Landlords who turn their rentals into corporate housing—renting a furnished apartment or home to a business—can make eight to 10 times more money than they might with a typical rental.
Corporate housing is most appealing to people who travel for work and are away on business for weeks or months at a time, and it’s a different style of housing. In addition to being furnished, all utilities and other services are included. It’s like an exclusive hotel without daily housekeeping.
You can customize your corporate housing to appeal to clients who want a luxury environment, white and blue-collar employees who prefer a homier environment, or insurance companies that need to house displaced families for extended periods of time.
All of these options can be highly profitable depending on how you decide to run your corporate housing rental business and what the competition—hotels, AirBnb, and other corporate housing in your town—offers.
Why is corporate housing so profitable?
The benefits of corporate housing manifest themselves when longer-term, temporary housing isn’t an issue.
Your goal in the corporate housing arena is to create a rental that’s 40% to 50% less expensive than a benchmark hotel for a month stay. If a hotel room is $100 per night per person, then price your offering at $50 per night per person. If you’re offering a decked out three-bedroom, two-bath house, you might charge $150 per night or $4,500 per month.
Compare that to the $1,500 monthly rent a typical landlord might collect and you’ll see the financial gain that can be made.
Understanding corporate housing
|What||Increase profits by providing corporate housing.|
You can get two or three times the normal long-term housing rates.
|Increase net income by|
|Basic components for luxury corporate housing|
|Basic components for mid-level corporate housing:|
|The extreme version||Convert your rental house into a luxury corporate rental and include a luxury vehicle in the rental package.|
|Possible new income streams|
|Steps to implement/test|
Who to target
Write an introductory information letter to the HR manager of the largest companies in your rental’s area. LinkedIn is great for networking with HR departments.
See who has a fleet of trucks at the hotel nearest to you. Send a letter to the company and leave an invitation on the trucks.
Follow the progress of a large construction project that goes out to bid. This information is kept on your city or county’s website. Contact the winning contractor and pitch your housing option to them.
Consider blue collar-type clients. Construction workers and project managers take long-term assignments away from their homes. Crews working on public works type projects are typically paid per diem based on the US Government Services Administration. Check the gsa.gov website to find the current per diem rates for your area.
This group may have a different set of need than high-end corporate clients. Many workers are willing to share a bathroom, so a company may be able to place three or more people in a three-bedroom, two-bath house. Consider offering weekly housekeeping and on-site laundry.
Check out Corporate Housing By Owner for examples of housing for large companies. Corporate Housing By Owner benchmarks their prices based on high-end hotels. Yes, this means big money.
POWER TIP: Having one consolidated bill is a huge benefit to companies, and corporate housing has that edge over hotels. Figure out how to make your target company’s accounting department happy, and use Cozy to collect rent.
Increased marketing expenses
You’ll need to maintain a decent website to operate in corporate housing and to be considered a serious player. Do what you can not to appear as a Ma and Pa type operator.
Higher cleaning costs
Blue collar types work in non-office environments, therefore they bring in more dirt. Your housing offering needs to be able to withstand dirtier clothing and foot traffic.
Luxury rental clientele are very demanding. Executives expect to receive the VIP treatment they’re paying for. It’s critical that there are no mechanical breakdowns or inconvenience during their bookings. This business model is lucrative but it’s not passive.
Cost and projected revenue
In places like Silicon Valley, housing prices and rents are astronomical, and the rates a corporate housing provider can charge are sky-high as well.
A good rule of thumb is to expect an all-inclusive furnished corporate unit to rent for two times the unfurnished market rent. Although you never want a vacancy, when operating luxury corporate housing, the number of days of lost rent is not as meaningful a factor as it is in the traditional landlord world.
Rent for a corporate home will vary seasonally and spike up to three times as much during festivals and times of high demand. Catching the highest demand times may more than exceed a year’s worth of market rate rents.