Download the full transcript PDF.

[00:00:00] Sarah: ​Hello, listeners. Welcome back for another great episode. My name is Sarah Karakaian.

[00:00:08] Annette: I am Annette Grant. And together we’re–

[00:00:10] Both Annette & Sarah: Thanks for Visiting.

[00:00:11] Sarah: And this is the–

[00:00:11] Both Annette & Sarah: Hosting Hotline.

[00:00:12] Sarah: If you want to get your hosting questions answered, head on over to the hostinghotline.com and submit your question via recording your voice. We’ll share it here on the podcast, and you’ll help so many hosts. Again, that’s hostinghotline.com. Today we have a question from Caitlyn.

[00:00:27] Questions: Hey, Sarah and Annette. This is Caitlyn. I love your podcast, and I have a quick question for you today. Since midterm rentals are a really great option for a lot of us hosts, what do we need to be looking out for when looking for great tenants?

[00:00:41] Sarah: This is actually a great question. I have been diving into the world of tenants.

[00:00:47] Annette: Deep.

[00:00:48] Sarah: Deep.

[00:00:49] They’re not guests anymore. They’re tenants. It’s, in a lot of states, more than 28 days, not 30 days. It’s 28 days. And Annette actually asked a great question before we hit record. You were like, so even if they’re sourced via An OTA, like Airbnb, you still want to have a lease in place.

[00:01:08] Annette: Mm-hmm. And your guest now turned tenant, community member, whatever you want to name them, they should not have an issue with that. They should understand that yes, you’re now a resident, after that 28 days. And you’ll see a lot of hosts online where they will only let guests book 28 days and then they’ll do a new 28-day stay, and then a new 28 day stay, because of what the laws are in their area.

[00:01:40] Sarah: Yeah, but I’d ask your attorney about that because I actually–

[00:01:43] Annette: No, that’s what I’m saying. It’s dicey. That system of 28–

[00:01:45] Sarah: I don’t think that works.

[00:01:46] Annette: Days and then 28 days, they’re trying to cheat the system, and the system I think is going to come back and bite you on that one. But it’s like they think that the guest never stays longer than 28 days. They always do the 28 days and then they start a new stay.

[00:02:02] Sarah: Reservation.

[00:02:03] Annette: A new reservation. And I’m just like, I don’t know if that would end up flying, though, if you’re trying to have the guest leave. It gets gray. It’s a gray area.

[00:02:13] Sarah: Because the guest hasn’t actually left the property and moved out. So I think there would be some gray area there. And listeners, if you want to do a midterm rental, even if you do a short-term, I think even more so for a midterm, get a real estate attorney that you can connect with and ask questions. This is not something that you want to “see what happens” because if you have anything where you need to evict the person, especially all you co-hosts out there, ask the questions because not knowing is not an excuse, is what I want to say.

[00:02:48] Caitlyn, to answer your question, you want to create a lease and create a system just like you would for a long-term rental. And with Fair Housing, you want to make sure that everything you get from any potential tenant, you make those same requirements for everyone else.

[00:03:04] And I suggest that you create some database where you can prove that you’ve asked the same documentation from each and every applicant to your, we’ll just call them a furnished rental. I have, from our friend Jesse, who has a great program for long-term self-management education.

[00:03:26] We’ll link to an episode. Jesse was actually on the podcast just a few episodes ago, but I’ve talked a lot with Jesse over the past few months because we’ve also been doing a lot more 30-day plus leasing via nurses and work-from-anywhere folks. I have someone coming who wants to be closer to his partner but doesn’t want to buy a home just yet.

[00:03:47] So there’s lots of reasons why people do it, and it’s very important that you follow those Fair Housing rules and ask the same questions across the board. So having them have a certain amount of income to rent ratio, what was their past lease like? Proof of not just employment, but proof of income verification. Because they might be employed, but that does not mean that they can afford your rent. And having a place to document all this information and, hot tip, hosting hot tip, Zillow.

[00:04:17] Annette: Yes.

[00:04:18] Sarah: Is the place to do this.

[00:04:19] Annette: And Zillow, if that’s your front facing, it’s just like Airbnb. Think about it. People understand Zillow’s where I go to find houses to buy, houses to rent. They’ve done amazing job marketing. So when you ask that potential midterm guest to stay and you’re like, hey, can you fill out the application on Zillow?

[00:04:41] They’re down with it. They know what it is. They probably have the app installed. It’s a great way to find people. And what Sarah’s saying, it’s a great way to make sure that every single person is going through the same exact application process. And correct me if I’m wrong, Sarah, once you fill out– I filled out a Zillow application before. I can reuse it. Once it’s in the database, if I’m in the house hunt or that midterm rental hunt, let’s say me and you aren’t a good fit, I can continue to use that for the next one.

[00:05:08] Sarah: Yeah, I think for a certain amount of– yes you can, but it’s for a certain amount of time and I don’t know what that certain amount of time is.

[00:05:14] Annette: But most of the time if they’re in the hunt, it’s like, hey, if this one doesn’t work out, if I spent my 15 bucks or whatever to submit it, I can keep using it until I find a good fit.

[00:05:23] Sarah: Yeah. Yes. It’s actually $35, and we actually have that in our Furnished Finder and in our Airbnb, and of course on Zillow as well. Like, hey, it’s $35. The tenant pays for this, but you can reuse this. Should our space not be a great fit for you, you already have this for your next application. And the landlord, the host would use that for sure.

[00:05:44] And I want to piggyback on what you said before, Annette, about if you get this tenant from Airbnb, have it in your house rules. Should you be booking our short-term rental, or should you be booking our rental for a stay that’s more than 28 days, please be advised that you’ll have to go through an application process, or some sort of verbiage like that.

[00:06:06] We actually dug into this because one of our members asked us this question. I honestly wasn’t sure what the answer was, so we asked Airbnb. We comb their terms and conditions. Listeners, if you want to leverage your spaces, both a midterm and short-term, you can use our parent-child listing strategy and have your listing only available as a 30-day option or more, and then still obviously have it as a short-term, have two different listings and have those calendars talk to each other.

[00:06:31] Now, if you are using a property management software or a property care software, all the above, pricing software, you do have to pay twice for those things. So that’s the downside of that. But you could do that as well if you’d like to have your property populate more than once and give people an option for– if people are searching for stays where they can stay 30 days or more, your property will populate.

[00:06:54] Annette: I know this is a lot of information. You’re like, oh, that seems like a lot of work, but this can be a long-term strategy for you. And so doing the work now will free up the time and the seasons to come. And what’s so great is if you do have multiple properties, this is where you can start to cater– maybe you have one up on Zillow for 30 days plus, and that one isn’t available. You might have, depending on your portfolio, one, two, all the way to 20 other alternatives for them. So that’s what’s nice also about the midterm short-term, is you’re really able to cast a wider net to anyone coming to your town and be able to host them in the way that’s going to work best for them.

[00:07:37] So definitely, we know that work from anywhere remote work, it is here to stay. I also know that retirement is changing. People are not going to be retiring and just having a snowbird house in their normal house, or two properties. I believe people are retiring. They are traveling.

[00:07:57] They want to go visit one kid in one city for a month, another kid in another city for a month. Or they just want to travel on their own because they don’t have any children and they want to go around the world. But I think this is the future. It is something worth putting the time in, figuring out the best way that’s going to work for your property.

[00:08:12] And then also it gives you that diversification. If you just want to take a break from short-term hosting from time to time, or maybe there’s something going on in your life and you’re like, hey, I need a break because work is going crazy, or maybe your family is just focused on– maybe you’re going on a three month vacation or something. This might be an alternative for you to have a break from the overnight stays or the short stays.

[00:08:35] Sarah: I’ll share with you our strategy, listeners. We’ve been playing around this past couple of seasons. We all know that we went through an amazing boom in 2020 and 2021, so you better believe we weren’t doing anything that was taking away our short-term stay revenue.

[00:08:50] But now that it’s normalizing, last winter and this winter, and then the next winter, we are definitely going to perfect this. But my revenue manager and I are going to be better about blocking off our calendars to only 30 days stays for certain buildings because what we were finding is we weren’t doing that. We were finding 30-day stay people, but then there were random bookings.

[00:09:16] Annette: Right. And then it shoots you in the foot. You’re like, man, I could have taken that booking. Now we have one weekend.

[00:09:20] Sarah: Yes, three-night weekend at a great rate, but it’s in the middle– right now, let’s pretend we’re in December and this random booking is in February, totally screwing up the opportunity to have a traveling nurse come or someone stay for that 30 days.

[00:09:34] Annette: For January, February, March, when it’s brutal.

[00:09:37] Sarah: Yeah. And we’re looking back at our historicals, and I know that in January, February, March, I know what we were making, and I know that if we can get a midterm person in there at a great rate, we will crush those rates that we’re getting for short-term, thereby increasing our revenue and our overall occupancy and having that whole year be much healthier looking and then going back to a short-term strategy in April, May.

[00:10:03] Annette: This is fun. This is the fun part.

[00:10:04] Sarah: It is fun. It is like for your puzzle.

[00:10:05] Annette: Right. Instead of–

[00:10:06] Sarah: And and not all buildings either.

[00:10:07] Annette: Right. Like, oh, I missed this. I missed out on this revenue. It’s like, no, just get better next time. If we can get a little bit better every single month, that revenue is just going to keep compounding. So it’s like, don’t beat yourself up. Don’t go and cancel reservations so you can get somebody in there. This is the long term play here, and that’s what’s fun, is knowing your numbers and competing with yourself on your last year’s numbers.

[00:10:34] It was Friday night last night. Yes, we’re recording on a Saturday, and I was nerding out in QuickBooks, getting so excited because the first month of the year is done and I’m like, let’s look at January, 2024 to January, 2023. Okay, what are we going to do in February? Make it fun for yourself. Compete with yourself. I don’t know what motivates you, but find that and just figure out how to always be future forecasting, thinking about how you can improve your revenue for the next year.

[00:11:02] Sarah: Couple more tips before we sign off. Zillow right now, the application process is free for us landlords or us owners.

[00:11:09] Annette: Do it.

[00:11:10] Sarah: The whole thing is free right now. I say right now because that’s what they say in their verbiage. So I don’t know if they’re going to end up charging, but right now the tenant can pay for the application. There’s a little link so you can just send that to someone who you want to apply, but the whole process is free for you. So get your leads from Furnished Finder, from Airbnb, from all the corporate whatevers.

[00:11:30] Annette: I know people love– we haven’t tested this yet, but we have been hearing that a lot of people are having a lot of success on Facebook marketplace also with the rentals.

[00:11:41] Sarah: Sure.

[00:11:41] Annette: So let’s lead into the next thing, though. They went through the application process. They are the winner. You’re like, yes, I’m getting this person in here for 90 days. How am I collecting their rent, their deposit?

[00:11:55] Sarah: Zillow. That’s great.

[00:11:57] Annette: What’s that look like?

[00:11:58] Sarah: It’s free too right now. It’s great.

[00:12:00] Annette: There’s no processing fees?

[00:12:01] Sarah: No.

[00:12:02] Annette: What?

[00:12:02] Sarah: No, not for the owners. And I believe ACH is free for the tenant and owner.

[00:12:07] Annette: Okay. Which that’s normally how rent is–

[00:12:09] Sarah: And then if they use a credit card, it is guest facing, at least in our state of Ohio. I do know processing fees are wonky state to state.

[00:12:15] Annette: So I know that is normally the biggest roadblock. The number one question for direct booking for midterm rentals, is like, because, and we love it Airbnb makes it so easy to just get the reservation. It magically appears in your direct deposit bank account.

[00:12:31] Sarah: I have not found a great way to hack our property management software. So we use Hostfully. You might be wondering because we talk about direct booking. The process of a midterm stay is just different, everyone. I want to make sure that these people are going through the right processes.

[00:12:46] I want to make sure that their background check, their credit check, their income verification, their job verification, all of it is in check. And to have that automated via a short-term rental property management software, it’s not perfect. So I’ve opted not to do it. There are other options out there like TenantCloud. I think Podium is a great option for long-term rental managers. But I don’t want to pay–

[00:13:08] Annette: Right. There’s no reason to.

[00:13:09] Sarah: For two softwares right now because I’m doing this seasonally. So if anyone else out there has hacked this and they want to let Annette and me know, because I have been trying to figure this out, but for right now, I am doing this process. So we built it out in our project management software in Asana.

[00:13:25] So whenever we get a lead, our team puts it in the Asana, and it goes through this whole process. Different people are paying at different times to get them through the process. Once they are approved, once they have paid their first and last month’s rent deposit, then they go back into our property management software and they can go through the automatic process of checking in.

[00:13:42] Annette: Here’s my Hosting Hotline question now, Sarah. The deposit, first month, last month, is that held in escrow via Zillow or is that our responsibility? I know that gets– and I don’t expect you to know this answer off the top, but what does happen to those funds?

[00:13:56] Sarah: So they have a deposit that is fully refundable should they not have any issue with their stay.

[00:14:02] Annette: Right.

[00:14:02] Sarah: But we require first months and last months especially for– and talk to your attorney about this.

[00:14:05] Annette: Oh, and you’re going to use it.

[00:14:07] Sarah: Yes. Because it’s such a short– well, whether it’s a short or long stay, it is lovely to have first and last months upon– because first of all, a lot of these people aren’t checking in the first of the month. These nurses and traveling. They’re coming in on the 14th. They’re coming on the 20th, so I don’t want to collect the 20th through the 30th as their “security deposit”. That’s not enough.

[00:14:26] Annette: Okay. See, I got that confused. So it’s security, security. Okay. So that’s fully refundable, but the first and last, they’re going to have to pay that anyway, so you get– okay, got it. I don’t know why I was–

[00:14:36] Sarah: They can all be automated within Zillow, that payment process. And that’s the tough part in the property management software that I haven’t even figured out either, is not having to do that manually. Has been really nice doing it through Zillow and then using it in Asana.

[00:14:50] And then, of course, we still plug them into our property management software, so our entire team can see like who’s in there. They get all the automated messaging. All that stuff is still working, but if you’re going to do a hybrid, I haven’t mastered a way for it to be completely easy breezy. This is not tough, but–

[00:15:04] Annette: I know personally, and you could luck out, and this happened, I’ve moved in places before for short-term, like six months, and I just paid all up upfront. I was like, look, can I just write you a check for the whole time? Because I didn’t want to have to worry about–

[00:15:16] Sarah: Your dream.

[00:15:17] Annette: Right. No, I’m just saying that can happen, So that would be awesome too, giving that person that option like, hey, if you just want to pay in full, let’s do it.

[00:15:26] Sarah: We’re working on an episode. We have to have life actually happen, everyone, before we can make the episode. But essentially, I’ve got a house that I was the buyer’s agent on because the family wanted to use it during football games. Then when football games weren’t happening, the whole thought process, we could do a midterm rental, but the owner wants to see if we can find a long-term tenant, so a year or more.

[00:15:51] Whether we do it furnished or unfurnished, the rent on this home is going to be more than $5,000 a month just the sheer size and location of it. So is there a tenant out there for a year or more at that price point? Do they want it furnished, not furnished?

[00:16:09] Annette: It’s a big house. Yeah.

[00:16:10] Sarah: Or is the person really just want the house for 3, 4, 5 months? Because if that rent is $5,000 a month or more and they’re going to live there for a year or more, why wouldn’t they just buy? These are rhetorical questions. I don’t know.

[00:16:24] Annette: Because they’re not going to live here for a long time. They’re here for a short time.

[00:16:27] Sarah: Because I’ve been talking to some landlords who have tried to lease houses like this and they’re telling me it’s impossible. But you know I like a good challenge. So we’re going to find out.

[00:16:34] Annette: Not impossible.

[00:16:35] Sarah: We’ll do an episode once we find a tenant. We will find someone.

[00:16:39] Annette: They’re out there.

[00:16:40] Sarah: Yeah.

[00:16:41] Annette: Great question, Caitlyn.

[00:16:42] Sarah: Yes, such a good conversation. This is not our last conversation around midterm rentals. If you want to hear more about midterm rental strategies, let us know. Or if you want us to stick with all the short-term stuff too, let us know. You can always reach out to us. hi@thanksforvisiting.com. Submit your questions at the Hosting Hotline.

[00:16:57] If we don’t have the answer, we will tap into our network of experts. We know lots of fun people in this industry, and we will get them to record their answers, but we love these episodes, so please submit your question. No question is too silly, unless you’re just being silly and you want to make us laugh, which we like those too.

[00:17:13] Annette: Yeah. Send those in too. I’m here for that.

[00:17:16] Sarah: But with that, I’m Sarah Karakaian.

[00:17:18] Annette: I am Annette Grant. And together we are–

[00:17:19] Both Annette & Sarah: Thanks for Visiting.

[00:17:20] Sarah: Talk to you next time.