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Jennifer and Paul Tessmer-Tuck started buying real estate in 2020 to supplement their income.
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They found success with midterm rentals, appealing to traveling healthcare workers.
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Midterm rentals can yield higher income than long-term leases, yet are easier to manage than vacation rentals.
Jennifer Tessmer-Tuck got into real estate in 2020 after a pandemic-era pay cut prompted her to seek another income source. The Minnesota-based OB-GYN started with what she already knew: buying a single-family home, the same kind of property she and her husband, Paul, had bought as homeowners.
Over the last five years, the Minnesota-based couple has grown that first investment into a 16-property portfolio, which Business Insider verified by reviewing closing documents. Along the way, they stumbled on a profitable niche: furnished mid-term rentals.
The idea came about when one of the first multifamily properties they acquired — a duplex — wasn’t performing as expected. Their plan was to clean it up, raise the rent, and lease it quickly. Instead, “it kind of sat there for a while,” Tessmer-Tuck told Business Insider.
Eventually, they rented out one side. For the other, she decided to try something different: furnishing it, renting it by the room, and targeting traveling professionals.
At the time, in the wake of the pandemic, there was strong demand from healthcare workers looking for furnished housing.
The property had previously brought in about $1,800 per side in traditional rentals, she said. After the switch, the furnished side generated roughly $3,900 to $4,000 a month, with the three rooms renting for $1,200 to $1,400 each.
Why midterm rentals are ‘the best of both worlds’
Tessmer-Tuck likes midterm rentals for several reasons. For one, they generate more income than long-term rentals. She said her furnished rentals now cash-flow about 1.5 to 2 times as much as her unfurnished properties.
While they may not be as profitable as short-term stays, which she’s also experimented with, they’re less hands-on and don’t come with the constant churn or guest expectations of a vacation rental.
“We found that the midterm tenants were way easier than the short-term tenants,” she said. Those guests often expected something closer to a hotel experience, while mid-term tenants tended to be more flexible.
“It’s kind of the best of both worlds, long term and short term,” she said, “because you get a bump in rent compared to long term, but you still get a nice relationship and ease of caring for the tenant that you don’t get with the short term.”