Midterm contract with construction company

[Floris V.]

Hi! I have a midterm rental in Temple and a construction company wants to rent it for several months. I’d be contracting with the company and listing the occupants in the contract. Anything important I should include when contracting with the business? It’s my first time, my other unit just rented through Airbnb.

[Miguel Del Mazo]

Congratulations.  In our MTRs, we've really seen a lot of success with renting to construction crews passing through our neck of the woods. 

I know the question is mainly focused on what sorts of special protections you will need as a landlord with a lease as opposed to a longer-term AirBnB booking, so let me answer that first.  You should use a state-specific lease that is clear regarding the start and end dates, the monthly rent, the fees that will be charged (ex. pets) and those that may be charged (ex late fee), the amount of the security deposit, and a clear list of rules associated with the property (no smoking inside is a big one as are rules related to parking). Since electricity and water is included in our rent, we also have a clause stating that if the monthly bill doubles compared to the month-comparable bill from the prior year, then the excess will be assessed as a fee. It's never been a problem, but with the rise of cryptocurrency mining (electrical intensive) and some specific types of indoor horticulture activities (electrical and water intensive), we felt it would be good to hedge against those admittedly small risks. Basically, you should treat an MTR lease just like a LTR lease, with some small adjustments because you are providing utilities and furniture.

Another side of your question ("anything important I should include when contracting with business?") is what should you provide when dealing with a business. You should provide the best possible experience for everyone involved in the process of renting your space. Business to business tenants can be some of the best paying residents you will ever have, if you treat them well. 

Think of the rent you can charge as a value proposition: what does the resident get when renting from you? The STR guest wants a nice vacation. The medical traveler wants to work at the local hospital. The insurance company wants to fulfill its obligations to the insured, and the construction company wants to keeps its employees happy, working and retained while they travel to a job site. All of these entities have a budget. The STR guest doesn't expect to earn anything beyond their regular pay during their vacation. The traveling nurse is being paid a premium, but that premium has shrunk since COVID, and the traveler often gets to pocket any part of the stipend not spent on rent (i.e. you). Both of these avatars are very cost conscious. The insurance company has a limit to what they will spend based on the contract they have with the insured. These contracts are often quite generous, but there is still a clear budget. A business that is looking to place employees into an area will value their housing based on the expected return to the business. The theoretical cap on what a business could earn placing the right employees into the right job site is huge. If a job needs a crew or individual specialized enough that importing them to an area is required, then they are likely part of a high-value deal. Quibbling over a few hundred, or even a few thousand, dollars in rent could cost the business tens (hundreds?) of thousands of dollars in lost productivity, so the business is likely a lot less price-concerned than other residents. That doesn't mean that the free market is thrown to the wind though. There will be competitors in your market that offer viable housing options, so how do you capture these valuable contracts?

You must understand the needs of all the parties involved in a business to business lease. The people who will be staying in your unit may be different than your point of contact at the company booking who may be different than the individual responsible for paying the rent. Treat everyone in this chain professionally, respectfully, and quickly. The booker is less concerned about the price as they are getting the workers' housing settled efficiently. The folks staying in your unit want a seamless transition to their new living quarters, and the person paying wants an easy way to cross out that line on their to-do list. Understand and meet all the needs of everyone involved and you will stand out from the crowd of competitors in your market. As an added bonus, doing all of this well can often land you on the "vendor list" of a company, putting your contact number as the first call to make when placing the next crew passing through.

I apologize for the long-winded reply as you probably know and understand all of this, but there might be a reader that doesn't.  These "b2b" contracts and contacts are incredibly valuable, so cultivating them is important.

A good lease protects your interests, and being a good "B2B" landlord will serve them.