Few investments are as safe or as predictable as property. Even in areas of the country where prices fluctuate, on the whole, property tends to appreciate. If you can buy an appreciating asset while also renting it out as executive housing, that’s a double win!
While we aren’t offering financial advice, we think investing in executive housing could make for a sound investment.
Here are a few tips we think could help if you’re in the market for a new investment.
Start small and work up
Executive housing is another word for corporate housing. Short term rentals often used by companies, military families, medical personnel and those who travel on business.
Depending on where the property is, occupancy can be high or medium to high. There’s a lot of demand for high quality executive housing right now and that doesn’t look like changing anytime soon.
While it may be tempting to go big right away, we recommend starting small and seeing how you like the market. It works differently than residential rentals and requires a slightly different approach.
Understand the numbers
All investments benefit from a solid understanding of the numbers or working with someone who knows.
Ideally, executive housing is a long term investment where you’re looking 5, 10, 15 years into the future for returns.
You have to consider purchase costs, mortgage costs, taxes, insurance, periods where the property is unoccupied, maintenance and utilities.
You can also consider price appreciation, rental income and tax efficiencies of the investment, so it isn’t all one way!
Plan for empty periods
Occupancy is generally pretty good for most metro areas but not everywhere, or every property will be full all the time. You need to plan for periods with no income and have the resources in place to cover the expenses during those times.
We do our utmost to keep occupancy as high as possible but can make no guarantees.
We recommend planning for empty periods and keeping a contingency fund for those times. You can put early rent income aside as a cushion or use other resources.
As long as you plan for it, you won’t be taken by surprise!
Higher quality renters give more but expect more
Many property managers or owners let executive housing because they attract a certain type of renter. That is true and definitely something to consider.
You also have to consider that a certain type of tenant is willing to pay more, but will also expect more in return.
That means higher standards of building maintenance, of décor, of fit and finish and of appliances, furniture and everything inside the property.
This is definitely one of those areas where you need to speculate to accumulate!
Spend more on the property to bring it up to executive housing standards and you’ll be rewarded with higher occupancy, higher rates and more positive reviews1
Location, location, location
Choose your location carefully. Executive housing tends to be close to Downtown areas, transport links and within easy reach of employers.
They will be close to military installations, medical centers, tech centers, universities, colleges and places where traveling employees will likely need to go.
There is also executive housing in rural areas, on the edge of town, in gated communities and other areas but all will be close to commuter rail, the freeway and offer convenient access to the amenities they are likely to need.
It isn’t about you
Executive housing isn’t about you. It may be your property and your investment at stake but every decision you make should have your target tenants front and center.
That means selecting properties suitable for that tenant in locations they are likely to want to stay. It also means decorating to suit that market rather than your own tastes and having that tenant in mind when outfitting the property and making it ready to rent!
Executive housing is a solid investment and while there are never guarantees.