In today’s dynamic real estate market, midterm rentals have emerged as a robust investment strategy, particularly for investors seeking stability, flexibility, and high returns. As you strategize for 2025, understanding the advantage midterm rentals have over other property investments is crucial.
This article will detail the key reasons why savvy investors should prioritize midterm rentals in the coming years, emphasizing trends, economic shifts, and unique advantages that make midterm rentals a wise choice.
What are midterm rentals?
Midterm rentals bridge the gap between short-term vacation stays and long-term leases, typically accommodating tenants for stays between three to nine months. This rental category is gaining popularity due to its flexibility for tenants and landlords.
These properties are often fully furnished and include utilities, which makes them attractive to a diverse range of tenants, including traveling nurses, students, digital nomads, business professionals, and those relocating for extended periods.
Why are midterm rentals thriving?
Several factors are contributing to the rise of midterm rentals as a go-to option for tenants and investors alike.
- Burgeoning remote workforce: As remote work continues to reshape the employment landscape, many professionals no longer need to remain tethered to a single location. Midterm rentals allow these workers to experience different cities and regions without the long-term commitment of a lease or the expense of nightly rentals.
- Increased mobility: The global workforce is becoming increasingly mobile, whether due to work assignments, seasonal migration, or lifestyle changes. Midterm rentals cater to these individuals, offering them a home-like experience without the burdens of long-term contracts.
- Greater stability for investors: While short-term rentals often have high tenant turnover, midterm rentals offer extended stays, providing investors with more predictable cash flow. This rental type also generally attracts more responsible tenants who treat the property as a temporary home rather than just a weekend stay.
- Midterm rentals attract a wide range of tenants, including:
- Traveling nurses and healthcare professionals
- Students attending short-term courses or internships
- Digital nomads seeking temporary bases
- Business professionals on extended assignments
- Individuals renovating their primary residences
- People relocating to new areas
Key advantages of midterm rentals for investors
- Higher yields than long-term rentals: Midterm rentals can generate significantly higher income than traditional long-term rentals. Tenants are willing to pay a premium for shorter, flexible lease terms and fully furnished accommodations. Investors can set competitive prices that fall between short-term vacation rates and long-term rental agreements, optimizing returns.
- Flexibility to adjust rental pricing: Investors have the flexibility to tailor rental rates to market trends, seasonality, or property demand. This means they can capitalize on peak seasons, such as during large conferences, festivals, or local events. Long-term leases, in contrast, lock in rates for an extended period, preventing investors from responding to market shifts.
- Lower vacancy rates: Investors in short-term rental markets often face high vacancy rates between bookings. Midterm rentals, with average stays typically ranging from three to nine months, reduce the frequency of tenant turnover and ensure fewer vacant periods. This consistent occupancy translates into a more stable and predictable income stream for property owners.
How midterm rentals outperform short-term rentals
While short-term rentals like those listed on Airbnb have long been a popular investment option, midterm rentals can often outperform them in terms of both profitability and ease of management.
- Lower management demands: Short-term rentals require constant tenant turnover management, cleaning, and upkeep. In contrast, midterm rentals significantly reduce the need for ongoing property maintenance and tenant screening, as stays are typically longer.
- Reduced regulatory risks: Many cities are cracking down on short-term rentals due to housing shortages and neighborhood disruptions. Midterm rentals are less likely to face regulatory scrutiny since they often cater to more established tenants, such as traveling professionals or students.
- Less competition: The market for short-term vacation rentals is oversaturated in many regions, driving down prices and making it harder to stand out. Midterm rentals, however, occupy a unique niche, giving investors a competitive edge with less crowded competition.
Economic factors favoring midterm rentals in 2025
- Inflation and housing affordability: With inflation impacting global economies, many people, particularly younger generations and professionals, are being priced out of the housing market. Midterm rentals offer a more affordable alternative to expensive hotels and long-term leases in high-demand urban areas. Although mortgage rates are forecasted to decline to the high-5% range by 2025, midterm rentals will continue to provide a valuable solution for those seeking flexible and cost-effective housing options.
- Growing demand for flexibility: The post-pandemic era has emphasized the importance of flexibility. Tenants now value housing options that allow them to move between cities or switch living arrangements based on career changes or personal preferences. Midterm rentals offer the perfect solution for individuals seeking flexible living arrangements without a long-term commitment.
- Positive market outlook: According to AirDNA’s 2024-2025 outlook, occupancy rates are expected to stabilize and rise in 2024, while RevPAR (Revenue Per Available Room) growth is projected to accelerate to 2.9% in 2025. Additionally, ADRs (Average Daily Rates) are forecasted to increase by 2.1% in 2025. These projections indicate a growing market for premium, flexible housing options, positioning midterm rentals to capitalize on this positive trend.
- Tax benefits for investors: Investors can benefit from several tax advantages unique to midterm rental properties. For example, owners can deduct expenses related to property management, maintenance, and furnishing, which are encountered less frequently in long-term rental arrangements. Depending on the jurisdiction, some investors can also benefit from reduced short-term rental taxes if they keep tenants longer than 30 days.
Top markets for midterm rentals in 2025
Identifying the best markets for midterm rentals is critical to maximizing return on investment. Here are some top cities and regions to consider:
- Austin, Texas: With a flourishing tech industry and an influx of remote workers, Austin is becoming a hub for midterm rentals. Its vibrant culture and outdoor recreation make it a prime location for digital nomads and professionals on temporary assignments.
- Miami, Florida: Miami’s position as a business and travel destination, along with its robust tourism industry, makes it ideal for midterm rentals, especially for professionals and seasonal residents.
- Nashville, Tennessee: As a growing city with a strong entertainment and healthcare sector, Nashville is attracting more professionals in need of temporary housing. Its affordability and access to major industries make it a top choice for midterm rental investors.
- Denver, Colorado: Known for its outdoor lifestyle and robust economy, Denver continues to attract a mix of tech professionals, healthcare workers, and travelers. With a high demand for flexible housing, Denver is a top city for midterm rental investments.
Explore innovative models
As the midterm rental market expands, platforms like PadSplit are revolutionizing the landscape by connecting property owners with qualified tenants. PadSplit specializes in transforming single-family homes into shared living spaces, meeting the rising demand for affordable, flexible housing.
PadSplit’s unique model offers several key benefits for investors:
- Increased net operating income (NOI): On average, PadSplit hosts see a 2x to 2.5x increase in returns compared to traditional rentals.
- Higher revenue and lower expenses: Compared to short-term rental platforms, PadSplit typically offers higher revenue potential with fewer property management expenses.
- Simplified management: PadSplit’s platform streamlines the rental process, reducing complexities associated with traditional property management.
Proven midterm rental success stories
Let’s dive into some eye-opening success stories that showcase PadSplit’s game-changing potential:
- Chris, the founder of Dream America, saw his monthly income grow from $5,400 to over $25,000 after converting multiple properties to PadSplit.
- Brenda, a former Airbnb host, reported a 150% increase in monthly income after switching to PadSplit due to regulatory changes in her market.
- David, an investor with a background in short and long-term rentals, transitioned to PadSplit’s midterm model and achieved 100% occupancy across three properties while experiencing less financial volatility from tenant turnover.
- Ray and Orianna, a couple who transitioned from Airbnb, now manage seven PadSplit homes with 47 doors, generating over $36,000 in monthly revenue. One of their 8-bedroom PadSplits brings in more than $8,000 per month.
These are just a few examples that underscore PadSplit’s ability to maximize returns while navigating market shifts and regulatory challenges. For investors looking to optimize their real estate portfolio, PadSplit offers a compelling alternative to traditional rental models, combining the stability of longer-term rentals with the flexibility and higher returns typically associated with short-term rentals.
Transform your portfolio
As we approach 2025, midterm rentals present a compelling investment opportunity for property owners seeking both high returns and reduced management headaches. The growing demand for flexible living arrangements, combined with economic shifts and demographic trends, positions midterm rentals as one of the top real estate investments for the coming years.
By tapping into this emerging market, investors can enjoy consistent cash flow, fewer vacancies, and the ability to adapt to evolving tenant needs. Platforms like PadSplit offer an excellent entry point for those looking to capitalize on the midterm rental trend.
Ready to explore the potential of midterm rentals for your property? Check out PadSplit’s earnings calculator at PadSplit Earnings Calculator to see how much you could earn by converting your property into a midterm rental.
