The idea of investing in real estate in 2021 excites you, as you are eager to diversify your investment portfolio to mitigate the impact of volatility in the market. The question is, what type of real estate should you pour some of your cash into? According to business expert Brian Ferdinand in a recently published article, corporate housing units are some of the best types of real estate to invest in. Let’s take a look at why you may want to invest in corporate housing investing, as well as examine an important consideration for investing in this type of real estate.
The Draw of Corporate Housing Investing
According to Brian Ferdinand, the managing partner of CorpHousing Group,corporate housing refers to nice, fully furnished housing designed for longer-term stays—stays lasting a few weeks to a few months.
Companies typically use this type of housing to house employees who are completing projects or assignments in distant cities. However, corporate housing also appeals to any other individuals who may need to live in fully furnished apartments or houses for extended periods of time. These individuals include snowbirds who are traveling south during the winter season, vacation travelers, and even college students. Insurance companies also use corporate housing units to temporarily accommodate families who have been displaced by fires or floods, for example.
One of the chief benefits of investing in corporate housing units is that they are generally less expensive than hotel rooms are. As a result, they are picking up steam among travelers across the United States. This means a big market for them exists nationwide, particularly in large cities.
An Important Corporate Housing Consideration
One of the major issues that investors in real estate have with corporate housing is that the lease agreements associated with this type of property are not long term. This can be a deterrent for some investors, as attrition is typically frowned upon in the investing world.
Still, although many investors/landlords view corporate housing turnover as a negative thing, it doesn’t have to be that way in your case. Why? Because you don’t necessarily have to rent out your corporate housing unit 11-12 months per year. Instead, you can generate a generous amount of revenue by renting it out for just 3-5 months per year. As long as you price your property at between 40% and 50% less than comparable hotel rooms offering month-long stays, you should have no problem with attracting tenants while still producing significant cash flow every year.