By Lew Sichelman
2:00 a.m. January 18, 2009
WASHINGTON — Sellers who are having difficulty finding buyers in the current apathetic market might want to consider entering their places into the corporate housing pool.
That’s what Doug Black did, and he couldn’t be happier.
When the Denver, Colo., businessman found it too difficult to carry two condominiums, he moved into the one he was renovating and put the one he was living in up for sale. But when he found no takers, he decided to list his fully furnished apartment with a do-it-yourself Web site called CorporateHousingbyOwner.com.
Black immediately landed a year’s lease with a vice president for Quiznos, who was transferring to the sandwich-shop chain’s headquarters near his condo. And since that lease expired in May, he has had several other, shorter-term tenants, including a delegate to the Democratic convention and a Canadian couple who were visiting their children during the holidays.
“In this kind of market, when things are slow, this is a good way to offset your carrying costs,” says Black, who works with casinos in Mexico. “It’s better to have it rented and generating a little income than to have it sitting vacant.”
In listing with Corporate Housing by Owner (CHBO), Black discovered a nearly $3 billion-a-year business, according to the Highland Group, an Atlanta, Ga.-based hotel-advisory firm. But despite its size, corporate housing is a segment of the housing market few sellers – or landlords, for that matter – even think about.
Kimberly and Eric Smith are trying to change that. The Denver, Colo.-based husband-and-wife team have been involved in corporate housing, a field long dominated by the likes of short-term housing giant Oakwood and the big hotel chains such as Marriott, since 1999.
Two years ago, the Smiths launched CHBO, a Web site dedicated to connecting individual owners with corporate renters. It isn’t the only site on the Web aimed at corporate travelers – condo.com and rentalspacenetwork.com are a couple of others. There’s even a trade group for landlords, the Corporate Housing Providers Association. But CHBO is the only one devoted solely to the field. The site currently includes more than 60 San Diego-area listings.
According to Kimberly Smith, the military is the largest user of corporate housing. The armed services relocate some 600,000 people a year. And since there is typically a one-to three-year wait for on-base housing, the overflow is always looking for short-term housing.
Traveling nurses are another big user. Some 200,000 nurses move about the country annually, taking two-, six-and sometimes 12-month assignments as they go. Relocating businesses, summer interns, sports professionals, traveling showmen, insurance-company adjusters, people undergoing extensive medical treatment and “snowbirds” are also frequent short-term renters.
“There are lots of different people who fit the corporate housing profile,” Smith says. “Even people who want to rent before they buy, or rent before they sell so they can put their houses on the market in the prime selling season, are good candidates.”
In the old days of corporate relocation, companies handled the entire move as a service for their relocating employees. Now, according to Smith, the trend is to hand transferees a lump sum and let them make their own deals. And since they control all the money, they can make their own choices.
For some, the choice is a less-than-satisfactory extended-stay hotel. But a growing number are opting to rent furnished homes or apartments. “It’s like choosing a garage over a parking lot,” the corporate housing executive says. “One is basically an oversized hotel room; the other is a fully outfitted private residence.”
According to the Highland Group, about 1,000 operators cater specifically to the corporate housing market. Together, they control nearly 78,000 units. But Smith says private homes are needed to increase the supply, especially where typical short-term housing doesn’t exist.
As corporate housing, your home would be occupied by someone who would be willing to show the house to would-be buyers and move out if someone actually decided to purchase the place.
“What have you got to lose?” Smith says. “As the owner, you get to make the rules and control the details, such as the length of the lease and when the place needs to be ready to show potential buyers. And you’ll be earning some income while you keep the house on the market. That’s an option sellers don’t otherwise have.”
One of the good things about corporate housing is that practically anything goes. “As long as it’s clean and easy to use, almost anything furnished works,” Smith says.
Still, not all houses fit the mold. For example, quality and security “count for a lot,” the expert says. “If the neighborhood doesn’t feel safe, the unit will be hard to rent.”
Also, if you want consistent occupancy, the place shouldn’t look like a dormitory. “It doesn’t need to be unique,” she advises, “but it should be decorated nicely.”
And simplicity “counts for everything.” Corporate renters want turnkey situations with low maintenance, Smith also says. “The don’t want any yardwork. They don’t even want to water plants.”
According to Highland, users of corporate housing pay an average daily rate of $116. Multiply that by 30, and the average monthly rent is $3,480. And the company says the average stay is 81 days, or almost three months.
Corporate users “will pay a premium for flexibility,” says Smith. “Simply because the unit is furnished and the lease is for a short-term, they will pay more than typical renters.”
Of course, what owners can charge will depend largely on where the house is located. In Phoenix, Ariz., for example, an unfurnished two-bedroom condo might fetch $900 a month, according to CHBO. But furnished, it would go for about $2,500 to a corporate user because of low availability.
In San Francisco, where there is a large, transient business market, an unfurnished unit might rent for $2,000 while the same unit furnished would go for $3,900.
Be forewarned, though, being a corporate landlord requires a lot more attention to detail than simply renting out a vacant house or apartment. You’ve got to provide linens, silverware – the works. (CHBO provides a list of things you’ll need to meet the standards of a typical corporate traveler.)
You’ll also need to be able to act quickly. “The biggest complaint we get is that owners don’t return calls quick enough,” Smith says. “These people need to show up next week, so they need to secure housing today. And they’ll want to pay by credit card, so you’ll want to sign up with a service like PayPal.”
Finally, be cognizant of your homeowner association’s rules, the tax ramifications and the legal requirements.
Some HOAs limit rentals to only one per year, for example, while others require that tenants must stay for a minimum of three months. Also, some states require owners to collect a lodging tax if the renter stays for six months or less.
Correction: A quote in last Sunday’s column about “greenwashing” was incorrect. Photovoltaic panels have been the subject of detailed analysis for decades, and the consensus has long been that over their expected lifetime, they produce far more energy that they consume in manufacturing. Therefore, PV panels deserve their reputation for being green.
Lew Sichelman is a nationally syndicated writer based in Washington. E-mail him at firstname.lastname@example.org .