Choosing the Perfect Neighborhood for Your Medium-Term Rental
8 Essential Factors to Consider
Many factors go into the decision on which house to buy, and I’m not referring to number of bedrooms. Read below for my top factors in choosing where to place a medium term rental.
2. The neighborhood is as important as the house itself. Photos are by far the most important aspect of attracting guests to your medium term rental. However, if your house is surrounded by boarded up houses and old cars in the lawn, your medium term rental will definitely suffer. Don’t even run numbers on a property until you “walk” it on Google.
3. Safety is in the eye of your guest. You might have wonderful memories of grandma’s house and know it’s incredibly safe based on fond memories of playing cops and robbers with your friends at night, but guests have their own point of view. Keep in mind that when you are putting a furnished rental out into the world, it needs to be in a location where a single female can check in alone at night and feel safe getting from her car to the front door. Is the home in a neighborhood where you would allow your mother to go alone at night had she never been there? If the answer is yes, you probably have the right street. If you cringe even a little at this thought, you probably need to keep looking.
4. Is there off street parking? I’ve seen many clients and property owners ignore this small detail, but it’s important. Most guests will bring a car, unless you are in a giant metropolis with amazing public transportation. Be aware that this is a big deal to guests. If the weather gets excessively hot or cold, covered parking is even more valuable, especially for men who tend to baby their automobiles. If the property you are looking at doesn’t have off street parking, are there free options nearby? A paid option is rarely desirable to a medium term rental guest unless the location is exceedingly desirable and homes are hard to come by there. Be prepared to solve the parking situation for your guests if the home doesn’t have it.
5. How tight are the neighbors? Neighbors can be your greatest asset and your biggest source of irritation. I own and manage medium term rentals with neighbors who will call us if there is ever an issue and have even helped my guests when they needed it. I also own and manage medium term rentals where the neighbors don’t like the changing guests and call the authorities to complain. In Savannah, GA where I invest, we have a home that has never been rented for less than 30 nights, but one angry neighbor keeps turning us into the city as an illegal short term rental. My team keeps having to explain to a neighbor the definition of a short term rental (29 days or less) and send bookings to the city to prove that we have never operated this home illegally. It’s hard to know much about your neighbors before moving in, but if you can get any information on them before you make an offer I strongly advise you to do so.
6. Is the home in an HOA? If the answer is yes, buyer beware. Never put in an offer on a home in an HOA without reading the documents yourself. These should be available in the MLS, simply ask your agent for them. My clients had a home under contract in a HOA last year and they wanted to have the medium term rental strategy as a backup for the home. I provided them with the documents and we quickly discovered that the minimum rental term in this neighborhood was 6 months. My clients did close on the home, but with all of the information in hand. I know of a condo facility here in Savannah that requires all tenants to be approved by the HOA board before being given a lease. This would never work for a medium term rental. I was the buyer on this transaction and quickly exited.
7. Will you be purchasing a nice home or rehabbing a home up to a high standard? The furnished rental market is incredibly competitive nowadays. Unless you can afford to have the house look nice, don’t do it. This includes landscaping and outdoor space if possible.
8. Use an agent that understands the investment strategy. Pretty agents who like to sell pretty houses don’t necessarily understand the investment strategy that you are employing. I went to a house once needing management and found a beautifully decorated home owned by out of state investors who bought it based on the photos only. What they didn’t realize (and their agent failed to communicate) was that the home was surrounded by Section 8 housing and neighbors were walking through the property multiple times per day. This home struggled as a medium term rental and we had to keep the price below what the owner wanted in order to keep guests inside. Sadly, the owner finally had to make the home into a long term rental. Had the investors used an agent who understood the ins and outs of medium term rentals, they would have avoided a very expensive lesson.