- Dana Bull has been investing in long-term rentals throughout her career.
- It is experimenting with a medium-term lease in 2025 to combat high interest rates.
- In general, medium-term leases offer higher income but require more management than long-term leases.
Dana Bull began building her real estate portfolio in 2012 when she purchased her first property.
Over the next decade, it expanded to more than 20 units in its Massachusetts market and hit financial independence sticking to the same general strategy: buying quality properties with upside and filling them with long-term tenants.
Bull, who is also a real estate agent and consultanttold Business Insider that she “swore off investing a few years ago.” Property management takes a lot of time, the mother of four noted.
But when a charming single-family home in Marblehead went on the market in the fall of 2023, it broke its promise.
“This little place in my town caught my eye and I really wanted someone else to buy it,” Bull said. “It was when interest rates were the highest they’d ever been, like 7.75%, so nobody wanted to buy anything. And I said, ‘You know what, I’ll do it.’
Listing it as a mid-term rental to combat high rates
Higher interest rates mean a higher monthly payment. For an investor, this can make generating positive cash flow more challenging.
To make the numbers work on her latest acquisition, Bull decided to experiment with a “mid-term rental,” which targets people looking to stay for a month or more but less than a year.
“It’s my first experience with anything other than a long-term lease. I’m kind of in uncharted waters, but it’s been great,” said Bull, who plans to test the medium-term lease strategy for at least 18 months. It’s more work than managing a long-term tenant, but she said she’s bringing in more income by doing shorter rentals.
She could earn even more if she had more time and could rent the unit herself, instead of working with an agent.
“I have a leasing agent who I pay a lot of money because it’s too much work to keep renting,” she said. “It’s a great strategy for anyone who has the availability to do the leasing themselves.”
The leasing aspect of the medium-term leasing strategy is the most challenging because it is less common than the short- and long-term strategy.
“If you want a long-term rental, you know you’re going to be on Zillow or you’re going to work with a real estate agent. If you want a short-term rental, you also have established channels: You have Airbnb, Vrbo,” Bull explained. “There’s a website called Furnished Finder geared towards mid-term rentals, but it’s not very popular and it’s not as big as something like Airbnb.”
She advertises her place on Furnished Finder, turns Zillow on and off depending on when it’s available, and sends mailers to the neighborhood.
It helps that she’s starting to understand her typical renter, she added: “The trend is that grandparents want to come and help with the kids, but the parents don’t have room in their house, or the grandparents want their own space. so was my target audience.”
Medium-term rent as a sustainable strategy for 2025
Bull doesn’t expect mortgage rates to drop in 2025. She also doesn’t advise that rates or other factors outside of your control dictate when you buy real estate.
“I wouldn’t base my whole plan around, ‘Well, I keep hearing rates are supposed to go down,'” she said, noting that current rates are in line with the historical average. “This is kind of a place where rates go down. So if they did go down, that would be great, but I wouldn’t be into it.”
If you’re financially prepared to invest in real estate in 2025, instead of waiting, use the numbers to see if a short- or medium-term lease might make sense in your market.
“Look at some alternative leasing approaches. Usually, they’re more profitable if they’re shorter,” Bull said. “One idea would be to start with something like an Airbnb, with the goal of transitioning after two or three years to something more passive, like a long-term rental.”
Real estate is a long-term game, she added: “You have to look beyond the first year – numbers are always going to be tight in the first year, no matter what the market conditions are – so what are your projections going into the year fifth?
“And then, what can you do at this time to make this property work? That would be focusing on neighborhoods and communities where you can balance both of these shows: It will attract a short-term tenant, but at the end of down the road, you may transition to a long-term tenant.”
It likely will, especially if it can refinance again.
Bull has already refinanced once, which took about $250 off her mortgage, she said: “I’d love it if it went down again and I could save another $250. At that point, I’d probably pass it on.” it on a long-term lease because it would be quite profitable and less of a headache, but for now I’m just experimenting for my own curiosity and want to understand more about this place.”
