As we reach the end of the pandemic and things begin to settle down, the demand for temporary housing for rent is increasing.
Table of Contents
- What Is Temporary Housing?
- When Would People Need Temporary Housing?
- How to Find the Ideal Temporary Housing Investment
- Temporary Housing Trends
- Conclusion
However, the pandemic has altered the ecosystem. Clients now have different expectations than they did at the beginning of 2020 when seeking a temporary apartment. The need for convenience continues. But now, this need is outweighed by concerns about safety. They are also looking for lodging with a decent place to work.
What Is Temporary Housing?
Temporary housing, often known as corporate housing, is a term in the relocation sector. It is the temporary rental of a furnished apartment, condominium, or house to someone. Moreover, temporary accommodation options can include extended-stay hotels, standard hotels, and rental homes and apartments as well.
As you might expect, a temporary stay is great for people searching for a place to stay in the meantime or using temporary housing while building a home. Traveling caregivers, business executives, military and government employees, and persons on the go frequently utilize it. In addition, temporary housing is now also employed for long-term holiday rentals.
For example, furnished temporary housing has several advantages and provides convenience and flexibility when you need it the most. In other situations, it covers everything from utilities to bath goods. This is so guests will only have to think about arriving at that place.
Temporary housing is a furnished property that is rented out to people who need short-term accommodation.
When Would People Need Temporary Housing?
Although this market segment originated as a method to provide temporary shelter for business visitors, today it attracts a diverse variety of people searching for short- to medium-term housing.
According to research released by the Corporate Housing Providers Association (CHPA), corporate leaders migrating account for over 40% of longer stays. While they remain important market participants, clients for short-term accommodation today come from a diverse range of backgrounds, including:
- Oil and gas exploration specialists or sustainable energy experts
- Manufacturing and construction project managers
- Medical scientists, travel nurses, physicians, and other healthcare professionals
- Government and military personnel
- Film producers and the crew, stage performers, and entertainment industry executives
- Banking and financial industry auditors, researchers, and analysts
- Technology professionals, such as freelance IT programmers
- Corporate consultants as an example of professional service providers
- Interns, such as corporate interns or healthcare interns
- Homeowners who are temporarily relocated because their houses are being repaired or renovated
- Long-term tourists seeking adventure
- Immigrants or homeless people facing hard times
Industry Statistics
According to Corporate Housing by Owner, Inc.’s 2019 report, 17% of landowners offering corporate housing have an annual occupancy rate of 95%, while 15% have an occupancy rate of 90%.
Only around 12% had an occupancy rate less than 60%, while roughly 10% maintained a 100% occupancy rate during the year. The majority of the properties had occupancy rates ranging from 80% to 100%, which is exceptional for the rental market.
How to Find the Ideal Temporary Housing Investment
Before investing in a short term rental property, you should consider the market potential as well as any benefits that one sector has over another. When deciding on an investment plan, consider the following possible advantages and align them with your property search:
Customer Type
A fundamental concern in a typical rental property is dealing with renters who may come from diverse backgrounds and bring various difficulties. Tenants who miss a payment, make unreasonable requests or complaints, or fail to maintain your furnished apartment for rent can consume a large amount of your time and resources.
Since the clients are often professional enterprises or organizations with a good reputation, handling furnished short term rentals helps reduce these issues. Their workers or colleagues, who are the actual occupants of your property, are frequently aware that their actions in your unit impact their employer. They might lose their employment if they mistreat or damage your unit.
Moreover, corporate renters are often well-organized when it comes to managing the financial side of their short term apartment rentals, and payments are made on time and without incident.
On the other hand, business travelers concentrate on their job and are frequently alone. These traits can provide an indirect benefit in the form of decreased maintenance and repair expenses and less administrative control.
Management Time
Popular short-term rental property platforms like Airbnb demand landlords to spend much effort following up with clients before and throughout their stay. In this case, renter follow-up is minimal with corporate rentals since these tenants often stay for at least four to 12 weeks, reducing your yearly tenant turnover.
Companies that employ temporary housing on a regular basis understand the procedure and have experienced personnel on board to interact with property owners. That may save you precious time and effort as a real estate investor, which you can put to better use elsewhere.
Here are some examples of well-organized real estate rental agencies when it comes to month to month apartments:
- Nomad temporary housing – blends more than 74,000 quality temporary corporate apartments with the outstanding service of a full-service temporary housing provider. The corporation operates 9,000 serviced apartment buildings throughout the United States, the United Kingdom, Canada, Latin America, Asia Pacific, South Africa, the Middle East, and Europe.
- Temporary housing directory – a national organization that coordinates short and long-term temporary lodging for people, emergency teams, and first responders. The firm helps commercial enterprises with corporate relocation and personnel accommodations.
Long-Term Partnerships and Revenue
One of the primary benefits of investing in corporate housing is the potential to form long-term connections with corporations. They will place their workers in your monthly rentals for tasks, training, or projects when they go to your area.
In addition, companies want to invest in connections rather than switch service providers for no reason. Adding a new supplier frequently entails a time-consuming internal approval procedure. If you are dedicated to seeing your investment success, you will have the potential to develop long-term partnerships with top corporate clients for your properties.
Flexibility and Customization
Corporate rentals encompass a wide range of property types, including single-family houses, apartments, condominiums, and more. The answer to the question, “what is corporate housing?”, essentially relies on the type of property investors want to invest in.
After deciding on the sort of property to deal with, investors will be charged with modifying it to meet the demands of corporate tenants. That includes, but is not limited to, furnishing it, providing amenities, and other services. Though customizing a rental property may appear to be costly, it is really beneficial in the long term.
In the end, by customizing the apartment, investors may secure strong returns through rental revenue by boosting the property’s desirability.
How Much Can You Earn From Temporary Housing?
It depends. Your local market determines the amount you may earn renting to corporate clients, the number of business visitors in your location, and the presence of significant businesses. All these factors (and many more) will influence both the demand for business housing and your earnings.
With an occupancy rate of 90-95%, you’re balancing out the typical 10% vacancy rate for rental homes over the course of the year. In New York, assuming a 90% occupancy rate, renting just one studio unit to corporate customers would net you around $55,200 a year, or $4,600 per month.
Temporary Housing Trends
Here are a few pandemic-related trends to look out for in corporate housing.
1. Automation Investment
The pandemic has underlined the importance of automation more than ever before. The booking procedure and day-to-day maintenance operations should require minimal human engagement.
Corporate housing providers must embrace technological advancements such as rapid booking and self-service check-ins and check-outs. In addition, you must also automate operations to boost the efficiency of your company. Therefore, you have to get yourself property management software.
All of that will allow you to keep track of reservations and maintenance requests and resolve issues much more quickly and efficiently.
2. Better Furnishings
People who relocate for employment and opt for temporary corporate housing will have big expectations from their rentals. If you are a business housing provider in a bigger city, you must dig deep into your finances and begin remodeling.
In such cities, competition is intense at the upper end of the market. Work with a competent designer to select new furnishings and modify the style of the corporate apartment that you are renting out.
Individual customers and relocation agencies seeking customized flats for their clients will notice the difference and prefer you for their stay in the city. Your offer will undoubtedly stand out with new designs and furnishings.
3. Home Office
When it comes to interior design and furniture, home office furniture is likely to be the most significant legacy of the pandemic. People were required to work from home for months. Even when they can return to the workplace, many people opt to work remotely.
Back in March 2020, individuals raced to transform whatever accessible area of their home into a temporary workplace. Now, they have higher expectations of their home workstation than ever before. And since corporate housing providers mainly serve professionals migrating for employment, providing a separate workplace in your rental properties makes sense.
Landowners now have the option of converting one of the extra bedrooms into an office. Even in tiny and cheap temporary housing flats, a separate workplace with hidden furniture and fold-up tables is more than advisable. The clients will be able to work conveniently from home this way and will not feel so uncomfortable when it’s time to turn off the computer.
Conclusion
Any investor looking for a lucrative investment strategy should explore the advantages of temporary housing. Although this property type is not as widely recognized as vacation houses or other rental properties, it can still turn out to be a profitable strategy.
Moreover, investors who want to get started should be certain that they are prepared to deliver high-quality rental units as well as develop powerful marketing efforts to attract corporate customers. Corporate housing, when handled properly, may result in substantial earnings and new prospects for real estate investors.
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