Request from corporation to rent STR "exclusively"

[Glen R.]

Hey Everyone

I glanced through the forum and did not see a topic like this so hoping you can provide some insight/suggestions!

I received a request from a corporation who wants to rent our place and lock in an exclusive agreement where we can't rent to anyone else during the contract period. We are free to use the place for our own purposes when it is available. They said they have a budget of $30,000. Problem is, I run about $40,000 in expenses. They are OK with us telling them how many months the $30,000 will last. We started renting the place last summer so this is our first full year and are projected to bring in $40,000. So, conservatively, we will break even but I think there is a good chance for us to be in the black.

They said they worked this model with someone else for 2 years and would be happy to pass on their information as a reference. I have already confirmed the place they were talking about is on VRBO and is very comparable to our place so it will be a good comparison.

Has anyone done this before and have any feedback?

All help/suggestions is appreciated!

Glen

[Glen R.]

Great stuff everyone! There were a lot of details that we covered so it was hard to list everything in the original post. 

@Paul Sandhu - they will require their employees to reserve the place in advance and we would use Google calendar to track reservations. So there would be the normal turn around done on the place with cleaning.

@Jon Crosby - you touched on an area that raised a lot of questions like, what are the tax consequences? I would think I no longer need to pay county/state hotel taxes and would want to make sure they know why they are no longer receiving payments from me. I would assume this would convert to an LTR scenario for taxes but need to confirm with my accountant. Thanks for the nugget about tenant's rights! Who would be best to check with about that? I wish I had asked why they stopped the prior arrangement but at least they are going to send us the last owner's information so we can talk to him. They did a 9 month lease and a 14 month lease with him in the past.

@Chai Xiong - I have been running different scenarios and was thinking it would be great to have them pay for all expenses plus 10%. I could live with that!

@Andy O'Neal - since this is a perk they are offering their executives I think they basically came up with a budget they were comfortable spending for the perk and then will back into how many days that will get them, then pass on the time frame to their people to book. Now, the number of days for the price will be where the real negotiations will begin!