Benefits of Turning Your Long Term Rental Property into a Corporate Rental
The Birth of a Corporate Rental
There comes a time when you want to sell your Investment Property. I was interested in investing in the Destin, Florida area and thought this was a good time to sell and do a 1031 Tax Exchange, which is a like property exchange so that you avoid paying capital gains taxes on the increased value of the Investment Property. After renting one of my single family homes for 15 years, I tried to sell with no luck so I thought "Why not turn it into a Corporate Rental?"
This is not an easy decision when you think of the amount of time and money it takes to furnish a house from scratch. So I put it on VRBO, rented it within a couple of days for double what I was getting for the long term rental and the guest was going to arrive in a week! I had three days to furnish, decorate and supply the kitchen and linens in this five bedroom contemporary. Since then, it has been booking very well and now is booked for most of the Summer. The listing is now on AirBnB, VRBO, Booking.com and our management site for Shore Dreams Vacation Rentals.
River Knoll Mountain Getaway
Just minutes from I-400 and I-285, this Mediterranean-style home is located in a mountain-like setting and sits on over 3/4 of an acre of prime Atlanta green space. The master is on the main and includes a fireplace, jetted tub, walk in closet, separate shower and a view that goes on forever. At the entrance is a library that makes a great bedroom, home office or den and includes a full bath. The great room has beautiful views and a fireplace. The kitchen includes updated cabinets, appliances and a breakfast bar. The balcony expands the full length of the house and an excellent area to view southern sunlight. Upstairs has 3 bedrooms, one with a loft area, one with a balcony, and a washer/dryer and full bath. Downstairs is a full 1000 square foot screened in porch overlooking the ravine with a creek. Live like you are on vacation in the heart of the city all year round!
The following information is some of her tips on turning your Investment Property into a Corporate Rental.
What do you think are the challenges with Corporate Rentals?
Is your Potential Investment a Good Candidate for a Corporate Rental – Get it Analyzed!
First you will need to analyze the yearly Cost/Benefit Ratio of doing a Corporate Rental. For example, Long Term tenants pay most of the utilities. Corporate Rentals furnish all the utilities unless otherwise negotiated, so there is additional cost and accounting with a Corporate Rental. Management Commissions are higher, however the return on Investment is also significantly higher as well.
Location, Location, Location Does Not Really Matter!
Where your Corporate Rental is located does not really matter and the reason why is that there is such a high demand of interest from visitors, corporations or buyers needing temporary housing. Where location does matter may be outlined in Home Owner Association restrictions and local zoning laws. However a Corporate rental can be 6 months, 2 years or just 30 days and still be in high demand.
You will need to check your local zoning rules and your Homeowners Association documents if you are member before you decide to take this path. Many jurisdictions are limited to four unrelated people or 10 related family members, however most of the Corporate Rentals demand is from families anyway.
AirBnB Atlanta Map
Next Steps if you want to turn your Investment Property into a Corporate Rental
- First you will need to analyze space to determine what needs to be removed and stored or what may need to be added to enhance the unit for Corporate Rentals
- Do Inventory of your space.
- Do a Maintenance check list of your unit.
- Find a management company that specializes in short term rentals (not just long term). The business model is very unique for Corporate Rentals. We do not recommend doing this as a Corporate Rental By Owner or VRBO because there are many license and tax requirements that only a management company can navigate.
- Work with management in implementing your decorating and unit set up strategy.
- Consult your tax accountant for any tax related implications of turning your Investment Property or your primary home into a Corporate Rental.
What does a Management Company do for your Corporate Rental and why do you need one?
A management company can help analyze any issues that may prevent you from turning your home into a Corporate Rental and will be invaluable in helping you with your search for the perfect investment property to turn into a Corporate Rental. Management companies should provide you the following:
- Access to Rental Reservation Portal including sales cycle with current and future net rental income and year-to-date information, calendar and owner booking capability
- No Trip Charge for Regular Maintenance
- Initial Property Assessment and Recommendations
- Interior Decorating and Purchase of Items if Requested
- Establish Rental Rates and Estimated Rental Revenue
- Take interior and exterior photos of the property
- List Properties on VRBO, HomeAway, Tripadvisor, Flipkey, AirBnB, Booking.com, Expedia and many others
- Calender management and synchronization
- Create Social Networking Campaign including Facebook, Twitter, Email Marketing
- Perform inventory of items
- Provide linen pool or set up linens for unit
- Schedule initial deep cleaning and unit set up
- Manage reservations, guests and follow up guest survey
- Conduct Routine Inspections and Routine Maintenance without trip charge
- Provide all Accounting Services Including Owner Statements and Owner Checks and Payment of Local County and State Sales Tax
In a nutshell, the opportunity to realize more income from your Investment Property or even your primary home is good option. Another option, is to turn your primary home into a Corporate Rental when you are going out of town for a major holiday. For instance, you may always go to Boston for Thanksgiving. That is a perfect time to promote your own home for Corporate Rental and reap the benefits of additional income!
If you have any questions or would like a free consultation regarding your Investment Property, please call 855-550-8005 Extension 10 and we will be happy to provide Real Estate Analysis.
About The Author
Renata Circeo-Loudon is the owner of Shore Dreams Vacation Rentals, a Destin and Atlanta Area company specializing in affordable family and pet friendly privately owned accommodations. In addition to hosting thousands of vacationing guests from all over the world, Shore Dreams Vacation Rentals provides owners with full service property management options all over the country.
As a former sports and music executive and real estate investor, Renata started Shore Dreams Vacation Rentals in 2010 and has expanded to Atlanta and Eatonton, Georgia as well as St. Augustine Beach, Florida.
She started her career in broadcasting and events at NBC affiliate, WICD-TV and by volunteering for the first Farm Aid. In 1990 she moved to Atlanta, GA to pursue a graduate degree in Sports Management and to fulfill a life long dream of working on the Olympic Games and the Super Bowl.
Renata worked for Live Nation Entertainment as an Area Vice President following a successful career with House of Blues Concerts in Atlanta. She manages most of her investments herself and enjoys new and innovated ways of utilizing technology and organization to streamline the handling of property management and vacation rentals.
Recently, she was featured in the “Millionaire Real Estate Investor”, by Gary Keller and is excited to continue learning about real estate, investing and spending more time at her beach house.