How should I price my corporate housing rental property?Admin 7 Year Ago
“How should I price my corporate housing rental property?” “When should I negotiate, and when should I hold firm on my rates?” What are the most asked questions at CHBO? You got it, "What are the current Corporate Housing Rental Rates." Because these are the top questions we’re asked at CHBO, we’ve divided this topic into three sections in our CHBO Annual Report: Variance, Actual and Discounts.
Variance: Changes in Rental Rates
We asked respondents to evaluate their current rental rates compared to the previous year for the exact same rental property.
The great news is that 39% of respondents – an all-time high – report having higher or much higher rates in 2015. This number has been rising since 2013, and it’s significantly above the 22% reported in 2011.
Another positive sign... We saw a 3% decrease in the number of respondents who say their rental rates were identical to the previous year.
In 2015, only 4% say that had “lower” or “much lower” rates than the previous year. (This is consistent with 2014.) Collectively, this is a big contrast to the 2011 Corporate Housing Report in which 16% said they had “lower” or “much lower” rates than the previous year.
Actual: Rental Rates
Additional rental rate data was collected for month-to-month rentals based on the number of bedrooms in a rental property. Compared to our 2014 survey results, rental rates were higher in 2015.
The one exception was for studio units, which showed a slight decrease in month-to-month rental rates. With that said, studio rental rates have remained relatively consistent since 2013 – a year in which we saw a big jump in studio rental rates (likely due to increased demand).
4 bedroom rentals saw the largest increase in rental rates in 2015. Though, they’ve remained statistically consistent over the last seven years. Larger properties, such as 4 and 5 bedroom homes, can vary significantly in rates because of the large variety of property types.
2015 month-to-month rental rates: What did you charge?
Discounts: Rental Rates
Traditionally, many property owners use a specific discount formula they apply for longer leases of three months, six months, nine months or one year.
In recent years, we’ve changed this survey question to clarify the answers. In 2012, we changed this question to read: “Do you offer a discount for a longer-term lease, and if so, how much?” We created this open-ended question to discover what types of discounts were offered to renters for longer-term leases.
Since 2013, we’ve been even more specific in our wording. We’ve asked respondents to choose from one of five discount ranges. In making this change, the results were significantly different than in 2012. We’ll continue to offer these specific choices in future surveys because we’ve found this to be the most accurate way to track trends.
Based on our 20 years of experience in corporate housing rentals, we believe these numbers are consistent with current trends.
Defining a “longer-team lease:” How a property owner defines a “longer-term lease” can vary significantly, depending on the market and the property. One owner’s definition may be three months, while another’s definition may be 12 months. While these discounts may be applied differently, the discounted amounts remain fairly consistent.
If you’re new to real estate, the takeaway is to avoid over-discounting. Very few property owners discount by 15% or more. The key is to find the right balance between keeping your property rented and properly valuing your property.
What would you like to know about Corporate Housing? Contact Us for answers or to enter your property in our Corporate Housing Rent Calculator.