We most often forget that the fundamentals of real estate still apply when looking to scale your mid term rental portfolio. Now our portfolio that we focus on is primarily on insurance. So how we buy all of our homes are very strategic, and we keep in mind the silver tsunami. Alright. What is it?
What do I mean by that? Okay. Cool. So when we think about growing and scaling, there are multiple ways to grow and scale in real estate. We like the idea of ownership because we get the upside of equity, cash flow, tax advantages, etcetera.
However, some have used the strategy, which is very well known, which is called co hosting, very common in a a short term rental industry, which can be utilized. And as a matter of fact, it gives you an upper hand advantage when you understand the mid term rental model. When you pitch to your homeowners with your cohosting, for those of you who are not familiar with the cohosting, it means that you’re reaching out to a homeowner who already has an established property fully furnished, or maybe you’re looking to have them furnish it respectively in a way that’s going to finish very well. Not not talking about the bare minimum furnishing. We’re talking about short term rental Airbnb like furnishing.
And then you reach out to them and you let them know that you actually have 2 strategies which most people do not know in the marketplace. You can do the short term rental model and you can do a hybrid, which means that you have direct relationships with these insurance companies. And if you’re just getting started, you can say that you know exactly where to list your property and you just need permission as part of this deal. You will be doing all the leg work of host of of of listing these properties in the right databases to get in front of who we call the relocation specialists, the relocation agencies who are looking to relocate families that are displaced due to unforeseen events, due to flooding, fires, etcetera. Right?
So that’s a nice pitch that you can add to your pitch deck when you’re looking to land a contract on the midterm rental insurance. So when you’re thinking about scaling, you can go to co hosting realm. And if you’re in the ownership realm, there is a way that you can do this. Right? We typically like to focus on single family homes.
Right? Now I have a buddy of mine that actually bought a 4plex who’s close to a hospital, who’s doing this, you know, he’s got one ones and who’s doing this mid to mental play, and he’s also landed a few insurance contracts as well. Keep in mind, the mid to mental umbrella is a broad one. The mid term rental doesn’t need to mean that you’re in your insurance space, although we love to optimize for that first because it is one of the most lucrative ways that your property can generate money because these insurance companies are willing to pay a premium to relocate a family because there are less alternative options. But, however, there’s still other areas where you can dabble in the midterm mental.
We had someone in our master mind group literally get pilots that appeared. If you’re currently getting value from read this article, you’ll wanna make sure you take a second and click below to grab the Midterm Rental Insurance Blueprint to help accelerate your process in being able to land these midterm rental insurance contracts with respect to your marketplace. Probably come in a specific region. You could have you could have the the the army.
You could have you could have, you could travel nurses, you could if you’re close to a hospital. So remember, the fundamentals of real estate still apply. So keep the exit strategy top of mind when you’re looking to make a decision on either co hosting, managing, or purchasing a property. Our fundamentals, we like to be within 20 minute 20 minute proximity to a metro city because we wanna be able to, if we don’t have an MTR contract, be able to take in the, you know, people coming in for conferences, people coming in to visit, people coming in for for even games, whether it’s baseball games, you know, the Metro Atlanta. There’s different areas where the Braves play versus where the Atlanta Hawks play.
You wanna get people coming in for conferences. You wanna get people coming in for attraction. You wanna get people coming in for concerts. You wanna, I mean, we want all of the above because we wanna increase our chances. So when we’re thinking about scaling a portfolio, we’re strategically also thinking about, you know, where do we have most of our properties, And we don’t necessarily we’ve actually turned down deals where we don’t necessarily wanna buy the blog because when we’re looking to relocate a family, we wanna give them options with respect to the proximity of where they are looking to relocate.
Right? So I don’t wanna start competing where I have 3 options to offer them on the same blog. I wanna be able to say, you know, when there’s inquiries coming in from left, right, and center, I wanna be able to say, well, this property might be best for this location. This one might be best for this because most relocation companies are looking to displace families within the 5 mile radius and my extent to 10 if they don’t have an option. But for that reason, we’re very strategic in how we invest where we don’t necessarily wanna buy the block.
And we wanna buy maybe the city, maybe by the, you know, the state, but we do want them to be scattered. Now the criteria that I go with goes back to the fundamentals of real estate location, location, location, location. While we do have some properties that are still out in the rural areas, it’s not too far out. Now keep that in mind that the rural areas are still an opportunity that usually is a pain point for a lot of the relocation specialists and agencies or even families looking to relocate because there’s not as many options. But keep in mind that there are many options because there’s not as much volume out there.
So, yes, it is a big problem, but you also wanna be able to catch as much volume as possible when it comes to increase in request and also make sure that the short term rental numbers always add up. Anytime we’re looking to scale, it’s the same fundamentals. The short term rental play must be in play. Can regulations change in the future a 100%? But when I’m going into it, I’m doing my due diligence to understand, you know, do you have to get licenses in this market for short term rentals?
Okay, great. You know, what is the process? Is there a waiting period? Is there a premium to get in? Are they looking to change it down the road?
It might be good to be grandfathered in. I might use that as an advantage. These are all the questions I’m asking because it does matter what the regulations are in that specific county or state or city. Whatever it is, you wanna make sure you’re very clear on that because if you don’t have the option to do a short term rental on the exit, to me that’s a concern. Because while I can guarantee that I can optimize the property to the best of the ability to be able to get as many inquiries and much interest as possible, I, myself, cannot guarantee you that you will land a contract in a specific amount of time.
So that’s it’s not a matter of if though, it is a matter of when. However, I don’t want that when to mean 3 months of goose eggs and no activity. That is not what we do. We wanna be like the airline industries. Anytime we a plane takes off, we wanna have as many seats as possible.
We should never have our home sit empty. That’s why we the airline industry, has standby, and that’s why we have hybrid, and we do short term rentals in between our midterm rental stays. So that is the way we’re looking to scale. Now the type of properties that we buy, we like to solve big problems. Therefore, it’s really important for us to at least have 4 to 5 bedroom homes sweet spot.
We love to have 6 6 to 7 bedroom homes too. That’s another super sweet quote. That’s something that we don’t have in our portfolio yet, but that is, again, 4 to 5 bedroom is a sweet spot. Why? Because when you’re solving a larger problem, you get paid at premium.
So get in where you fit in. That’s part of what we do as well. And keep in mind, house hacking can still apply. I truly believe if you’re watching this and you’ve been in your either you’re renting or you’ve been living your property more than a year, keep in mind that there is no there is no limit as to how many primary residence you can have at a time. So it’s very important that you look at your closet.
And keep in mind, you can always call it primary house hack. It is not talked about enough. And if you were like, hey. You know, 4 or 5 bedroom home in my market is very expensive. Well, what’s stopping you from putting 3.5% down on an FHA loan or 5% down primary residence, live in it for the year, even house hack it for the year.
Right? No one stops you from being able to rent your home on Airbnb if it’s a primary. Right? And then a year after, whatever your clause says. Right?
Because remember, they they say you have to have the attention to live there, but it doesn’t stop anyone from, again, changing changing properties if for whatever reason. But your your lenders are gonna wanna have a reason why you’re moving. Maybe you’re starting a family. Maybe you’re deciding to upgrade and change your lifestyle, move down to a different town, change cities. There is no limit on that.
Right? So while the rule does state that you must live within a year, have a look at what your clauses say. Speak to your lender about it. Understand. Right?
Ours had that in many different properties that we bought, so we follow that rule. As soon as it’s a year, we get into a new primary. Right? Another way to how hack your portfolio for those of you who are just starting out too is if you’re gonna do that, there’s power in having a remote job if if doable because there’s never a question about your change of employment because you work remotely. That’s another big hack not often talked about.
If you do have that luxury to work remotely, don’t let it go to waste because it means you can start going from primary to primary, relocate relocate every year. And that is one way that you can screw your portfolio in addition to using, like, 10% down payment for vacation home loans. You know, again, there’s a lot of different products out there that you can use. That’s d DSCR loans. That’s that’s service coverage ratio loan where essentially they run the numbers like an Airbnb.
That’s why you’re gonna want your numbers to work for Airbnb because that’s how they’re gonna lend to you. And then you can also do a combination of a hybrid. That way, there’s many different ways, but it goes back to location, location, location, and then the asset asset type that we like. 4 to 5 bedroom, master on main, garages, fenced in backyard, no carpet, and washer and dryer on main. Brake style homes, we do like as well.
It’s a good finish. We stay away from stucco. We also wanna make sure that others keep in mind, the silver tsunami, saving the best for last. There are a lot of people that are gonna be above the age, and you’re not gonna be able to go up and down the stairs. So we do like to buy a lot of bungalows.
We do like to have additional, accessible basements that do walk out to the ground level. Right? Because this additional space, you might be paying for a 3, 2, but you really do have a 5 2. Right? And again, that’s another way to house.
Another way that we buy duplexes strategically is about having 2 separate entrances, 2 separate kitchens, a door in the middle that you can open or close. And that’s now a huge upsell. Down the road, you have have multiple exits where you could turn it into a duplex, or you can have a 5 bedroom listing and then a 3 bedroom listing at the top or or or upsell them from a 3 2 during the stay to, hey. You can upgrade and get the suite downstairs. We’ve done this time and time again.
There are multiple ways to scale. Do not sleep on your options. Make sure you continue to educate yourself because when you do have this model, you’re giving yourself an extra extra level of comfort. And even when you do have your leases and you run your leases and it’s time to get in a loan to loan, if you’re showing them MTR income, now that’s gonna play in your favor because that’s going to really help your debt to income. It was respect to how much a debt service and how much coverage you’re actually getting on these rentals.
Like, I remember showing a lender what we’re getting there, like, wow. Very, very impressive. And that really played in our favor for our numbers. So make sure you scale strategically. Always keep the end in mind.
Have an exit strategy. Remember, it’s all about serving a problem, a large window, so that we can get highly rewarded and compensated for doing so. If you got value from this article, make sure share this article, the secret to building your brand in the mid term rental insurance space.