6 Reasons Why Corporate Housing is a Better Investment Than Airbnb

6 Reasons Why Corporate Housing is a Better Investment Than Airbnb

If you own an investment property, chances are you’ve considered using it as a vacation rental. Apparently, you weren’t alone – in 2021, the industry grew by 50%. Last year, the industry earned $82B in revenue globally, so it’s clearly lucrative. Although it’s a better-known option than corporate housing, is it the best one?

Every rental property owner is looking to earn the most income with the least effort. There is a host of reasons why corporate housing is a more attractive option than Airbnb. Better return on investment (ROI) may be the strongest on the list. Here are six reasons why corporate housing offers a better ROI.

But first…what’s the difference between Corporate Housing & Airbnb?

Airbnb is a well-known disruptor of the travel and lodging business. The concept is simple: a guest can rent out a room, an apartment, or home from a private owner. In an Airbnb, the guest can stay for as little as one night or months at a time. Options abound with the company boasting over 660,000 listings in the U.S. in 2022. These are rooms in homes, apartments, condos, tiny homes, trailers and more.

Meanwhile, corporate housing is no newcomer to the long-term rentals market. Before Airbnb, corporate housing offered guests a home away from home for 30+ days at a time. Corporate housing is a multi-billion-dollar business growing faster than the hotel industry.

#1 Taxes

Income earned from Airbnb and corporate housing are not taxed the same. There are tax advantages in corporate housing, such as deducting more property-related expenses. Besides other taxes, you may also have to pay occupancy tax if you rent out your property as an Airbnb.

Consult with a tax professional for advice that is specific to your unique situation. To read more about taxes, check out H&R Block’s answers to some frequently asked rental income tax questions.

#2 Laws & Ordinances

If you’re in this space, you’ve probably read about the ever-increasing complications caused by state and local laws and ordinances surrounding Airbnbs. Some locations require permits or restrict the number of nights a guest can rent your space while others prohibit Airbnb rentals entirely. It is wise to do a deep dive into the regulations in your area before pursuing an Airbnb.

Or you can pursue corporate housing, which is a much simpler venture under the law. Unlike Airbnb, it falls under tenant-landlord law, making life easier for property owners and offering guests added confidence.

#3 Maintenance Cost Differences

People rent Airbnbs to vacation or party. People who rent corporate housing are professionals who are traveling for work or families who are between houses. These two demographics give rise to two different levels of maintenance costs. For the Airbnb, those costs are generally more expensive.

  • Vacation rentals are shorter stays which requires a professional, deep clean more often.
  • Risk of more serious and expensive damage is higher in Airbnb properties.

#4 Property Insurance

Although Airbnb offers owners some insurance, many hosts get full coverage. Because of the greater risk of damage, insurance costs are often more expensive.

#5 Location & Seasonality

How close is your property to local hot spots, events and vacation attractions? This can often make or break an Airbnb. Sometimes those attractions (such as a beach or a festival) are seasonal in nature. These two factors alone may guarantee months where your property will remain vacant.

#6 Time is Money

Marketing an Airbnb is time-consuming, particularly when it’s not one’s area of expertise. After all, we’re not all photographers, copywriters, and marketers. That doesn’t include maintaining the property itself and managing guest requests. In corporate housing, a full-service property management team like AvenueWest manages everything. That means tenant vetting, the leasing process, bill payments, paperwork, rent collection, and guest experience. In fact, AvenueWest offers concierge-level services such as cleaning, towel service, dry cleaning and so much more. With an Airbnb, it’s all on your shoulders. Your time is money, particularly if this is a sideline and you spend the bulk of your time on other endeavours.

Corporate housing is the best-kept secret for property investors but it’s time to let this secret out. Reach out to us today to learn more about how you can earn more while doing less with your rental property.

 

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