While corporate housing can be quite lucrative, it’s not the right strategy for everyone. If you are an investor looking to purchase a rental property, review the following to determine whether you and the property are the right fit for corporate housing or whether the property might be a better fit as a traditional long-term rental.
|Location||Corporate housing thrives in urban and business areas where executives are likely to travel. It also does well near hospitals and universities, which tend to bring on temporary staff or relocate professors or doctors to the area. (These may not be traditional rental areas.) If your property is in 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 with 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 receive payment 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 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 easygoing and enjoy earning higher returns overall, you may have the right personality to manage a corporate housing rental.|
|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 1 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. AvenueWest Corporate Housing is a full service property management program for CHBO Complete™ properties that is available in various markets nationwide. Visit AvenueWest.comfor more details.|