With more investors coming into the marketplace looking for good deals on real estate, we want to address what it takes to be a corporate housing landlord. While corporate housing can be quite lucrative and make your property stand out in a sea of available rentals, it’s certainly not the right strategy for everyone.
Ask yourself the following to determine if corporate housing runs in your blood:
Is Your Location Right?: Corporate housing locations can be quite different from properties that make great traditional rentals. Corporate housing thrives in urban and business areas where executives travel to often. It also does well near hospitals and universities, which tend to bring on temporary staff or relocate professors or doctors to the area. If your investment property falls into one of these locations, you may want to convert your property into a corporate housing rental and tap into these lucrative opportunities.
Do You Need Smooth Cash-Flow?: While you’ll typically get a higher annual return with corporate housing, you don’t necessarily get smooth cash flow. If you need money by the 2nd of each month in order to pay the mortgage, than corporate housing is not for you. Your place will be rented more sporadically and less consistently than a renter who signs a 12-month lease. In some cases, especially when you work with corporations vs. private renters, you may not get payment for 45-60 days.
Are You a Worrier?: Your rental property might sit vacant for part of the year (vs. having a locked in renter for 12 months like a traditional rental). Some people, by nature, 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 easy-going and enjoy earning higher returns overall, you might be just be the right personality fit for corporate rentals.
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 can be anywhere between 2-12 transactions on your property per year. That said, if you don’t want to be as active in the property’s management, then hire a good property manager to handle the nitty-gritty details likes transitioning the key and prepping the home for the next renter.
Overall, corporate housing takes a certain kind of investor. The rewards can be fantastic, but you have to be able to stomach a little more volatility. Happy landlording!