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Wise Investors Think Corporate (housing)

Mobile home parks. Self-storage lots. Residential housing. Commercial housing. These are just some of the ways investors can approach income property investing. But there’s one strategy we haven’t spent much time discussing and, truth be told, it’s a pretty big industry, to the tune of about $2.5 billion annually in gross rents. Popularly referred to as corporate housing, the term refers to short-term residential leases that might run anywhere from a week to a month or longer.

What kind of tenant is interested in these types of rentals? A few would include visiting nurses, baseball players during spring training, snowbirds, traveling shows, or even a mother and daughter in town for a few weeks to look for jobs. This class of rental originally drew its name from the corporate field when businesspeople on temporary assignment or relocation needed a temporary place to stay.

There are a few very good reasons real estate investors might want to consider corporate housing; one is rental rates. The reality is you can normally charge a rate somewhat above that charged for a traditional long-term rental. The reason is a simple matter of supply and demand. There aren’t as many corporate housing units available in most areas and landlords can afford to ask a premium price.

How much more?

One example comes from where a couple found that a well-appointed guest house on the back of their property fetched $2,800 monthly in an area where $2,000 was the going rate for a similar long-term lease. What’s the best way to get into the corporate housing rental business? Well, you need a property first. After that, Jason Hartman suggests, as with all investment endeavors, figure out how to structure your business so as to leave out the middleperson. Trust us, they aren’t necessary.

One website to check out is Corporate Housing By Owner (CHBO). This clearinghouse of sorts allows property owners to connect directly with prospective tenants. The best scenario of all is to hook up with a person who travels regularly for business into your area. The CHBO website is an excellent source of information for anyone interested in exploring this area of the rental market.

While the corporate housing industry has traditionally been dominated by large conglomerates, don’t make the mistake of thinking there’s no room for the little guy. If you’ve got the property and the motivation, why not check it out? Here’s a link to the CHBO website. (Top image: Flickr | Seabamirum)

The Solomon Sucess Team

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