Make 30% More Than Regular Rentals? One Property Sees “Explosive” Demand

0:04Monthly rentals have moved from a niche to a meaningful slice of the housing economy. And there is finally a data set that shows how and where it's growing. I'm Dave Meyer, and today I'm joined by Furnished Finders' Jeff Hurst to unpack their new monthly rentals report with AirDNA. We're going to start by talking about what this report is, how it's built, because it's pretty cool. It's the first of its kind where we're actually getting some new insights and data about the really profitable midterm rental market. Then we're going to dig into specifics, like where demand is rising, which markets lead, and the playbook for investors who want to get into this segment.

0:42We'll cover what you need to know and how to act on it. This is On The Market. Let's get into it. Jeff, welcome to On The Market. Thanks for being here. So glad to be here again and excited to be talking to everybody. Yeah, we had a super popular show last year with Jeff, but for those of you who haven't listened, Jeff, maybe you can just reintroduce yourself. Absolutely. So I'm Jeff Hurst. I'm the CEO at Furnished Finder. We are a monthly furnished rental platform. The platform's been around about 10 years. I've been here about two years when we partially bought out the founders with some private equity and I have been upgrading the software, upgrading the team and helping to provide a better experience.

1:20Before that, I spent over a decade as the president of Vrbo, the chief strategy officer of HomeAway and also the chief operating officer of Expedia Group. So most of my career is short-term rentals. And along with that, I am a real estate investor. And so I own three short-term rentals, previously self-managed one of them for about a decade, and now they are all property managed. So I've got one on the beach, one on a lake, and a working ranch, which has been a different type of adventure. Well, that's great. I mean, I feel like that's everyone's dream life, right? It's like you have a collection of short-term rentals, hopefully making you a little bit of money at least.

1:55Hopefully we'll get everyone on the, who's listening to this to that point one day. That's our collective goal here. But we're here today to talk a little bit more about longer-term rentals. So not necessarily short-term rentals, but Furnish Finder worked together with AirDNA to put together a report on monthly rentals. Can you just tell us a little bit about the scope and methodology of this report you put together? Yeah, absolutely. I mean, first of all, for those who don't know AirDNA, they're without question kind of the gold standard of reporting on short-term rentals. And so for over a decade, they've been tracking Airbnb, Vrbo, Booking.com.

2:30They're constantly updating their data sets. And so I've known the team there for a long time from my life in short-term rentals. And I had reached out to Jamie Lane there to see about collaborating on, hey, listen, we've got kind of different data sets. And I think this thing's bigger than a lot of people in my old Orbit short-term rentals think it is. And so I'd love to get together and just see what we learn. And as it turns out, they had already been looking at upgrading their data products, which they've now done to be better at understanding when something's 28 days or longer. And when it's not, you know, it's tricky with the way they've built their platform, but they've done a great job doing that.

3:05You know, Furnish Finder is a classified site, so we don't have great booking data, but we have a ton of signal on where tenants are trying to go, where landlords are adding inventory, and then the characteristics of what's in demand and not. And so we thought it was a great complement. And so it kind of came about as just an idea. And we were like, hey, let's all peek under the hood and look at each other's data and see what the story says. And for us, it was really exciting because it was confirmatory of a lot of us kind of like staking our next careers on this opportunity of that. It says monthly furnished rentals are growing really fast and there's a ton of demand for them.

3:37Interestingly, it says it's very different than what most short-term rental demand is. It's not leisure-based. And so it does shine a light on like this thing's growing a lot faster than short-term. It's adding more inventory and it's a different type of asset class. What are some of the differences between the short-term and mid-term rental industries? You know, you start with it's obvious. The difference is once for 30 days or more, you know. But when we look overall, so one key difference, smaller footprint. And so 70 % of the inventory on furnished finders, two bedrooms are smaller. when you extend that to like apartments.com and Zillow, totally the same trend, smaller footprint, where it is way less likely to be in a leisure destination.

4:16In general, think about it as being around universities, hospitals, and commuter corridors. And that's because the tenant types, the largest is commuting for work. That could be skilled trade, but it's also a lot of professional services. Second largest is healthcare, which is how Furnish Finder built its name. The third largest and fastest growing is relocating families. I think that's the most interesting for investors because it really opens up where the category can go. Because of those things, it's overwhelmingly in suburbs, small towns. It's in major urban areas, but it's not in the downtown corridor.

4:48What's exciting about that is the assets tend to be less expensive than short-term rental. For the price of a short-term rental, you might build it by a duplex or a quadplex and have a different type of key strategy. It's probably typically a better cash on cash return because the entry price is lower and the cost to outfit these is way lower. Think like $7 a square foot. I was talking to Garrett at BiggerPockets, like routinely a short terminal might be more like$30 to$50 a square foot because you are investing in wow amenities because you're trying to really help somebody have a great weekend.

5:20We're trying to help somebody get through a tough time or maybe like have a comfortable place to sleep while they're on a work assignment. So those are the key differences. The thing that I think surprises a lot of people the average length of stay on Furnished Finders over three months and over a third of the tenants extend. And so you're talking about doing like three turns a year. And if you're doing it well, the occupancy is actually a lot higher than a short term rental, you know, because you might only have a few days between turns, like 90 percent plus. And so it's very different. But people who are great at short term rentals can be excellent at midterm rentals because it's actually easier.

5:57You've just got to do a different type of asset hunting. It seems easier from a property management perspective and from a design perspective as well, is what you're saying. I was kind of curious about that, if people spend as much effort into a medium-term rental, or is it just there's no ROI on that? They don't. You think about when you're designing for a short-term rental, you have to think about who's coming, where are they coming from, and what's the wow-amidity? Is it pickleball? Is it that we're going to do, you know, foosball and ping pong, are we going to have some sort of different visual aesthetic or fire pit?

6:28Everybody knows how to sleep comfortably. It's like, can I stock a kitchen with basics? Can I get a reasonably good couch and TV? And can I have like a quiet place to sleep comfortably? Like you don't need to have a designer. You need to be pragmatic and you need to know how to do these things efficiently. And you need to be really good at locating where are people going to need this type of inventory? Totally. Yeah. Just to my own experience with midterm rentals, I moved to the Seattle area about a year ago, didn't know where we wanted to live, stayed in a midterm rental in one area for like two or three months, figured out we wanted to live on the other side of the city, moved to that area, stayed in a midterm rental for two or three months while we did some house hunting and ultimately found the place.

7:07And we wanted somewhere comfortable. We wanted parking, you know, like we wanted proximity to the grocery store, like stuff that you look for more in a traditional long-term rental as a tenant. Whereas like, yeah, if I'm taking a short-term rental, I'm like, give me a golf simulator and a view of the mountains that are pretty happy. But it's not what I'm expecting. Interestingly, the midterm use case, because it's not long-term, curb appeal matters a little less. You don't care as much that there's wow curb appeal, that there's a fantastic, you need maybe a lawn for pets, but you may not need the perfect manicured front lawn and stuff like that because it's really transitional and you need it to be comfortable.

7:44And so that gives you a different type of flexibility also. What you're describing, I'd say, is our fastest growing use case. We call it try before you buy. And it's people who aren't sure where they want to be in a new town, but it's also people who might be priced out. And so they can't afford to make a mistake with the way housing inventory and affordability is right now. And so they're going to be really picky about what they buy after they figure out where they're going to buy. And that might mean they're in these for six to 12 months. And furniture is a bad investment. And so they also want to be sure they buy furniture for the place they're going to be in for a long time and aren't moving it and moving it and moving it.

8:16And so, you know, it's an interesting dynamic. And I've found it to be, you know, my kind of eat crow moment is at Verbo. I often thought that Chesky at Airbnb was kind of like, I didn't believe his story about how people were going to live. And increasing like, OK, I get it. People are going to live more flexibly. And what's shocked me is it's both ends of the generational curve. Yes, it's younger people, but it's absolutely boomers and late Gen X. Really? Like my mom lives two to three months a year in Maine. Like she's not it's not because she's crazy wealthy and has another home. She travels with a friend.

8:48People are grandparent traveling. Instead of living in the guest room of their kids, they're getting a house nearby that's a duplex, and they can walk to their kid's house but have the grandkids at their duplex. There's a lot of these use cases because of the generational wealth transfer and housing, where I think the older generation is actually catching up or exceeding this idea of flexible living. That makes sense, because I guess now millennials are mostly, at least those who can afford at trying to settle down into a home and are less having kids. You know, they're a little less transient, traveling less probably than these other generations.

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12:10Welcome back to On the Market. I'm Dave Meyer. Let's jump back into my conversation with CEO of Furnished Finder, Jeff Hurst. So you mentioned earlier, generally, it sounds like the industry, the category as a whole is growing. Is that both on the supply and the demand side? It is. So in the report, AirDNA has got a better view of demand. So they estimate that there's over$6 billion of transactions on the short-term platform that are 28 days and longer. So that's big. We have seen from 2019 to 2025, the furnished fly under platforms gone from 20 ,000 listings to over 300 ,000. Oh my God. So 15 times more inventory.

12:48We think we're probably the biggest site for monthly furnished inventory, just period. So like Zillow has about 50 ,000 monthly furnished apartments.com about a hundred thousand. Uh, there's not a great number out there for Airbnb. We estimate it to be about 150 ,000, but then of course they've got, you know, millions of homes that could be rented for 30 days plus, but they've got a three-day minimum or a one-day minimum. So it's explosive growth. It used to mainly be healthcare and some niche use cases. Think about what trucks are at an extended stay America. And increasingly, it's way beyond that.

13:21And that was the other interesting confirming stat. 40 % of all new hotel starts are extended stay. Really? Like the big institutional money is going into extended stay. And you see that with new strategies of higher end extended stay, but it becomes, again, to your point of commercial or long-term real estate, a little bit easier to go hunt because you just look where the hotels are. You know who's great at asset identification? Hilton and Marriott. They don't screw it up a whole lot. And so if you go figure out where they are and have a duplex nearby, then your equation becomes, okay, well, the Hilton extended stay property is going to be$3 ,000 a month.

13:58I can deliver twice the square footage and a private space for$2 ,000 a month. Are people going to choose that? Yeah, if they know, they're going to choose it. It feels like short-term rental in 2010, it's just way better. It hasn't gotten as complicated yet. Where's demand for monthly stays coming from? Where are you taking it from? I guess hotels is one part, but is it also, I mean, long-term rentals too, it sounds like? For sure. Yeah. I mean, it's part of the long-term rental platform. I think that When you look at the big macro trends, you know, declining home ownership, increasing rentership, you know, they're not really caring whether you're renting in a 12 month lease or a three month lease that renews four times like you're just a renter.

14:37And so the macro trend of more people renting probably plays into it the most. I do think there's hotel share steal, but I don't think it's zero sum. I think the hotels realize there's so much excess demand that they're building supply and we're helping augment the need for more supply. If you're a landlord, you're probably advertising on Furnished Finder a little over half or exclusive to Furnished Finder, you're likely also on Airbnb or maybe also on Zillow. It's got more of a hustle dynamic. You're more likely to also be telling your neighbors you've got a space in the neighborhood for if somebody gets divorced or the roof catches on fire or whatever.

15:12That part's unique of that it's a little bit more cottage industry that way. A lot of it is more referral or local relationships. The asset class is unique that way because a lot of neighborhoods and even municipalities have banned short-term rentals. But this actually feels like a neighborhood asset. You're excited if somebody like you is moving to a neighborhood in Seattle and has a chance to live for three months and be sure they can buy something in the neighborhood, become a part of the community. You're not excited if a family gets divorced, but it's nice that the husband and wife can both stay in the same neighborhood and have kids close to each other and maintain family consistency.

15:45And then if somebody's plumbing bursts or roof catches on fire or just wants to remodel, it's great that your friends get to stay in the neighborhood. Like it just feels like an asset. A hundred percent. I think I'm probably, I was on Furnished Finder the other day because I'm starting a remodel in the next couple of months. Yeah. Thinking about where I'm going to stay. You know, it's going to be over budget. So you're looking for a way to save some money too. Yeah, exactly. So talk to me a little bit about, you know, we see demand seems to be going up. Supply is certainly going up. You know, one of the knocks or the question marks about short-term rentals recently has been about oversupply.

16:17Do you have concerns about that? And I'm sure it varies market to market, but do you have concerns about oversaturation in the midterm market as well? No, nowhere near what I did with short term. Really? Short term, obviously went through a fantastic boom period. I think the dynamic at play there is there's a lot of what I'd call irrational buyers. It's very often almost like the middle class version of buying a sports team. There may be someone out there who's willing to buy it with no intention of making money. It's not an investment. It's actually that they just want it for usage. And so the dynamics of who's buying those are different.

16:53It went through a boom, but the boom was very consolidated in Gulf Coast and lakes, rivers, mountains. And so there's oversupply in a small number of places. What do you have everywhere but there? Undersupply everywhere. There's a housing shortage. And in most places, it's a pretty durable housing shortage. And so I think the estimate is we're over 10 million units of housing short. And so when you think about where midterm rentals plays, it actually plays way more in the suburbs and in places where there aren't any short-term rentals than it does in the places where there's short-term saturation.

17:25And so it's more likely to be where there's a new community coming up, where there's a new multifamily nearby or where there's a new hotel than it is where there's a new Ritz-Carlton or a new resort property. And how can people measure or get a sense of where there's good supply and demand dynamics? Obviously, you mentioned one tip of following the hotels, which is a great tip. But are there any other ones you recommend? Yeah. So there's a tool on Furnished Finder called Market Insights. You can reach it from the homepage. You can put in any city in the US and it'll tell you how many visitors have seen that map grid.

17:59So like how many people are searching the area where your property could show up. It'll show you how much inventory is there and it'll show you by price point. bedroom type, what's the distribution? This is a, I'd say it's a solid B product we've built now, but there's some real improvements we need to make. And so my advice to people would be check it out now, but check back on it every month, because I think there's going to be some things that we're doing that help make it more powerful, like moving it to zip code search. We're going to do some things that better represent that, if you're looking at Austin and part of the map might show a smaller town outside of Austin, we may not be accurately showing you the exact demand for that small town and so we've got to help better calibrate the way that works but start on furnished finder okay second thing use a site like air dna because short term is a good indicator and then the third thing is use the otas to your advantage you know go to a booking.com or an expedia and look at where the extended stay properties and you're kind of like think about this triangle where you've got furnished finder airbnb and an ota and you're trying to figure out like okay well where do things line up to where i'm getting a little bit of everything in that triangle.

19:03And then, you know, you're into something that's pretty special. And then tell me a little bit more about what assets people are buying, because you said it's different. It doesn't have to have this wow factor. Is there some sort of sweet spot that you find has a lot of demand, but is also reasonable from an expense perspective? Yeah. I mean, I think what I'd start with is let just kind of describe the continuum. And so first of all, of our over 300 ,000 listings, 60 ,000 are rooms. Oh, and you know, that's a very new product for me because at Vrbo, we didn't do rooms. And And so I'm kind of like, I'm learning about it also.

19:33It's growing fast and it's a really interesting strategy. You know, and I think, you know, of our partners, I think PadSplit's a really interesting partner to learn more about. But like co-living and how you rent out a room is a great strategy because like America actually doesn't have a room shortage. We have a housing shortage. You know, like my mom lives in a three bedroom home and she's one person. There's a lot of people like that. And increasingly, as they think about like, are you willing to rent out a room or are you willing to add an ADU to a property? you know that there's kind of a starting place there you know the second stop on the continuum would be there's a ton of studio apartments in one bedrooms apartments condos duplexes quadplexes but the important thing there is unlike short-term rental it is actually viable to where you can get into this and more of an arbitrage model and so you can take out a two or three year lease and most buildings and landlords are amenable to hey i'm going to have four tenants in here over the course of the year as opposed to i'm going to have 54 tenants in over here over the course of the year.

20:28And so there are people who kind of dip their toe in the water with arbitrage. And then the majority is a single family and it's two bedroom or smaller. I think the sweet spot is like one bedroom with a bonus room so that you have the opportunity to play in like housing a family of three or four or having a slightly bigger place for a couple or somebody who wants some office space while they're there. That's probably the sweet spot. The inventory class in general is moving to larger footprints because of the family dynamic, but it's more like three bedroom is the larger part. There's nothing here exciting for your five bedroom, your six bedroom.

21:02You're like some of the most successful STR formats are those like sleeps 23, put four families here and you'll save the cost of eight hotel rooms. Like that's my lake house. That's not part of the situation here. I think it'll cap out around three or four rooms unless you're co-living. And then the co-living strategy can allow you to yield a lot more if you've got five different tenants and a five bedroom house and are treating it more like a monthly product. And so it's very flexible. And I think what's interesting as an investor, it's a lot easier to invest in what you know, because you just kind of think about like, oh, I can put one of these within a half an hour of my house.

21:35Where could I look within half an hour of my house? And then self-managing is way more of an opportunity than short term, because it is closer to your primary residence and you're only dealing with it three or four times a year. And I imagine that it's also a little more flexible, not just on size, but in type of asset. Just hearing you talk, Jeff, it makes me feel like you know, you could potentially buy attached homes, you know, condos or townhomes. Whereas I think for short-term rentals, in my experience, most people want to buy single family dwellings just to stand out a little bit. But I don't know, in my experience as a midterm renter, I don't really care.

22:10I just want the, you know, a comfortable place. Yeah. You know, is it, is it as private as, you know, a hotel room? Yeah. Like that's kind of the bar. Yeah. And so like an ADU or, you know, an attached property for sure. Yeah. I think some of the people that have had the most financial success play in that like duplex quadplex space because you can own the dirt. You do have more flexibility. And, you know, I think some of the best investors in the category underwrite it as like, okay, my worst case scenario is this is a successful long-term property. You know, what does that return profile look like?

22:41Okay, well, what if I can then do 40 % better than that as a midterm rental? What does that return profile look like? And that kind of establishes your range. And that midterm range can get really exciting and start to kick off cash really quick because it's basically like, what's the return on furniture? And furniture usually pays itself back in like six months on our platform because it's five to seven dollars a square foot. And then you're just making more money forever. You know, like the depreciation lifecycle of furniture and a midterm rental may be three or four years. So you've got three years of extra cash before you have to refresh.

23:11Let's talk a little bit more about the economics here, because in my mind, there's sort of this continuum where it's like long-term rentals, least amount of management on a day-to-day basis usually, but the lowest cashflow potential. If you break it down by how much revenue you're bringing in per night, that's going to be the lowest. Then in my mind, correct me if I'm wrong, midterm sits in the middle, right? Where it's like a little bit more work because you have maybe three tenants, like you said, in a year instead of one, you have to furnish it. There's maybe some more maintenance and costs that are there, but the daily rate you can get is higher.