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Could the Mid-Term Rental Market Become the Next Investment Goldmine?

·4 min read

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

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The need for dedicated mid-term rentals and suitable platforms for their management has been increasing rapidly over the past years. While there was always some level of demand for properties one could rent for one to twelve months, this market is developing exponentially without signs of slowing down. That’s why it’s worth looking into mid-term renting and learning about its current drawbacks and prospects.

Mid-Term Rentals Face Prosperous Days

With the rise of technology catering to communication, collaboration, and convenience, more and more people can afford the luxury of becoming digital nomads. These people work from home and choose to use the opportunity of remote work to travel around and experience different locations, cultures, and countries. And, the COVID-19 pandemic only further proved the feasibility of remote working for a variety of professionals, particularly in knowledge work.

One study shows that, in the US, the number of digital nomads grew from 7.3 million in 2019 to 10.9 million in 2020 — a 49% increase. Unsurprisingly, millennials make up 42% of all digital nomads, and Gen Z comprises 19% of the whole group (with many of them not even a part of the workforce yet). While many companies have switched to a hybrid work model in 2021, we can’t expect the number of people working from the office to return to pre-pandemic levels (at least anytime soon), especially as many employees have expressed reluctance or unwillingness to return to the office full-time.

Naturally, it’s not only digital nomads who might benefit from mid-term renting process improvements. Other large groups include exchange students and professionals going on lengthy business trips, together creating a sufficiently large market in desperate need of innovation.

A Lack of Dedicated Solutions for Mid-Term Renting

Ask yourself: What company comes to mind when it comes to finding a place to rent for a three-month or six-month period? The truth is, no business grew to become a household name for mid-term rentals yet.

Over the past decades, many platforms sprouted up to offer short-term and vacation renting, such as Airbnb (NASDAQ: ABNB), Booking (VIE: BOOK), and Vrbo. Some have been trying to enter the mid-term rentals game, albeit with little success thus far.

The main reason is that these platforms are not properly suited for those searching for a home to live in for longer than a few weeks. One hypothesis could be it’s simply a marketing issue, the basic perception of customers not considering these brands for mid-term rentals. Equally important, certain services need to be implemented — such as signing rental agreements with landlords. And, of course, there is a problem with exorbitant prices comparable to renting a hotel room daily.

The Fundamentals of Successful Mid-Term Rentals

The truth is this medium-length renting falls into a separate group, one too long to be considered short-term or vacation rentals, but under a year in length, so not counted as long-term rentals. And, the tenants’ demands for mid-term properties combine specific characteristics of both types.

Renters expect to sign a rental agreement to feel more protected, which is usually not the case with short-term rentals. They want to move into a fully furnished apartment. Also, if arriving in a new city, they expect the property to be in a central location while still paying a fair price, which wouldn’t be the case with hotels or Airbnb.

In addition, there are landlords to consider. Right now, many of them prefer long-term tenants, while others (and particularly sublessors) focus on short-term holiday accommodations.

“To make the process seamless for both parties, we need to educate landlords about mid-term renting. Many of them are not yet aware that it’s a viable business option, how to do it correctly, and that it’s not as complicated as one might think. We need to promote mid-length rental periods and create a platform suitable for landlords to manage their mid-term rentals,” says Oleksiy Lubinsky, CEO at Rentberry, a global renting platform.

What to Expect Next?

When it comes to mid-term rentals, certain issues and concerns remain unresolved. As the market is expected to grow, there is a high chance of a business emerging that will address all these requirements and create a clear and user-friendly solution.

One example of this is Rentberry, which aspires to fill the void with its new project, Flexible Living. Currently, the company is in the midst of a Reg A+ investment campaign on Start Engine, fundraising with the goal of acquiring properties and securing partnerships with landlords worldwide for mid-term rentals.

Only time will tell what the future holds for mid-term rentals, whether it’s just a pandemic-inspired fad or the new normal. But, one thing is clear — this market is definitely worth keeping an eye on, as we might soon witness a revolutionary, once-in-a-generation sort of breakthrough with mid-term rentals.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.

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