Today, we are exploring the world of corporate rentals; at Dublin Place Corporate Housing, we help owners convert their properties into corporate rentals and provides all the necessary services to run them.
What is a corporate rental, and who stays in them?
A corporate rental lease is longer than a short-term rental, which is 30 days or less. The average corporate rental length is three months, though one month or even years-long stays are possible. Rates for corporate rentals are higher than typical rentals, and the units are fully furnished and equipped with upscale amenities. While there has been a slew of legislation regulating short-term rentals, such as Airbnb’s, corporate rentals have yet to be affected because they are considered medium or long-term rentals.
What type of property makes the best corporate rental?
Our philosphy at Dublin Place is that less is more. Because of the high rate these properties go for, less square footage will yield the greatest return. That doesn’t mean that investors should find the smallest property to rent out, though. Since renters will be staying for at least a month, they want to be able to have some space and feel at home. Diana’s sweet spot for size is 1500sqft max, and finds that townhouses are the best units.
People in transition generally use corporate rentals. Typically, the renters are individuals in the medical field, research and development company housing employees, or real estate buyers and sellers between properties. The average income of renters is $260K per year.
How are corporate rentals managed?
Dublin Place offers two main services for property owners: advertising and support services. Investors can choose how much or how little involvement they want from the company. The only areas that the company cannot help with are financial or legal matters.
Now, investors can team up with Dublin Place to market their properties. They receive a property evaluation and list of recommendations to ensure the property is in line with the exclusive rentals in which Dublin Place specializes.
Support services help owners get in place everything they need to be successful in renting out their properties. These services can range from buying and staging furniture, to white-glove cleaning services, to arranging contractors to make repairs. Owners are in charge of coordinating deposits with renters, though the cleaners will provide them with a checklist of any missing or damaged items. That way, the owners can determine how much of the deposit to return.
Is it worth it?
Let’s analyze.The biggest difference in initial costs between a long-term and corporate rental is that corporate rentals are fully furnished. Dublin Place average cost for buying furniture, linens, and other essentials and having them professionally staged is around $13-16K.
The same townhome rents as a long-term rental for $1695 a month, at Dublin Place for $2900 a month. Even though the vacancy rate for a corporate rental is greater, 8% compared to 3%, the higher rent makes up the difference.
Monthly Operating Expenses Corporate Rental
Other unique costs for a corporate rental are a personal property assistant and advertising. The personal property assistant manages the day-to-day aspects of the rental, such as checking renters in and out, coordinating repairs, and replacing items that are damaged or running low. These services together run about $5K per year.
We recommend that property owners call their insurance companies to see what is covered if they switch their homes from a long-term to corporate rental. Most companies have this coverage built-in, but it’s usually worth it to see if there is additional coverage available. The cost of this type of insurance may be a bit more expensive, but it’s usually not significant.
First Year Returns Corporate Rental
The first-year returns analysis shows just how different long-term vs. corporate rental properties are. The annual cash flow for a corporate rental townhome is nearly double that of the long-term rental home, even though the homes themselves are the same. Altogether, the corporate rental yields a much stronger return than the long-term rental.
Connect With Diana Tapia
If you are an investor interested in turning your property into a corporate rental, reach out to Diana via her website. Use the online form to submit your information, and she will personally respond. And if you are thinking of buying a property, schedule a free real estate investment consultation. With Jenny Bayless, she can help you find the home that best suits your needs and connect you with Diana if you want to turn it into a corporate rental.
Article by Jenny Bayless
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