Short-Term Rentals (STRs), Mid-Term Rentals (MTRs), and Your Rental Property

A lot of the long-term value of an Airbnb is determined by the term itself. Both Short-Term Rentals (STRs) and Mid-Term Rentals (MTRs) can work – it just depends on property location, target market, operational capacity, and tolerance for regulatory complexity. This article runs through all those considerations so you can make the right decision for your portfolio.

Short-Term Rentals (STRs), Defined

Short-term rentals (STRs) are residential properties rented out for brief periods, typically ranging from one night to several weeks, with stays usually under 28-30 days. STRs function similarly to hotels in that they cater to travelers, tourists, and business professionals seeking temporary accommodation.

Listings are commonly advertised on platforms like Airbnb, Vrbo, and Booking.com, where property owners can market their spaces to a global audience. This rental model often commands higher nightly rates compared to traditional long-term leases, making it an attractive option for property owners in high-demand tourist areas or urban centers. However, the trade-off includes higher turnover, more intensive management requirements (cleaning, guest communication, maintenance between stays), and the need to comply with local regulations and licensing requirements.

Mid-Term Rentals (MTRs), Defined

Mid-term rentals (MTRs) are residential properties rented out for extended periods that fall between short-term and traditional long-term leases, typically ranging from 30 days to 12 months. These rentals are designed to accommodate guests who need temporary housing for longer durations, such as traveling professionals, corporate relocations, students on internships, or individuals in life transitions.

MTRs are often furnished and include utilities. You could consider it a more home-like experience than a hotel yet still more flexible than a standard annual lease. Property owners benefit from reduced turnover compared to STRs, lower management intensity, and more stable occupancy rates. It's worth mentioning that MTRs typically face fewer regulatory restrictions than short-term rentals, as many jurisdictions only regulate stays under 30 days.

Why the Difference Between STR and MTR Matters

The difference between short-term rentals (STRs) and mid-term rentals (MTRs) matters because it directly impacts profitability, operational demands, regulatory compliance, and investment strategy. As mentioned in the definition above, STRs typically generate higher nightly rates and greater annual revenue potential, but require constant guest turnover, intensive management, and strict adherence to municipal licensing and zoning laws. MTRs, by contrast, offer more predictable income streams with significantly reduced management overhead and fewer regulatory hurdles, though often at lower monthly rates than what multiple STR bookings might yield.

Your choice between these models affects everything from tax obligations and insurance requirements to target market positioning and long-term business sustainability. Selecting the wrong rental structure can mean the difference between a thriving business and regulatory fines, vacancy struggles, or burnout from operational complexity.

Also remember short-term rentals are specifically regulated by policies imposed by the City of Toronto. That means if choosing this structure, you'll need to follow the parameters below.

• Pay a registration fee of $375
• Collect and remit 8.5% Municipal Accommodation Tax (MAT)
• Post City-issued short-term registration number on all property listings
• Provide guests with instructions on how to contact emergency services
• Provide guests with an emergency exit plan
• Short-term rentals are only allowed for a principal residence
• Rent up to three bedrooms in a principal residence for an unlimited number of nights per year or an entire home for up to 180 nights per year
• Choose between registering as an entire-unit short-term or partial-unit short-term rental operator for the duration of a registration period (you can only switch your registration status upon renewal)
• Short-term rentals in a secondary suite must be within a principal residence

Switching Between STR and MTR Before the Winter Season

STR activity plays a significant role in the national accommodation services subsector, rising in revenue share from an estimated 7.0% in 2017 to 15.2% in 2021. Statistics Canada says there were over 355,000 active STR listings in the country in 2023. But given its unique benefits and drawbacks, the structure competes with MTRs in prevalence.

In fact, many entrepreneurs switch between STRs and MTRs as strategies, seasons, and markets change. It might make more sense to operate as an STR during high-demand tourist seasons (summer festivals, holiday periods, major events) when you can command premium nightly rates and maintain high occupancy. However, as winter approaches and tourist demand declines in many Canadian markets, transitioning to MTR bookings can provide stable income through the slower months without the stress of constant marketing, guest turnover, and fluctuating occupancy rates.

Seasonal pivoting allows property owners to maximize revenue during peak periods while ensuring consistent cash flow during off-peak seasons. The key to executing this transition successfully lies in timing your shift appropriately - ideally securing MTR tenants before your STR demand drops - and using the right platforms and tools to manage both rental types effectively.

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The most resilient rental businesses are built on flexibility. As Toronto's regulatory landscape continues to evolve, tourist patterns shift, and economic conditions fluctuate, your ability to pivot between rental models can be a competitive advantage. Remember that the rental strategy you choose today doesn't have to be your strategy forever, and remain open to transitioning when market signals suggest it's time.