What is Corporate Housing?

What is Corporate Housing?

Corporate housing refers to fully furnished, temporary housing provided to employees, executives, or clients by a company for short-term or extended stays. These accommodations are typically more spacious and homelike compared to standard hotel rooms, offering a more comfortable and residential living experience for business travelers, relocated employees, or individuals in transition between permanent homes. Corporate housing units are usually located in residential apartment buildings or communities and come equipped with a full kitchen, laundry facilities, and other home-like amenities, blending the convenience of hotel services with the comfort of apartment living. This option is often used for stays ranging from a few weeks to several months, bridging the gap between short-term hotel stays and long-term lease commitments.

Pros and Cons of Corporate Housing for your Multifamily Investment

Allowing corporate housing as part of your real estate investment strategy can offer a mix of benefits and challenges. Here's a quick breakdown of the pros and cons:

Pros of Corporate Housing

1. Stable Income: Corporate tenants often bring stable and reliable income, as companies are generally consistent in paying rent on time, and contracts can be for extended periods.
2. Higher Rent Potential: You can potentially charge higher rents for furnished accommodations and short-term leases, which corporate housing typically requires.
3. Reduced Vacancy Rates: Corporate housing agreements can help keep your property occupied consistently, especially if you establish relationships with multiple businesses.
4. Professional Tenants: Corporate tenants are often professionals who are likely to maintain the property well, given the backing of their employer and the nature of their stay.

Cons of Corporate Housing

1. Increased Wear and Tear: Frequent turnovers and the use of the property as a temporary living space can lead to more wear and tear than long-term residential leases.
2. Higher Operating Costs: The need for furnishing, regular maintenance, and possibly additional services (like cleaning) increases operating costs compared to traditional long-term rentals.
3. Market Dependency: Demand for corporate housing can be highly dependent on the local job market and economy. A downturn can significantly affect occupancy rates.
4. Regulatory Challenges: Some localities may have specific regulations or restrictions around short-term rentals or corporate housing, requiring careful navigation and potential legal consultation.

Incorporating corporate housing into your real estate investment strategy can be lucrative and offer a steady income stream, but it requires careful consideration of the potential for increased costs, regulatory hurdles, and the nature of the market demand.