals vs. short-term rentals 

Hosting a short-term rental and a mid-term rental are similar in many ways. Both rentals need to be fully furnished, advertised and maintained. However, the frequency of these activities is different because the kind of guests you attract for each type of rental is different.

Since short-term rentals are occupied for a shorter amount of time but a larger number of people throughout the year, they often require frequent cleaning and repairs. Mid-term rentals have fewer people visiting the property, but the people tend to use property amenities such as the kitchen and bathrooms, more often than short-term guests. As a result, mid-term rentals may require less maintenance but more amenities than short-term rentals.

Guests who are on vacation for a few days are unlikely to complain about not having a designated workstation. A business traveler, on the other hand, may see this as a necessity. Take a look at some of the benefits of hosting a mid-term rental over a short-term rental, below:

1. Investors enjoy increased stability and flexibility.

Investors hosting mid-term rentals get the best of both worlds. They enjoy the predictability of rental income on at least a monthly basis but also have the flexibility of raising their rates once a guest vacates the property. If your mid-term rental property is located in an area that gets popular during certain times of the year, you can increase your rates accordingly, a perk that isn’t possible with long-term leases.

2. Lower tenant turnover means less expenses.

Maintaining a property in excellent condition is much more manageable for mid-to-long-term housing than short-term housing. Vacation rentals have higher turnover and are typically more expensive to clean and maintain. Mid-term rentals experience less wear and tear throughout the year and often require less maintenance.

3. Mid-term tenants are usually more respectful of the property.

While there is no guarantee that one tenant will treat your property better than the other, mid-term tenants in general are likely to be more careful than short-term guests. Short-term bookings are usually made by people on vacation. Mid-term bookings, on the other hand, are made by people looking for a temporary home. As a result, mid-term tenants are more likely to be considerate of their neighbors and the property itself because they'll be staying there for an extended period.

Hosts can expect less noise, less trash, and a lot more peace of mind with mid-term rentals than with short-term rentals. In some cases, owners can even ask for a security deposit on a medium term rental lease further safeguarding their property from potential damage.

4. Mid-term rentals help cover off-season vacancies.

While a vacation rental will usually generate more income per night, hosting mod-term stays may be a better option during times where occupancy rates are 65%, or lower. These slow periods are referred to as off-seasons and can negatively impact an investor's profitability. 

To curb these losses hosts often implement a double-strategy by running short-term rentals during peak seasons and switching to mid-term rentals during off-seasons. This keeps income flowing without having to deal with an inconsistent stream of short-term guests during less popular times of the year.

5. There are fewer restrictions on mid-term rentals than on short-term rentals.

In the last year or so, several cities and counties have enacted regulations restricting short-term rentals. New York City now prohibits stays of less than 30 days in apartment complexes due to the city’s extreme housing crisis. Los Angeles, New Orleans, and other cities across the country have implemented similar restrictions. Mid-term rentals are so new, legislation hasn’t been able to catch up. This makes it a viable alternative for hosts who are looking to increase their earnings by dipping their feet in the mid-term rental market.

How to pivot from short-term rentals to mid-term rentals

Shifting from one rental strategy to the next requires some preparation. If you have a short-term rental, moving towards a mid-term rental shouldn’t be difficult. Transitioning from a long-term rental to a mid-term rental, however, is slightly different. You’ll need marketing to a different audience, list on different platforms, and furnish your property before listing. Consider the following tips to make sure your transition to mid-term rentals is a success:

Focus on creating a home-like environment.

As guests will be staying for longer periods of time, they'll want to feel more at home. They may want to work or cook often which means kitchen utensils and a designated workspace should be included. Consider purchasing quality mattresses, inns, and pleasing décor to make them feel comfortable.

Consider extra costs and invest in design.

Although you’ll be saving on cleaning expenses and repairs, you may need to set aside a budget to make your rental more functional and convenient. Make sure you are accounting for higher utility expenses, such as high-speed internet and streaming services, since mid-term guests will likely be spending more time at the property.

Market appropriately to the right audience.

When marketing your property on mid-term rental platforms, it's important to go beyond simply posting pictures. Don't forget to highlight property characteristics in the listing description. Include whether or not your rental is in close proximity to cafes, grocery stores, gyms, or public transport. These are important amenities to mid-term tenants such as digital nomads, business travelers, and traveling nurses.

Understand the legality of mid-term rental agreements.

Short-term rentals are subject to different taxes and regulations than mid-term rentals. While you won’t be obligated to pay hotel taxes, which is often the case for short-term rentals, you may need to acknowledge your guests’ tenant rights. 

Depending on where you live, guests staying at a mid-term rental may be considered actual tenants, which would imply tenant rights. You should understand your municipality’s local laws before moving forward with mid-term rentals to avoid any issues in the future. 

Some investors sign mid-term leases with renters to clarify roles and responsibilities between the property managers, owner, and tenant. Mid-term rental furnished apartments can come with term leases that last a 3-6 months, or month-to-month leases which are renewed every 30 days.

How can I succeed in the mid-term investment market?

Mid-term rentals can be a profitable investment for a variety of investors, but some areas and strategies are better suited for success than others. These include:

  • Seasonal towns: Investors in seasonal towns can offer short-term rentals during high-demand periods and switch to mid-term rentals when the tourist rush dies down.
  • Locations near corporate headquarters or businesses: Homes near areas of commerce that bring in out-of-towners for contract projects can provide a steady stream of mid-term tenants.
  • Investors who are tired of the hassle of short-term rentals: Mid-term rentals require less upkeep, maintenance and general customer service.

Whether or not a mid-term rental strategy is right for your real estate business will depend on what your goals are as an investor. The amount of time and money you have to dedicate to maintaining your property and interacting with guests will also influence your decision. 

Ultimately, a mid-term rental will work for investors who are willing and able to perform property maintenance at least once every three months and would like to secure rental income with periodic high-profit margins during peak seasons.

Important Note: This post is for informational and educational purposes only. It should not be taken as legal, accounting, or tax advice, nor should it be used as a substitute for such services. Always consult your own legal, accounting, or tax counsel before taking any action based on this information.

Gemma Smith

With 7 years in property management, Gemma serves as a key content strategist at Azibo.com. While excelling in writing, editing, and SEO, she also enhances Azibo's social media presence. Passionately, Gemma educates others to make informed real estate investment decisions in the ever-changing market.

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