Investors will earn over $40 billion in rental properties over the next year as demand and earnings from corporate housing projects soar. Corporate housing investments are a great way to diversify your portfolio, they’re not just for the wealthy. As a real estate investor, you can buy and hold rental properties in various locations, build up a portfolio of assets and make extra money on the side.
Temporary housing is an attractive investment option for investors. The average annual return on investment in corporate housing is about 10% per year. These real estate investments are becoming popular due to high occupancy rates, lower management costs, and stability of incomes.
From 2014 to 2018, corporate housing grew by 12%, compared to the hotel industry, which grew by 3% during the same period. Investing in corporate housing can be a masterstroke for any investor. You will experience growth in revenues and diversification in your portfolio.
Here are the things to consider when investing in corporate housing to help you make the right decision.
Why Invest in Corporate Housing?
The benefits of corporate housing are endless, including:
- Corporate employees have higher and stable incomes.
- The demand for corporate housing is skyrocketing.
- High occupancy rates.
- Corporate housing can quickly become long-term rentals thanks to the lasting relationships you’ll build.
- Corporate housing is a great investment option to increase your earnings or bottom line.
- Find Out More About the Rental Market
There are many ways to find out more about the rental market. You should start by visiting your local real estate office and asking for information about what’s available in your area.
Moreover, you can also contact your city’s planning or economic development department. Often they may have reports on the housing market in your area and can help you make informed decisions.
Before investing in rental properties, you must know more about the rental market. You’ll want to ensure enough demand for your properties so that you don’t have empty units on the market.
The best way to do this is by looking at historical sales data and asking local real estate agents for information about current trends in the area.
- Look for the Ideal Corporate Investment Partner
To invest in corporate housing in Chicago, you need a partner that knows the Chicago market adequately. Your real estate investment partner/advisor can help you objectively determine the growth potential and future earnings. An investment partner should effectively manage the property and maintain its value.
A reliable corporate housing firm with plenty of experience in Chicago’s corporate housing market will be able to provide you with great advice regarding your investment.
A seasoned team of professionals can help you decide what type of property to purchase and how to get high returns on your investment without taking too much risk.
You want the ideal corporate housing companies to help you select the perfect housing for your employees or rental income. Do not hesitate to ask about their credentials, this is their job!
Ask about their experience with various business operations and how they plan to handle any challenges that may arise from this project. A professional who has previously completed similar projects will be better equipped to manage any issues arising from this venture.
The ideal partner should help tenants with relocation requirements, bookings, flexible rental solutions, and marketing. The partner can also serve as the property manager, so you can focus on growing your business or profession.
The ideal real estate investment partner will have the expertise to help you get through the various regulators.
Ensure that your partner has experience with zoning, permitting, and construction permits. This is a crucial part of getting your project off the ground, as it can save you time and money later on.
- Consider the Growth Potential of Your Preferred Location
Find out if there are any upcoming developments around your property to secure tenants. You can then be sure of more tenants looking for properties like yours.
Depending on real estate trends, investments in other sectors, and government policy, different areas can grow differently.
When choosing a location for your corporate housing investments, consider the population and employment growth rates over the past few years. Pick a location with the highest potential for growth to ensure high occupancy levels and stable rental returns.
- Pick the Right Location To Invest In
When choosing where to buy, think about where your target market resides. For instance, purchasing a multi-family unit near research centers makes sense when investing in places like Silicon Valley or Boston.
To buy a unit near a hospital or medical center, look at smaller communities with higher population density.
It’s essential to find a good location for your rental properties because it will affect the return on investment (ROI). The ideal location would have several factors:
- A high number of residents who work nearby
- Lots of affluent residents that could afford your prices
- Tenants who would pay rent for an extended period (such as a year or two)
- Determine Your Return on Investment
Your return on investment (ROI) is essential in corporate housing investments. If you pick the wrong property, then your ROI will be low. Also, you may be overextending yourself if you don’t understand your rental income needs.
It’s essential to think through every aspect of your corporate housing investment so that it pays off as much as possible.
This will help you determine if it’s worth buying into corporate rental apartments or if you should focus on other options. Talk with a financial advisor about whether buying into a building makes sense for you.
- Determine the Capital Requirements
You’ll need money to make this investment work. Determine how much you’re willing to invest and how long it will take for your investment to pay off. Ensure you have enough cash available for renovations and maintenance costs.
The capital requirements for the investment will depend on;
- The investment size and how much you are looking for in return for your investment.
- The type of property (e.g., corporate apartments for rent, townhouses, or homes)
- Regulatory factors like tax implications.
- The location of the property.
- The amount of money you have available to invest (and whether or not this is a viable option for you).
- Know How to Finance Your Property
When opting to invest in corporate housing, it must be financially feasible. You may want to explore financing options like loans or corporate apartment leasing options to ensure your investment pays off quickly and easily.
You can also seek partnerships with other investors who share ownership in the business.
Also, consider other ways of getting financing, like:
- Use a home equity loan (HEL) to raise money for your investment property.
- Selling your home and using the proceeds to buy an investment property.
- Figure Out the Best Way to Manage Your Property
The best way to manage a rental property is by hiring professionals who specialize in managing properties like yours. The average cost of a management firm is 7-10% of rental income, but it’s well worth it.
The best corporate housing companies will ensure your tenants are happy and their needs are met, which will increase the value of your property.
A professional property manager can take care of all the day-to-day responsibilities so that you can focus on growing your business and increasing profits.
If you’re interested in corporate housing, now is a great time to start. Many tenants are looking for new/temporary places to live for professional or business reasons.
With the growth of demand in corporate housing, you can expand your portfolio and earnings by investing in a property today. Ensure you know the real estate dynamics, have the right partner on board and pick a location with growth potential.
You should also consider the ROI, determine how to finance the project, and plan the best way to manage the project. With these tips, you can be sure of having a long-term, stable, and profitable investment.