When looking at the rental strategy along the shores of Lake Huron, the GrowthShores Capital team looked at long-term, medium-term, and short-term rental options. Because of the economic juggernaut that is Bruce Power, which has a continual influx of people coming into the area for extended stays to support plant operations and maintenance, having a project (King St. – Tiverton) devoted to medium-term rentals, often called corporate rentals, just made sense. But, what exactly defines a medium-term rentals? The term is unfamiliar to even seasoned real estate investors. So, let’s delve into the topic a little more.
What are medium-term rentals?
Medium-term and corporate rentals are often terms used interchangeably. But really, it is about the length of stay, and the type of “tenant” that you’re targeting. These are some key characteristics:
~ Focus: Tailored to business travelers and employees on extended assignments
~ Duration: Typically months (1 to 12 months), medium-term rentals strike a balance between short-term and long-term leases.
~ Target Audience: Professionals, individuals seeking temporary housing.
~ Property Types: Apartments, condos, or single-family homes
~ Property Features: Fully furnished, equipped with amenities, and strategically located
~ Benefits: Consistent demand, premium rates, and minimal vacancy periods. steady income, less intensive management, and attractive to corporate clients/employment services
Why invest in medium-term rentals?
1. Stable income
~ Predictability: In contrast to the seasonality of short-term rentals, medium-term rentals provide a stable cash flow. You know exactly how much rent you’ll receive each month.
~ Consistent Occupancy: With longer lease durations, you won’t face frequent tenant turnover. This stability reduces the stress of
constantly finding new renters.
2. Less intensive management
~ In the middle: Medium-term properties require less day-to-day attention than short-term, although more than long-term.
~ Quality tenants: Corporate clients and employees come with reliable references and a commitment to maintaining the property during their stay.
3. Attractive to corporate clients and teams
~ Business travelers: Professionals on temporary assignments or relocating employees seek comfortable, hassle-free accommodations. Medium-term rentals are perfect.
~ Fully furnished: Corporate renters appreciate the convenience of moving into a fully furnished space without the hassle of buying furniture.
4. Premium rates
~ Value proposition: Corporate clients and employees are willing to pay a premium for convenience, comfort, and proximity to work. You can charge higher rates than long-term leases.
~ Negotiation power: You are often negotiating with a business vs an individual.
5. Minimal vacancy periods
~ Limited “down time”: As one tenant leaves, another can be ready to move in once you have developed relationships with employers.
~ Year-round demand: Unlike the seasonality of short-term rentals, work happens year-round, so potential tenants are available year-round.
Conclusion
With the right location, furnishing and amenities, and tenant and employer relationships, medium-term rentals offer a unique niche for investors.
