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LossMid-Term Rentals (30-90 Days)

My mid-term unit sat vacant for 47 days between placements and I netted less than my long-term comp for the entire quarter.

Phoenix, Q1 this year, two-bed furnished near the medical district. I was getting $2,850 on 30-90 day stays and the long-term comp in that building was running $1,750. On paper that's $1,100 over. In practice I had a 19-day gap after a travel nurse placement ended in January, then a 28-day gap in February when a corporate relo fell through at the last minute. So for the quarter I collected $2,850 for 6 weeks plus one full 13-week placement, against what would have been $5,250 guaranteed from a straight 12-month tenant. The turn costs between placements were $480 total, utilities I was carrying during vacancy were another $310, and the platform fees on the placements I did close came to $390. I netted somewhere around $7,100 for the quarter from the mid-term approach versus a projected $5,250 long-term. So technically still ahead, but by $1,850 over 90 days on a furnished unit that I sank $14,000 into upfront. That's not the math I underwrote. I had modeled 15% vacancy and the actual number came in at 52% for those two months combined. The demand is real but it is not consistent enough month to month for me to underwrite it like a stabilized asset, and I think that is the part I missed.

2dpatel_redpatel_reCS4A
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2 replies

The relo falling through in February is the number that jumps out. Was that a direct corporate contact or did it come through a platform, and did you have any kill-fee or hold deposit baked into that booking?

0omar_haddadomar_haddadActivePRO19
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Phoenix medical district is brutal in January specifically because the travel nurse contract cycles don't align cleanly with calendar months and you end up chasing placements that are already placed. I had a similar unit in Tempe, Q4 2022, modeled 20% vacancy and ran 61% vacant over a 10-week stretch because I was too dependent on one staffing agency that went quiet after Thanksgiving. That cost me about $3,200 net versus what a long-term tenant would have paid, on top of $11,500 in furnishings I hadn't depreciated yet. The part that hurt more than the vacancy was that I had turned down a 12-month applicant two weeks before it started because I thought I had a corporate placement locked. What I'd push back on in your math is the $14,000 furnishing cost sitting there unaccounted in that $1,850 upside number. You'd need something like 8-10 quarters of that margin just to break even on the fit-out before you're actually ahead of the long-term comp on a total return basis.

0gregpowell66gregpowell66AG4BPRO19
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