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Top 4 things to consider when deciding if your rental is best as a corporate housing rental or traditional unfurnished rental.

While corporate housing can be quite lucrative and make your property stand out in a sea of available rentals, it’s not the right strategy for everyone. If you are an investor looking to purchase the right type of rental property, review the following information to determine whether you and your property are the right fit for corporate housing – or whether your property may be a better fit as a traditional, long-term rental property.

LOCATION

Corporate housing thrives in urban and business areas where executives travel to often. It also does well near hospitals and universities, which tend to bring on temporary staff or relocate professors or doctors to the area. (Please note these may not be traditional rental areas.) If your property falls into one of these locations, you may want to make it a corporate housing rental and tap into these lucrative opportunities.

CASH FLOW

While you will typically get a higher annual return with corporate housing, you don’t necessarily get the smooth cash flow that you would from a tenant who is signing a long-term lease. If you need money by the second of each month in order to pay your mortgage, then corporate housing is not for you. With corporate housing, your place will be rented more sporadically and less consistently than a tenant who signs a 12-month lease. In some cases, especially when you work with corporations versus private tenants, you may not get paid for 45 days.

NERVES

Are you a worrier? Your rental property might sit vacant for part of the year (versus having a long-term, lease-committed tenant). Some people, by nature, worry about these kinds of details and may not have the stomach for investing in a short-term rental property. That said, if you’re more easy-going and enjoy earning higher returns overall, you may just be the right personality fit for corporate rentals.

TIME

Do you have the time? Corporate housing can take more time than traditional rentals because you will have to deal with turnover more often. There may be anywhere from two to 12 transactions on your property per year. If you don’t want to be as active in your property’s management (i.e. you’re not cut out for “by owner” management), then hire a good property manager to handle the nitty-gritty details like prepping the home for the next tenant. 

I work with an investor in that area who not only has his property full furnished for monthly corporate rental but he went above and beyond to make it a "wellness" property.  He is getting more rent than his neighbors and has a waitlist. 

If you are going to market them as a Corporate Rental there are guidelines that can help you connect with the right customer.  CHBO / Corporate Housing by Owner has a CHBO Complete checklist that you can get for free when you register all the information is in the resource library.  You can also check with CHPA / The Corporate Housing Providers Association.  I work with AvenueWest Managed Corporate Housing and we do property management for 30%, and we connect your property with our corporate accounts that we have developed over 20 years.  We currently have 13 local offices but nothing currently in your area.

@Jonathan Klemm

STR / Smith Travel Research, The Highland Group, Phocuswright are all market research companies that focus on hospitality and extended stay travel. AirDNA and All the rooms are on-line data collection companies that also follow residential hospitality trends.

Demand - Depends :)  I always like to talk about "Portfolio Diversification."  I like to make money but more than that I like to prevent losing money.  Also, there is the "PPD" factor - or Pain Per Dollar.  How hard do you want to work for your money?  Some markets have year round nightly demand, however in some markets having 3-4 monthly reservations that give the property an 85% annual occupancy could be a lot less work, a lot less wear on the property and at the end of the year could be more profitable if you know how to connect with the right business traveler.

Watching this market is my full-time job :)  I watch trends from the user group as well as the supply group.  There are a lot of changes happening in the market.  As a former President for the Corporate Housing providers association and having spent 8 years conducting and writing the CHBO annual corporate housing real estate report, you can say I am a data geek.  Over the years 40% of the occupants who stay in corporate housing are connected with a corporate relocation so that is an important industry to watch.  I also track the extended stay lodging industry as a basis for supply data.

Did you see the news about "Lyric"?  Airbnb just invested $160 million in this company that is doing rental arbitrage.  Sondor and StayAlfred are two other well-backed arbitrage startups.  I have been doing furnished monthly rentals for over 20 years and I can appreciate the potential income.  I would just advise that you spend time monthly watching business travel trends and watch as this type of rental option is getting more crowded so that you don't get caught with rentals that sit empty.  

Seasonal renting for furnished units: do you prefer month to month, entire season, or week to week?  

Great question - Start by understanding what lodging options are legal in River Beach.  These regulations seem to be changing daily.  Second, understand the "PPD" Pain Per Dollar - take time to understand the time commitment that you will need to make to manage shorter stays vs longer stays. Third, research local market seasonality, to maximize rates but also understand if you do shorter stays are there certain times in the year you will get large vacancies.  All the Rooms and Airdna offer rate data and trends and for longer stays there are a number of different corporate housing reports.

Last week I attended

the Serviced Apartment Summit in New York and both STR / Smith Travel Research and All the Rooms presented their findings on higher end extended stay lodging options. Their research found there is strong and growing demand for these monthly housing lodging solutions. Thanks for sharing your rental success.

On Facebook - Gypsy Nurse

https://www.facebook.com/groups/travelnursehousing...

PPD - Pain Per Dollar

Its not just what you make but what it takes from you and how it positively or negatively affects the value of your real estate.