- The Corporate Housing Market
- How Did COVID Affect The Corporate Housing Market?
- Is Corporate Housing Still Profitable?
- Corporate Housing Market Rent
- 9 Things To Consider When Starting Your Corporate Housing Business
- Corporate Lease For Residential Property
- Benefits of Doing Business With Corporate Housing Renters
- Challenges of Starting a Corporate Housing Business
- How To Fill Corporate Housing Rental Vacancies
- Billing and Credentials For Corporate Housing
- Corporate Housing Property Management
- Key Takeaways
In recent years, there has been a surge in enthusiasm for corporate housing and short-term rental businesses in general. The prospects are highly promising, especially as the economy grows.
Short-term housing options, be it corporate housing, vacation rental, or the other accommodation types, usually offer flexible lease periods and give all of the conveniences of home with the extra perks required for a traveling professional.
It may go by a number of different names like:
- Furnished Apartments
- Corporate Housing
- Executive Suites
- Corporate Apartments
- Executive Apartments
- Serviced Apartments
- Executive Rentals
The Corporate Housing Market
Corporate housing took authority over the short rental business not too long ago, as a way to create a steady, temporary living environment.
Entrepreneurs and employees that are on the road for projects, contract employment, or training looked for fully furnished flats. These were either corporate housing or extended stay establishments.
While this is still true, workers on the go are more diverse in terms of personality, requirements, and interests.
Traveling health professionals and government contractors used to rely on extended stay accommodation, but increasingly, apartment and condo communities are competing for their business.
Even vacation houses are diversifying their marketing efforts to appeal to both personal and business travelers.
How Did COVID Affect The Corporate Housing Market?
COVID-19 has led to widespread travel restrictions and non-essential cutbacks. As a result, when the pandemic started, the volume of new short-term rental bookings became low, and existing bookings were also canceled.
However, the amount of available short-term rental apartments did not change much. This means that property investors held up hope for the resurrection of the dying rental space business.
Is Corporate Housing Still Profitable?
Now that the restrictions have died down, monthly rental earnings from corporate rentals still generate a lot of money. Corporate housing is in great demand among executives and other professionals, resulting in generally high-quality residents.
Also, in comparison to other rental properties, executive short-term rentals often require less repairs and upkeep. This is an upside to corporate housing because, you won’t have to put too much resources into maintenance and repairs, which means more revenue for you.
Corporate Housing Market Rent
Pricing can be in the range of a long-term rental monthly fee and 50% of a comparably equipped 30-day hotel stay.
The broader the lease options, the more freedom you'll have to charge much more for one month and lower the monthly fee for lengthier stays.
For instance, if you charge $2400 per month, a two-month lease might be reduced to $2300 per month, and a three-month contract to $2150 per month. The same pricing flexibility applies to lease renewals.
9 Things To Consider When Starting Your Corporate Housing Business
Here are 9 things to consider if you're thinking about buying a corporate housing complex or converting existing long-term housing into your corporate housing business.
Do Extensive Research About The Corporate Housing Market
While owning a short-term rental (STR) property might be lucrative in the long run, it's critical to do your homework beforehand. For corporate housing, there are a variety of demand drivers to consider as well as specific expenses.
For example, you want to consider insurance, research liability coverage, tax implications, and the legal part of enforceable leases. You have to read about all these things and soak yourself up in the awareness.
You could even get in touch with other landlords as talking to experienced business owners about the market could be as effective as reading about the market.
Choose The Property Acquisition Strategy
Whether you want to buy or lease properties for your corporate housing business, there are three property acquisition strategies you can look into.
These strategies can help you with the concept of gaining profit from new remote work and accommodation trends.
Invest in a dedicated corporate housing complex
The most evident, expensive, and time-consuming option is to acquire an entire complex dedicated to corporate housing needs and accommodate only to clients in that area.
Convert a vacation rental into a corporate housing solution
This second approach can include catering only to the traveling professionals or providing the apartment as a mixed-use property depending on the season and market need. Generally, whatever the location's off-season is, it's a good time to promote and try something new.
Convert a single-family home or individual units
Though remote work is becoming popular, people are exploring moving for opportunities, reduced costs of living, and to escape high-density metropolitan regions.
Vacancy rates in conventional rental housing are expected to rise as well. Property owners and managers may be able to join the corporate housing market once tenants move out.
Consider The Location
Many people today want to invest in the market but find that the prices in their location are too exorbitant or that the ROIs are too poor.
The good news is that for long-distance real estate investing, there are many places to buy corporate housing properties with low costs and high cash flow.
Many areas in the United States share similar characteristics, such as strong employment markets, high rents, and growing property values.
When investing in property for the long run, it's critical to consider the bigger picture and consider corporate housing property demand and growth in various real estate markets. So before you buy that property, make sure you do proper research.
Generate a Good Corporate Housing Business Model
When venturing into real estate, you have to get your head straight into the game. Ensure that you generate a good business model that has no blurred lines.
Your business model is a clear representation of a business’s profit strategy. It specifies the items or services that the company intends to sell, as well as its target market and any estimated costs.
There are three types of business models that can be used for corporate housing, the fixed rent model, gross price model and net price model.
Draw Out a Good Corporate Housing Business Plan
Corporate Housing business plans often include comprehensive information and strategies that can contribute to the development of your business. A business plan isn’t something that should be done in a haste.
Make sure you and your team draw out a very good business plan for the sake of transparency. It could be with the help of some other third party professional. A business plan is also a good way to win investors over.
Read more: Corporate Housing Business Plan
Policies and Legislation
You need to make a commitment to remain up to date on the corporate housing rental policies and legislation in the country where your property is located.
The penalties can be harsh, and they differ greatly from one country to the next. You can bookmark some reliable websites in your main markets for future reference.
Consider The Capital and Budget
How much would it cost you to establish your corporate housing business? It's difficult to know for sure, but it's critical to start planning ahead of time to avoid any unexpected costs.
Preparation is required for any successful company launch. Even if you don't know precisely what those costs will be, you may and should start studying and calculating how much it will cost to start your company.
You have to consider expenses like:
- Training and certifications
- Listing fees
- Construction and renovation cost
- License and permit costs
- Utility and appliances
- Management and PMS costs
Analyze Your Potential Clients
Nothing makes your work easier as a business rental provider than choosing the appropriate occupants. There are several warning indicators that someone may be a difficult tenant, but they are often overlooked until it is too late. That is why screening your tenants is very important.
While the majority of people who complete a rental application are typically trustworthy individuals or organizations, it's critical to sift out those who aren't so that you can avoid problems in the future.
You can do this by:
- Verifying IDs
- Signing rental detailed agreements
- Asking how many people are going to be staying
- Canceling suspicious reservations
Also, you can adopt the use of short term screening rental solutions like Auto Host, it gives you leverage over unsuspected loopholes.
Execute The Business plan
Now that you have a comprehensive business plan, it’s time to start executing it. If you carefully follow your business plan, you shouldn’t have too much trouble establishing your corporate housing rental business.
Corporate Lease For Residential Property
A corporate lease is a lease for one or more residential units in which one corporation rents all of the apartments from the mortgage company and has the ability to sublease subtenants.
The most useful feature of a corporate lease versus a personal lease is the signiﬁcantly higher safety element.
Because the corporation in whose name the property is leased bears full responsibility for the occupier, there is no chance of any form of fraudulent activity under a corporate lease.
The rent is paid on time, and the property owner has a good probability of instantly finding another occupier from the same firm when the lease period ends.
Benefits of Doing Business With Corporate Housing Renters
Short-term rentals are not normally subject to the same rules as holiday rentals, which have experienced an increase in policies, particularly around charging and collecting occupancy taxes.
Because of the higher turnover rate, there will be more opportunities for routine inspection and maintenance, ensuring that your property stays relevant and in excellent working order.
Payment is frequently made directly by the company or a booking agency, rather than by the occupier, reducing the risk of rent arrears.
Finally, the corporate resident usually behaves in a courteous manner toward the house, neighborhood, and community.
Challenges of Starting a Corporate Housing Business
Sure, every investment comes with its own set of risks and challenges. The following are some things to consider:
- Long-term rental turnovers are more annual or seasonal, whereas routine marketing and networking are more regular for corporate housing.
- You are required to do regular lease signing, tenant screening, move-out inspections, unit screening, and all other turnover operations.
How To Fill Corporate Housing Rental Vacancies
You may advertise a vacancy offer on regular listing sites; just make it clear in the description that you are accepting month-to-month leases from corporate clients.
However, you may also attempt the following strategies:
- Create a network with HR departments of big corporations.
- Contact significant firms and organizations and inquire about being on their approved list of and short-term accommodation prospects.
- Check with your insurance company to make sure you're covered for this new venture, as well as to be included to their authorized list of housing options for individuals displaced by natural disasters or home renovations.
- Make use of short-term rental listing services like Airbnb, but make sure the minimum stay is set to 30 days.
- Hire a booking service like corporatehousing.com.
- Post your availability on social media sites like Facebook, Twitter and even Craigslist.
Billing and Credentials For Corporate Housing
Accounting departments are in charge of rent payments, and while a consolidated statement is a smart option, they may prefer an itemized bill.
Whoever is responsible for paying should not only sign a statement of responsibility but also tell the occupant that they are accountable for damages.
It's a good idea to have a duplicate of the renter's or company's credit card on file in case of damages, extra services, or cleaning. You may choose to charge a separate housekeeping deposit in addition to the conventional security deposit.
Before making any of these decisions, ensure that you check with the local and state regulations.
Corporate Housing Property Management
Booking Ninjas corporate housing property management system for corporate housing that caters to the demands of short-term rental businesses. Property owners, investors, and managers can benefit from our authentic property management services.
We help clients with a seamless property management experience, whether they provide vacation rentals, furnished flats, or corporate housing.
Year after year, the corporate housing market sector grows at a faster rate than the hotel industry. And now, it appears that a big new possibility is emerging, as organizations encourage remote work.
Investors interested in starting a corporate rental business should make sure they're ready to deliver high-quality rental properties and make effective marketing efforts to attract corporate clients.
Corporate housing, when properly managed, may result in substantial earnings and new prospects for property investors.