Monthly Rentals: Make More Money with Less Hassle

22:19And so there's a big discount if you aren't going to self-manage by being in the midterm because they just take less of the rate. Jeff, I know you said that like the tech stack is still developing for the midterm rental space, but obviously Furnished Finder is one of the tools that midterm rental hosts are using. what are you seeing as like the best practices to stand out on the furnished finder platform is there a golden ticket that you've seen that's like man this works every time i think the um people who know their target audience have an advantage and so i'll start with like how do i compare it to short term the biggest thing i i've changed people's frame of reference on is like imagine you were competing on airbnb in 2016 as opposed to 2025 and so what that means is like One, there is less inventory, so it's easier to stand out.

23:09Photos probably matter even more. Like, you can't possibly be competitive on Airbnb without professional photos. You can be standout on Furnish Finder with great professional photos. And so it kind of changes the competitive positioning. And then something that more than anything is communications. Like, remember that these function more like Zillow or Apartments.com and Furnish Finder, like, were classified lead sites. And so the necessity of replying fast and communicating clearly raises the bar a lot because there's not just an instant book. You're not going to get an app notification. Good news, the weekend booked.

23:42You're going to get an app notification from somebody who's applied to stay at your house and one more. And if you wait a day, they're probably going to pick the other one.

23:51Tony J. Robinson:There's a lot. My brain is still just like I'm just so ready now to figure out where the next steps are in my investing journey because now I'm thinking like, okay, hey, there's all these things that I've learned in the short-term rental space that the mistakes I've made that I don't want to make again. Are there mistakes that are kind of common that you're seeing other landlords make in the monthly rental space that I could learn from and other rookies like hearing this right now to avoid going forward? Yeah, I think there's a, you know, one thing I'd emphasize is the, you know, going back to the knowing your customer, it's like people over-invest because they assume they need to do something more than what the actual use case in their area needs, or they underinvest for the exact opposite reason.

24:34And so I'd say that primary research, you know, and Garrett, you mentioned the$25 a square foot. If somebody's done six short terms and then jumps into midterm, it's like, oh, I've got a playbook for this. Let me go use my, you know, my furnishing scheme. You know, you've spent four times as much on, you know, outfitting the home as you needed to. And on the flip side, if somebody's coming from long-term and they're just like, well, they're only going to, you know, we just need to kind kind of like bare bones and I'm going to do it all at Ikea, you may not be competitive enough. And so I think that's probably the first thing.

25:03The second would be that assuming that a good short-term rental will be a great midterm rental, you cannot make that assumption. I think you can assume that a short-term rental that doesn't perform well in a shoulder season or off season, you should take a crack at midterm rental because people don't go to Michigan in winter for vacation. they still work in Michigan. There's still universities in Michigan. There's a chance to make money in that shoulder off season. And then the third mistake that I'd say people can get into is not appreciating that four turns a year still means the phone rings.

25:36It doesn't ring nearly as often, but if you're in Texas and you've got an HVAC issue, or if you've got a plumbing issue, you do need to have a plan. And so getting ahead of it from a process standpoint still makes sense. It's just that your process manual is more likely to be two or three pages instead of two or three dozen pages. Jeff, you bring up a good point around not every short-term rental will also work as a midterm rental. And I think that's a very important distinction for especially rookie investors to understand, because I know that there are folks out there who say, I'll buy this property as a short-term rental.

26:09And if it doesn't work, I'll just midterm rent it. And it sounds good in theory, but to your point, not every market supports midterm rentals in the same way. And I'll give you guys a real example. we had one of our properties in Joshua tree near the national park. And, um, there was just like a long delay getting the permit for that property, like much longer than it had ever been. They were super backed up. And it was like a 90 day timeframe before they would even give us like the first response of what it was going to be. Right. So we're sitting on this property for, for a while. We said, Hey, let's try and midterm rent it.

26:39And we put it up everywhere to try and get people to book. Turns out no one is really coming to Joshua tree and planning to stay for 90 days. There just wasn't a lot of demand for that. So you've got to make sure that if you're underwriting a property, especially if you're underwriting in a true vacation destination, that it actually works in that model and don't feel like you can just fall back to midterm or long-term renting it. Yeah. My biggest advice here is underwrite it so that your backup plan is to turn it into a long-term unfurnished rental. And so maybe as a long-term unfurnished rental, you've got something that's going to do whatever, 6 % cash on cash or 4 % cash on cash.

27:21But if it works as a midterm, it's going to do 20 or 15. And then your backup plan is actually just like, I've got to figure out what to do with some furniture or have a furnished year-long lease product, as opposed to, I spent$25 a square foot for a short term, and now it's not working, and it's an oversold market. What do I do? It's easier to solve from the other side. Jeff, I guess just one last question, because I feel like a lot of rookies are going to want to know the answer to this. But AirDNA in the short-term rental space, they put out their annual list of best places to invest. And the internet, the short-term rental community always goes crazy when that list comes out.

28:00Do you guys have something similar for the mid-term rental space? Like, hey, here are kind of like the 10 up-and-coming places that we're seeing a lot of traction. Yeah, we do. We actually published on our site, I think we did the five markets by small, medium, large that have the most supply and then those that have the biggest imbalance of demand to supply in a good way. And so a few trends jumped out. I think the biggest trend and something for people to really pay attention to is just data centers. Where are you building data centers? I'll tell you where you're not building them. Seattle, Los Angeles, Chicago, Manhattan.

28:37Data centers need a lot of space. They need a lot of power. They need cheap land. And so an example, the fastest growing market we had in the U.S. was Abilene, Texas. That's where Oracle and OpenAI are building the biggest data center in the world. You know, there is not enough housing in Abilene to house all the workers needed to build this thing for the next six years. It's just it does not exist. And so you're seeing people turn in, you know, turn, create housing on the spot. you know think people are talking about we're going to build an RV park we're going to build container housing we're going to transition this multi-family here we're going to outfit this motel differently and so data centers is a big one and it's great because if you know where they're going to be one they're usually built by like meta and google and microsoft like they're willing to spend money to have their workers have a good experience and the time to value for them to get that done faster is massive so if you can get there and be early, there's a great opportunity around data centers.

29:34The second thing, and this is one that's probably changed the most in my year and a half at Furnish Finder, is more and more families are trying before they buy. Mortgages are high and inventory is expensive. And so a lot of families are actually moving into neighborhoods on a three-month rental or a six-month rental that's furnished, being sure they like the school, like the neighborhood while they shop for a home. And plenty of times they actually re-up, sometimes they don't. What's interesting about it is you're not solving to give them the home, you know, their lifetime home or their dream home.

30:05You're solving to give them a comfortable place in the community they want to be in. So they might be shopping for a four-bedroom home, but be willing to put their family of four in a two-bedroom home for the next six months. And that opens up duplex strategies and townhome strategies and investing more of what you know. And just think about like, how many people do you know that have moved in and out of your neighborhood, that have remodeled, you know, that have had an insurance claim or they needed temporary housing, you can almost think of like maybe filling these with friends and family network in some places.

30:35And that's a very different dynamic. And we're seeing that open up more and more neighborhoods. One last question on that piece, Jeff, because that's like super interesting insight because the AI boom, I think everyone's thinking about it from like a technological standpoint, but you're coming at it from like a completely different angle, which I haven't heard anyone talk about before, which is so interesting. I guess one last question on just like the demand and the kind of trends you're seeing. what are your thoughts on room rentals in the midterm space? Is that also something that you're seeing gaining traction or is it really just the whole place that folks are looking for?

31:05No, it is. It's gaining traction. You know, I'm a big fan of what the guys at PadSplit do. And so, you know, if people haven't checked them out, certainly do. We have 60 ,000 room rentals on our site. And so it's a big number. You know, we're probably one of maybe next to Airbnb, we're the biggest room rental site out there. And, you know, what is interesting about it is, you know, we're kind of like the self-serve version for that. And so you, you know, you might have an ADU or just a room you're trying to rent out in your house, and you can get started that way with a very traditional house hacking strategy and start to dip your toe in the water or potentially even create some cash flow to where you can then use that cash flow to fund a midterm rental acquisition or an arbitrage purchase.

31:46And that's something we haven't talked about is arbitrage is much more prevalent in the midterm space than it is in the short-term space. And it's because you're much more likely to be able to get a landlord to give you a three-year master lease that lets you sub if you're subbing it out 90 days at a time instead of three days at a time. It doesn't have the same community nuisance type of concerns. And you can very often basically start a midterm business with like one or two months down payment instead of 20 % or 10 % of a purchase price. And so those have changed the dynamic a lot. I am a big fan of the growth opportunity in rooms, mainly because of the original macroeconomic point of like, I think affordability and housing crisis are here to stay.

32:25And there's going to be a large chunk of Americans that need to find a more affordable way to live. Wow.

32:30Tony J. Robinson:That's amazing to even just the sheer amount of different opportunities and creative ways that a rookie could get into this because it seems like there's going to be less red tape all around with this type of strategy. And that's discouraging for some rookies that are looking into the short-term rental space, but they want the cash flow that could come from something like this kind of model. So I can't wait to hear further about how this has kind of changed the way your lifestyle and your perspective on these different type of investing models has happened. But we do need to take our last ad break before we do that.

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37:34Tony J. Robinson:So Jeff, I can't wait to go into bigger deals after this and go to Abilene and start looking up some deals and see if there's anything out there that could possibly work. But what shifts in your life have you seen come about this since you've been championing this type of model for everyone. You know, I think there's kind of two questions there. What shifts have I seen in the industry? What shifts have I seen in my life? And so I'll start with kind of the life one and that it is very different than running a short-term rental platform. You know, I was the president of Vrbo and we were obsessed over like trying to make these moments perfect for somebody's like highly leveraged spring break or for, you know, someone to be able to afford their dream vacation home or whatever it is.

38:12This is a much more, I'd say, connected to most of the world's type of business and that we're really much more solving for the bell curve of America. And we're solving for like, can they afford a place to live? Can they afford a place to work? Can they afford a place to be when they're disrupted and when they're, you know, really in need of housing? And so whereas I used to spend a lot of time on like a NIMBY movement, like I'm not in my backyard. How do we prevent this? What's the regulatory environment? Now it's much more to me like, of course, you want one of these. Like, of course, you want traveling professors or doctors in your neighborhood.

38:46Of course, you want families to be moving in and thinking about how to buy. And so it's changed my perspective on some of just like how housing works in general and also like how we got to the regulatory place we got to in short term rentals. And I don't think that's around the corner for midterms. Personally, for me, what's been a lot different is like I'm working at a much smaller company. We're only in the U.S. It's a much simpler type of approach. and we're very committed to keeping it simple and really keeping control with, you know, rookie real estate investors and real estate pros. You know, I think that there's probably been overreach on the short-term side of how much control they've taken into the platforms from the end users.

39:25And our perspective is that we can build something that's leaner and more affordable by putting more of that trust and control back with the landlords and tenants to just figure it out yourselves. Like, I don't know, have a conversation, get on a FaceTime. You guys can do this. It doesn't have to be disintermediated communication where you don't talk to them until after the booking and you can never talk to them again once the booking closes. It doesn't have to be that complex. Jeff, I love so much of what you said. And I think that the affordability piece is what really stood out to me because, like you said, it feels like unless something dramatically shifts within the U.S.

40:04housing industry, the affordability challenges are going to persist, if not get worse. And I think the ability to give folks an option to maybe try and relieve some of that pressure in a way is an important thing, especially when you talk about the rear mental side. And I really think it is a, you know, it's not like it's a bandaid. If more people would invest in quadplexes and duplexes to solve affordable housing, then you would have more affordable housing. And if more people were furnishing it, and like, you know, furniture is not a, it's one of the worst return on investment things you can ever do.

40:41Like as an individual furnishing your home, it's like buying a car. As soon as it's in your house, you know you're selling it for less than you paid for it yesterday. And so more and more people are also thinking about, well, I'm just going to rent the furniture through a furnished finder. And then, you know, if you start to do the math on, okay, I've got a$2 ,000 a month apartment that I'm going to come out for, but I've got to go spend three or four months rent to furnish it. why not basically just rent the furniture along the way and save all that money? And that money might also be enough for you to go buy a midterm rental and start to create cash flow instead of buying furniture for yourself.

41:19And so that's the other hidden dynamic is when people ask me about the strategy, I often describe it as like the strategy is how fast can you pay furniture back? And we usually think the payback period on furniture is like six months, maybe a little more. And after that, you're just making an extra 50 % ish every month on paid back furniture. Like you've actually turned it into a cash flowing asset instead of a couch that needs to be reupholstered. So for all the rookies that are listening that are maybe somewhat convinced Jeff by the wonderful information you've shared so far, what is your challenge to those folks who were sitting on the sidelines thinking about getting into the monthly rentals, but they haven't yet pulled the trigger.

41:59Yeah. My biggest challenge to you is to be creative about how little capital it can take to get into this. If you're going to rent out a room in your house, perfect. Wouldn't you rather have a midterm tenant than short-term tenants coming in and out? That seems reasonable. And so you can start there and then start to look at what does it cost to buy something that's an efficiency studio near my house? It is going to be a lot cheaper than And a short-term rental is going to be in a leisure destination. And so how can I basically look into that? And then, you know, one of the things that I'm also encouraging people to think about is like, you know, there's a big aging demographic issue or issue.

42:39There's opportunity in the United States. You know, when you see things that are like estate home sales that you're like, oh, my God, I can't imagine renovating that and fixing it up. There may be an opportunity to make it a midterm rental that doesn't have to have the same high design, the same feature, the same functionality and get into a spot where you're just trying it. And for anyone who's already got a rental, you know, for$179, you can put it on Furnish Finder and find out if you're running so close to the wire that you don't have$179 in your rental business, you should not be in the rental business.

43:09Like you don't have a big enough support fund. And these are the types of things where you need to be able to take risk and just try it.

43:15Tony J. Robinson:Jeff, that's some amazing advice. You pretty much laid out the blueprint for all the rookies listening and myself included to not just make this something that they've thought about or they hear about online and YouTube. And that's kind of getting buzzy and trendy now. But I think you've really laid it out for everyone to take some actionable steps going forward. If people wanted to reach out to you and ask a few questions or just connect going forward, where's the best place for them to find you? Yeah. So we have a real humans on a sales and customer support team, hundreds of them, that if you come to the site and reach out to us, they'll answer questions.

43:51I'm also, you know, frequently accessible on LinkedIn. If people want to reach out to me and connect, you know, I'm happy to meet prospective customers and think about how we can help people. And then definitely check out our Landlord Diary podcast, where two of our resident landlords talk through midterm rental experience. I think we're 150 episodes in and a million views. And so there's a lot of great content there for very specific topics like room rentals and arbitrage and how to think about target audiences. Well, Jeff, thank you so much for coming on. I can tell that you've got extensive knowledge, not just about mentoring rituals, but the travel industry in general.

44:26And I appreciate you sharing that with us. Garrett, thank you for jumping in for Ashley while she's off frolicking on the beaches in Mexico. And to all of our listeners, thank you for hanging out with us today. This has been the Real Estate Rookie Podcast. I'm Tony, he's Garrett, and we'll see you guys next time.

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