If you’ve decided that corporate housing is right for you, here are some important considerations to make beforeyou purchase a property specifically for use as a corporate housing rental.
Evaluate Price Per Bed, Not Square Foot
|Evaluate the price per bed, not price per square foot.While some people think more space or a bonus room is a great perk for their own home, keep in mind that those features are just added liability in a home you plan to rent.Purchase the least square footage with the most number of bedrooms. Just like a hotel, when you rent out a corporate rental, it’s priced per bed, not by square footage.|
|Avoid First-Floor Units||If you’re purchasing a condo as a rental property, avoid first-floor units. People who don’t know the city may not feel as safe in a first-floor unit (which can negatively affect your rental success), and often people will use a first-floor rental to advertise a business that they may conduct in the unit.|
|Location Matters||Location. Location. Location.Location can single-handedly ensure your property is rented continuously. Look for homes in urban areas, near train stations and airports, and close to universities and hospitals. Typically, these locations rent well and have the best resale value.|
|Functionally Obsolete Homes Can Make Good Rentals||Don’t rule out functionally obsolete properties.Sometimes a property that appears to be a poor long-term home is a perfect short-term, furnished rental home. For example, homes with tiny closets or outdated kitchens make ideal furnished rental properties because a corporate renter may not need all the space or features. Moreover, these properties are usually less expensive to buy and provide good cash flow.|
|Views and Amenities Matter||When people are visiting a new city for business or pleasure, they want to enjoy all that city has to offer. Corporate tenants like city views, covered parking and free gym access.Keep these things in mind when choosing a desirable corporate rental property.|
What kind of return on investment can an investor in this space expect?
That is the puzzle question of the century. And there are a lot of moving parts and each market is completely different.
In a market like Fort Collins, Colo., which you normally would consider a quieter market, you might be able to buy a two-bedroom condo for $175,000 and then you may be able to turn around and rent that property as corporate housing for $3,500 a month, where if you were renting it unfurnished, you might be able to get only $700 or $800 a month for it. AvenueWest Managed Corporate Housing works with a lot of investors across the country and believes corporate housing rentals are an essential element to an investor’s portfolio diversification. For example, if you are a full-time investor and this is all you do and you watch your properties 100 percent of the time, then sure, make your whole portfolio corporate housing, if that’s something that’s interesting to you. But normally, you see it as: if you have 10 units, take seven of them, rent them unfurnished, get consistent rent on them, understand what that is, and then use three properties for corporate housing as your high growth assets, just as you would buy internet stocks or technology stocks.
AvenueWest Global Franchise has emerged as the industry’s leader in the managed corporate housing business. Founded in 1999, AvenueWest, had the mission to provide high quality condominiums, townhomes, lofts, single family homes and apartments to meet the extended-stay executive housing demand by professionally servicing a unique niche of business travelers with investment owners’ properties. AvenueWest Managed Corporate Housing and now AvenueWest Global Franchise, LLC were built to provide monthly lodging options and increased opportunities for individual real estate investors.
AvenueWest Corporate Housing, Inc., started as a small real estate management company but quickly grew to the largest provider of corporate housing rentals in Colorado and is now the foundation for the national expansion of AvenueWest Global Franchise. This year AvenueWest Corporate Housing is celebrating its 18thanniversary of doing business and providing solutions for property owners, corporate travelers and business owners alike. As the industry continues to grow and provide quality lodging solutions investors can be hands on with their investments, hand off with their investment by utilizing a full service managed corporate housing company and can even develop a business through the AvenueWest Franchise model.