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Midterm Rental
A furnished property rented for 1-6 months, often to traveling professionals or relocating tenants.
Definition
Midterm rentals fill the gap between short-term vacation stays and traditional 12-month leases, typically renting for 30 days to 6 months. Common tenants include traveling nurses, corporate relocations, insurance displacement cases, digital nomads, and graduate students. Midterm rentals often generate 20-50% more revenue than long-term rentals while avoiding many of the regulatory restrictions placed on short-term rentals. They also experience less wear and tear than STRs and have lower management intensity. The trade-off is more turnover than a 12-month tenant and the cost of furnishing the property.
How This Relates to DSCR Loans
Most DSCR lenders underwrite midterm rentals using long-term market rent from the appraisal, even though actual income may be higher. Some lenders are beginning to recognize midterm rental income.
Related Terms
Short-Term Rental (STR)
A property rented for short stays (typically under 30 days), often listed on platforms like Airbnb and VRBO.
Cash Flow
The net money remaining after all income is collected and all expenses and debt payments are made.
Market Rent
The rental rate a property would command in the open market based on comparable rental properties.
Vacancy Rate
The percentage of time a rental property is unoccupied and not generating income.
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