Why You Should Get Going with Corporate Rentals

Posted By: Al Williamson ICOR Blog & News,

Landlords have always had the ability to woo business travelers to their rentals. 

But now that online travel agencies such as Airbnb, HomeAway, and TripAdvisor have gone mainstream, it’s easier than ever! 

Let’s define a corporate rental as dwelling that’s lease directly to a company or a business  traveler who has a housing allowance. If a company is paying for the rental, and not the tenant,  then it’s a corporate rental. 

When a company pays their employees or contractors to work remotely, then that tenant:

  1. Will behave and not embarrass their employer
  2. Will have a binary attitude towards your rates. Either they are within their allowance or they aren’t. 

These two characteristics make business travelers the most lucrative and ideal people for your  rentals.

The Opportunity

Business travelers find that with short-term corporate rentals, they are able to afford more  home-like conveniences for less. They are able to cook healthier, have more privacy, and have  a richer travel experience when they don’t stay at a hotel. That’s why the trend in corporate housing is spiking. Especially when a traveler is on an assignment for 30 days or longer. Extended stay business travelers actively search for houses and apartments to live in. Many  want to live in neighborhoods and not off freeway offramps.Now, is it possible that you could furnish a rental to accommodate corporate travelers? Could  you earn hotel-size money instead of market rents?

Most certainly!

How Much Can You Make

The Government Services Administrations (gsa.gov) maintains a list of daily hotel rates for  various cities throughout the United States. Their website present per diem housing rates for  each calendar month.

If you’re trying to decide if a corporate rental would be profitable, then look up the GSA per diem  rate for your city and work with that number. 

For example, the GSA per diem hotel/lodging rates for Sacramento, CA is $91.00 per night  (assuming a 30-day stay). That’s $2,730 per month.

Assuming a 70% occupancy, if you have a one-bedroom corporate rental in Sacramento, you  could reasonably expect to earn a maximum of $1,911 per month.

NOTE: My Sacramento corporate rentals actually rent for $1,860 per month. When I accept  pets, and charge a $50/month pet fee, I’m still a more affordable choice.

The next step is to calculate the difference between your expected corporate rental earnings  and your local market rent. 

For example, the going rents for a one-bedroom apartment in Sacramento is $950 per month.  This means that you could make $910 extra each month ($1,860 - $950) if you converted a  traditional rental into a corporate rental. That’s a LOT of money!

Of course, you’ll need to pay for the electricity and other monthly expenses associated with a corporate rental, but even after paying those expenses, the additional net income is fantastic!

Help Making a Decision

Extended stay hotels have been around for decades. They a part of a mature industry. By focusing on extended stay, and not nightly stay, you can take month-to-month landlording to  new heights.

Corporations behind Extended Stay America and Residence Inn by Marriott use a lot of  sophisticated financial models and institutional knowledge to decide where to place their +$10M  hotels. So, if there’s an extend stay hotel is near you, then you should accept that as proof that your extended stay corporate rental will be wildly successful.