Do you want to generate a handsome amount of passive rental income each month without having to deal with the unwanted headaches of traditional tenants? If yes, then you might want to consider investing in corporate housing schemes.
Table of Contents - Is Corporate Housing The Next Boom In Rental Profits?
Corporate housing is one of the most effective means adopted by real estate investors to alleviate the risk involved in traditional real estate without compromising the return on investment in the form of a passive rental income.
All real estate investments come with their own sets of pros and cons, and so does corporate housing. The primary factor of investing in corporate housing is to have possession over real estate in urban areas. This holds a core factor and has to be considered before even considering starting investing in corporate accommodations. However, if you have possession over real estate in major metropolitan areas or developing cities, then too, is a chance for you to find some golden opportunities in the industry of corporate housing.
To start investing in corporate housings, it is necessary to know the pros and cons that follow corporate housing investments. Mentioned below are some of the advantages and disadvantages of investing in corporate housing in detail so that you can get a clearer view of what holds your future capitalization plan.
An Overview of Corporate Housing
Corporate housing units are short-term rental solutions to meet the requirements of mobile workers.
People who rent out corporate houses are usually those well-off urban professionals who spend a significant amount of their time travelling for work.
Even though many people consider short-term rental agreements a less consistent means of generating revenue, corporate housing is contrary. It is proven to be more stable and more profitable than vacation rentals and other short-term housing options.
Several factors affect the ability of a person to generate a significant amount of passive income by renting out corporate housing. These factors include the market in which the investors are operating, the location and positioning of their assets, and their property management skills.
What's essential to earn a good passive income from your corporate housing property is to figure out the right combination of market conditions and business skills. These two, combined in a ratio ideal for real estate assets, help both novice and expert investors to make an excellent investment.
Defining Corporate Housing
Corporate rentals are fully furnished apartments or housing units offered to businessmen and other professional travellers on short-term lease agreements. These houses are designed in such a way to accommodate business travellers with their long-term lodging requirements.
The majority of the corporate houses are rented on a monthly rental agreement. However, some property owners may opt for quarterly lease agreements, while some may even opt for weekly contracts.
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The All-Inclusive Housing
The central theme behind providing business people and other workers who have to travel for office work with corporate housing is to meet their lodging needs in areas where they have to stay for an extended period.
These include all the basic amenities required by a person to spend his days; some corporate housings even offer a full-service, including weekly or daily cleaning, in addition to building security.
All that is left for the renters to arrange is their clothing and food to fill the fridge.
Smaller, well-positioned housing units
Since individual business people generally rent corporate houses, they are designed in such a way that they accommodate a single man. This is the reason why they are smaller in size than traditional residential apartments.
These studio-sized apartments are strategically planned in terms of size and their positioning as well. They generally show a natural scenic view in a tranquil environment for professionals to work in peace.
This strategizing helps investors to yield the highest possible returns on their investments in corporate housing.
High-end tenant demographics
Since corporate rentals are used to cater to the needs of professionals, the demographics include such occupants as lawyers, sales executives, businessmen, media professionals, and academics.
That’s why the interior of corporate rentals is designed with great caution. Corporate rentals are mostly furnished with high-quality, sustainable furniture and equipped with top-end appliances.
Simply put, corporate rentals are designed to give tenants a feeling of 'home away from home.'
Since the professionals will be travelling for work and not for leisure, they will not have the time to go out for groceries and other related errands. They will, therefore, prefer localities that provide them convenient access to shops and markets, while being tranquil.
Easy accessibility to the city's business hubs and educational institutions will prove to be a plus point. The rental property should also be in close proximity to bus stops and other public transportation.
Benefits of Corporate Rentals
Even though the earning capability of corporate housing may seem quite less compared to traditional residential rental units, the reality is quite on the contrary. There are many perks associated with investing in corporate houses which are worth considering.
Firstly, it is time to break the myth. It is possible to earn a considerable amount of income by renting out corporate houses, and the figures may even exceed the ones of traditional rental units. Since the houses consist of top-notch interior and high-end appliances, they cost much more than regular rental units.
Moreover, if you introduce complete service packages, including cleaning, house help, and security, you can command a premium. And the rates would not even be an issue as corporate bodies are always willing to pay far more for sophisticated houses with special features than general tenants.
In addition to this, renting out a residential property to corporate tenants can also alleviate many hurdles that investors might face with general tenants. For instance, the issue of late rent payments and allowing pets inside the houses will not be an issue at all. Corporate tenants usually pay the rent in advance and maintain an open line of communication with their landlords throughout their stay.
Furthermore, renting out corporate housing will also eradicate the risk of coming across a bad tenant. So if you are a corporate housing investor, worrying about interior damages is a thing of the past for you!
Last but not least, corporate tenants are likely to recommend excellent lodging to their friends and colleagues as well. Hence, if you leave a favourable impression on your tenants regarding the maintenance and communication, you are likely to welcome a few more guests. You might have heard that the business world is based on networking. Try to minimize the communication gap between yourself and your tenant. By doing so, you can establish your network, which can significantly benefit your real estate business.
Keep in mind that corporate rentals expect maintenance and communication. If you stand up to these two expectations, you are likely to keep yourself busy and your property occupied by corporate tenants for the foreseeable future.
Disadvantages of Corporate Housing
Like every other investment opportunity, investing in corporate housing also has its drawbacks. Even though the cons are relatively more minor in number than the pros, it is only fair to give them due consideration. The two most noticeable disadvantages of corporate houses are:
- A high amount of beginning capital is required to set off.
- Limited lease terms result in long periods of vacancy of the rental units.
Before investing in corporate housings, make sure to determine the rental unit's location and positioning. Furthermore, apprehend whether the locality is suitable for the business community to dwell in or not. This can be achieved by examining the place from the perspective of a corporate tenant rather than an investor.
Lastly, it is recommended to consult with a real estate attorney or other professionals belonging to the same industry to learn more about what other investors think of the property.
Corporate Housing - A 30 day stay
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