How to Make Extra Money with Corporate Housing

Written by Apartment Management Magazine on . Posted in Blog

stock_ad-1024x682Did you know that renting your units as a typical landlord is the least profitable way to operate a landlording business?

Yes, you can make money each month but you can net up to eight and ten times more using an advanced corporate housing operating plan.

You can net 8-10x more money each month with corporate housing

What is Corporate Housing?

Corporate housing is an established concept where you rent a furnished apartment or home to a business. Typically all utilities and services are included; it’s like an all-inclusive hotel without daily housekeeping.

Traveling employees can make a strong case for corporate housing if they’re away on a business assignment that’s 20 days or longer.

You can customize your corporative housing offering to appeal to:

  • Clients that want a luxury environment
  • Typical white and blue-collar employees that prefer a home environment
  • Insurance companies that need to house displaced families for extended periods

All three of these options can be very profitable depending on how you operate and what the competition has to offer. You competition is now hotels and other corporate housing units in your town – not other landlords.

Why is Corporate Housing So Profitable?

The benchmark is a hotel room for 20 or more days not a rental for 20 days. The benefits of corporate housing manifest themselves when longer term temporary housing is an issue.

Your goal in the corporate housing arena is to create an offering that is 40% to 50% less expensive than the 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 3 bedroom, 2 bath house, then you might price your offering at $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 why I said typical landlording is the least profitable way to operate.

Breaking Down Corporate Housing

Let’s drop this idea into the breakdown table.

Corporate Housing
What: Increase profits by providing corporate housing.
Difficulty: ●●○○○
Time Commitment: ●●●○○
Why: You can get two or three times the normal long-term housing rates focusing on corporate housing.
Increase Net Income By:
  • Catering to high end clients who expect to pay extra for premium service and furnishings.
  • Catering to workers on long term assignments who would be more comfortable in a home instead of a hotel.
  • Catering to insurance companies that need to house displaced families.
Basic Components for Luxury Corporate Housing:
  • High end furnishings, luxury brands, and tasteful design
  • Art work and high end appliances
  • Large TV with premium entertainment packages
  • Fully stocked kitchens
  • Good network with the HR department of larger companies
  • Cleaning and maintenance crew
Basic Components for Mid-Level Corporate Housing:
  • Durable furnishings
  • Quality brand named appliances (Whirlpool, Kenmore, etc)
  • Midsize TV with upgraded cable options
  • Fully stocked kitchens
  • Good network with the HR department of larger companies
  • Cleaning and maintenance crew
The Extreme Version: Convert your rental house into a luxury corporate rental and include a luxury vehicle in rental package.
Possible New Income Streams:
  • Frequency of housekeeping
  • Affiliate security or body guard service
  • Affiliate chef or meal delivery service
  • Affiliate limousine service
Nontangible Benefits:
  • Branding for additional products
  • Get to know accredited investors that may serve as equity partners to fund your real estate investments.
Steps to Implement/Test:
  1. Study your market and competition.
  2. Network with HR manager and others connected to traveling executives and corporate retreats.
  3. Consider renting your furnishings to test the market before purchasing new furniture and decor.

Quick Start Tips

Write an introductory and information letter to the HR manager of largest company in your proximity. Linkedin is great for networking into HR departments.

  • Construction Teams 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.
  • Fleet Drivers 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.
  • Online Listings List your offering on corporate housing websites like: Expedia.com, CorporateHousingByOwner.com, CorporateHousing.com

POWER TIP: Having one consolidated bill is a huge benefit to companies, and corporate housing has that edge over hotels. Be sure to figure out how to make your target company’s accounting department happy.

Don’t Overlook 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 has a difference set of priorities than the high-end corporate clients.

  • At this level, many workers are willing to share a bathroom. A company may be able to place three or more people in a 3 bedroom, 2 bath house.
  • Have laundry on site.
  • Offer weekly housekeeping.
  • Consider making your rental into a man-cave.

Executive Clients Want Premier Housing

Take a look at Executive Lifestyles Furnished (ELF) Homes and Hotels. They have been providing corporate housing in the Bay Area since 2007.

Their Bay Area operation focuses on providing housing for companies like Google, Microsoft, Facebook and Apple. You can see pictures of their high-end homes intended to delight their clients on ELF Global’s website.

ELF Homes uses their website, word of mouth, Airbnb, Expedia and other travel agencies to book their Bay Area residential homes. Most of their clientele are out-of-town visitors.

Groups of executives rent out ELF’s houses for retreats, meetings or other business related activities. Their homes can house four or five executives at rates less than the equivalent number of hotel rooms, plus meeting space.

ELF Homes is also able to benchmark their offering off of high-end hotels and adjust their prices accordingly. Yes, this means big money.

The Downside

  1. VIP Treatment Luxury rental clientele are very demanding. Executives expect to receive the VIP treatment they are paying for. It’s critical that there are no mechanical break downs or inconvenience during their bookings. This business model is lucrative but it is not passive.
  2. 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.
  3. Increased Marketing Expenses You will 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.

Cost / Projected Revenue

In the Silicon Valley, housing prices and rents are astronomical, and the rates a corporate housing provider can charge are sky-high as well.

Rent for a corporate home will vary seasonally and spike up to three times as much during festivals and times of high demand.

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 vacancy, when dealing with luxury corporate housing, the number of days of lost rent is not as meaningful a factor as it is in the traditional landlord world. Catching the times of highest demand may more than exceed a year’s worth of market rate rents.

Final Thoughts

There are at least five different ways to be a buy and hold landlord. And you don’t have to ask permission to change your style.

There is a financial benefit for solving every problem. The bigger the problem, the bigger the reward. Consider positioning your rental to be a housing solution for a group within your network or a hotel alternative for a business within your proximity.

First posted by Landlordology.com. Find the original post here: http://www.landlordology.com/make-extra-money-with-corporate-housing/