Offering services to medium-term rental owners--general tips & local market questions
I live in the Raleigh area but own a medium-term rental for traveling nurses in New Hampshire. I love everything about managing the property, and even fly up there between tenants to get it ready for the next one! Heck, I even find joy in it when a squirrel eats a hole through the kitchen ceiling, the fire alarm blasts for no reason, and the tenant's kid secretly turns off the "do not turn off" switch to the heater, necessitating an emergency call to the electrician.
Three years after retiring from freelance writing, I'm looking for my next act. I don't want to purchase more properties—we bought the one in NH to move to when my husband retires, which is a ways off—but I know I'd like to do something related. I spent 25 years at my laptop, so I'm looking to do something more hands-on.
An idea that hits the sweet spot—it's more hands-on, it's related to my interests, I can use my previous experience—is to start a business helping Raleigh-area MTR (and possibly STR) owners set up their rentals. I'd offer different packages, such as purchasing furniture and supplies, doing actual set-up, refreshing an already-furnished rental, doing marketing, etc.
I'm in research mode now to figure out if this is even a doable idea. I've reached out to several local owners of multiple MTR rentals to see if they'd be willing to talk to me, have looked at Furniture Finder, and have researched competition. But I'd love to get insights from people in the business now!
My questions:
* In general, does this strike you as a workable idea?
* Does it make sense to focus only on local MTRs and not also STRs? MTR seems like an underserved niche, but maybe it's too small?
* How is the MTR market in the Raleigh area? Furnished Finder is showing 107 full-unit rentals that are available right now, which is giving me the idea that there are a lot more rentals than potential tenants. (To compare there are TEN full-unit rentals in my area of NH...though to be fair, Raleigh is literally 10 times bigger than the NH city...so maybe per capita it all evens out?)
* Is it better or worse for my business if the rental market is over-saturated? AirDNA says the occupancy rate for STRs in Raleigh is 33%, which sounds low to me, and as I mentioned, there are 107 empty full-unit MTRs. Would people be less likely to hire me because they're not making enough money, or MORE likely because they need help?
* Have you heard of/used a service like this before for MTRs, in any area of the U.S.? If so, what were your experiences like? (I know there are a TON for STRs, though I found only a few in the Raleigh area and I had to dig for them, which makes me think that marketing is not their strong suit. Better for me because it IS my strong suit!)
* If you own an STR/MTR, what are your biggest challenges in getting them set up to rent?
Any other ideas or advice are much appreciated! I apologize for the kind of vague post, but I don't know what I don't know yet. :) Thank you!
Hi Linda - your services make a lot of sense for someone who is trying to go the MTR route, however if they are just now buying a house in today's dollars and rates, and setting it up as a MTR, it may be hard to substantiate a few thousand dollars to pay a third party to do the set-up after they just spend tens of thousands, or potentially hundreds of thousands on a house DP in Raleigh + furniture.
I think the fundamentals work for someone who's owned it a while, has made great cash flow, and who has been thinking about converting from LTR to MTR, and just doesn't want the hassle of set-up and marketing but wants the returns. You're more likely to find LTR owners who want to convert to MTR because they are effectively the same rental experience and management for an owner, just with (potentially) more frequent turnovers. Going from LTR to STR though is an entirely different management experience for the owner/client and its rare someone wants to ADD work to their rental portfolio by making it actively managed.
I figure your 107 units is at a single moment in time, right? So rentals get leased and other rentals come on-market? Would be useful if you tracked that daily/weekly to see how it moves if it does. DOM (if that figure is available) is probably more important to your Q. But if those are already active MTR-able units then your set-up model isn't really relevant to that group, right?
Quote from@Pat Lulewicz:Thank you, Pat! That make a lot of sense to focus on LTR property owners. Yes, the 107 units was just at the moment I checked, but you're right, that wouldn't matter if I'm targeting current LTR landlords.
Hi Linda - your services make a lot of sense for someone who is trying to go the MTR route, however if they are just now buying a house in today's dollars and rates, and setting it up as a MTR, it may be hard to substantiate a few thousand dollars to pay a third party to do the set-up after they just spend tens of thousands, or potentially hundreds of thousands on a house DP in Raleigh + furniture.
I think the fundamentals work for someone who's owned it a while, has made great cash flow, and who has been thinking about converting from LTR to MTR, and just doesn't want the hassle of set-up and marketing but wants the returns. You're more likely to find LTR owners who want to convert to MTR because they are effectively the same rental experience and management for an owner, just with (potentially) more frequent turnovers. Going from LTR to STR though is an entirely different management experience for the owner/client and its rare someone wants to ADD work to their rental portfolio by making it actively managed.
I figure your 107 units is at a single moment in time, right? So rentals get leased and other rentals come on-market? Would be useful if you tracked that daily/weekly to see how it moves if it does. DOM (if that figure is available) is probably more important to your Q. But if those are already active MTR-able units then your set-up model isn't really relevant to that group, right?
Though, totally off-topic...I'm realized only considering this idea because I love having an MTR but feel I can't afford to do more of them myself. We paid for the first one with cash and can't afford to do that again. (It was a house we used to own and we missed. it a lot. It was kind of an emotional purchase but it's been working out so far!)
But...I ran a client-based business for 25 years and when I ask myself if I really want to do that again—all the business set-up, marketing, value propositions, proposals—just to get some of the joy of property management, the answer is no.
The idea of going into debt to buy more properties is very scary, especially at today's interest rates, but maybe I should look more into how to make that happen in a way that would work for us since it'[s what I'm really interested in.
Sorry for the off-topic take!
@Linda Martin there isn't much difference between this service for medium and short term rentals in my opinion. Yes you may purchase different furniture and market differently but the basics are the same.
In an oversaturated market if you had marketing stats to show effectiveness you could win clients but the setup part of your business is likely to take off more quickly in a growing market than an oversaturated one. There is a big location component in rentals, especially this segment and you can't fix that. A service like this can't bring a unit that isn't in the inner circle for location a lot more business.
Quote from @Colleen F.:
@Linda Martin there isn't much difference between this service for medium and short term rentals in my opinion. Yes you may purchase different furniture and market differently but the basics are the same.
In an oversaturated market if you had marketing stats to show effectiveness you could win clients but the setup part of your business is likely to take off more quickly in a growing market than an oversaturated one. There is a big location component in rentals, especially this segment and you can't fix that. A service like this can't bring a unit that isn't in the inner circle for location a lot more business.
Thank you! That makes sense. I'm on the fence about the whole idea because what I REALLY want to do is own and run more MTRs. This seemed like way to be able to do some of the tasks I love without owning more properties myself, but the amount of marketing/setup/etc. needed...well, I did that for 25 years already in my previous business, and I'm not sure I want to start all over again.
@Linda Martin you never know if it is for you unless you try. What you are thinking to do now is sign on for the setup etc that is work but not the back end where you reap the benefits. Personally, I would also be more inclined to work on a market where you have fewer rentals available. More power to you on the squirrels and fire alarms, critters especially squirrels) are not an enjoyable repair for me. I am no stranger to critter issues.
@Linda Martin - If you were interested in picking up a RE License here in NC, we have a team of agents who property manage for clients as well as help them find properties to continue and build their portfolio. Everyone on our team is real estate investor focused. We currently manage Short Term, Mid Term and Long Term rentals in the Raleigh and Greater Raleigh area. If you think it could make sense to connect, feel free to give me a shout.
Best of luck as you figure out next steps!
Quote from @Colleen F.:
@Linda Martin you never know if it is for you unless you try. What you are thinking to do now is sign on for the setup etc that is work but not the back end where you reap the benefits. Personally, I would also be more inclined to work on a market where you have fewer rentals available. More power to you on the squirrels and fire alarms, critters especially squirrels) are not an enjoyable repair for me. I am no stranger to critter issues.
Thanks, Colleen! You're right about that. Yes, the squirrel was a two-month mystery, but our tenants were super nice and helpful about it and the wildlife control guy we hired finally got it figured out. (The squirrel was coming in through an unused chimney in our 125-year-old house via a broken tree branch and nesting in the ceiling.)
Quote from @Cory J Thornton:
@Linda Martin - If you were interested in picking up a RE License here in NC, we have a team of agents who property manage for clients as well as help them find properties to continue and build their portfolio. Everyone on our team is real estate investor focused. We currently manage Short Term, Mid Term and Long Term rentals in the Raleigh and Greater Raleigh area. If you think it could make sense to connect, feel free to give me a shout.
Best of luck as you figure out next steps!
Thanks, Cory! I'll reach out via DM.
@Linda Martin got to watch those animals, one mama squirrel chewed up all the windows in one apartment for us. And they have memories so you have to check that they don't reopen up entry points. it is a big issue in older homes.
Quote from @Colleen F.:Oh my! That sounds terrible. We're lucky she only put a small hole in the ceiling.
@Linda Martin got to watch those animals, one mama squirrel chewed up all the windows in one apartment for us. And they have memories so you have to check that they don't reopen up entry points. it is a big issue in older homes.