Corporate Housing Cashflow: How Investors Use Mid-Term Rentals for Resilient Income

Angela Healy (00:00)
It’s not. ⁓ So just because you have a fully furnished, like say you have a vacation rental and ⁓ it’s working well as a vacation rental doesn’t mean that it will transfer into a corporate housing rental. You really want to look at the property and figure out its highest and best use. So if you are in a vacation destination, keep it as an Airbnb nightly vacation rental.

But if you are in a city that has corporations that are very close to you

Dylan Silver (02:02)
Hey folks, welcome back to the show. Today’s guest, Angela Healy is the owner and operator of Avenue West Global, an award winning corporate housing company specializing in fully furnished mid and long-term rentals across more than 200 cities. With over 10 years in residential real estate investing, she focuses on helping investors create resilient income through corporate housing solutions that serve traveling professionals relocating families.

medical staff and project based workers. Angela, thanks for joining us today.

Angela Healy (02:35)
Thank you for having me, Dylan. Actually, not to age myself, but I’ve been doing this for over 25 years. yes.

Dylan Silver (02:40)
25 years in the business. ⁓

Why do you believe corporate housing is one of the more resilient real estate investment strategies even during some economic uncertainty?

Angela Healy (02:53)
Yeah, absolutely, because your customer base is a very strong corporation. So you’re not renting to individuals that are subject to ebbs and flows. We’re renting to large corporations which have the ability to stay resilient through some of the ups and downs. Now obviously corporations can go out of business as well, but if you’re really watching their signs and they put out a…

quarterly report or they do something you’re able to see in advance if you think that they’re getting weaker before they get to the point where they just pick up and leave you high and dry. So I’ve been in this for 25 years and I can count the number of times that I have gone to collections or even eviction on one hand.

Dylan Silver (03:43)
Now, when you’re dealing with corporate tenants, right, I’m imagining that there’s going to be some level of turnover. How does that process ⁓ work? I’m imagining they’re handling it on their end when someone new is coming in, or are you having to like, resign a new lease with the individual person who’s gonna be there?

Angela Healy (04:04)
So we are signing the leases with the corporation directly, not with the occupant inside the property. But we do sign a new lease anytime they turn over or they bring a new person in, it does start a new lease. And our average stay is about 99 days. So we do have turnover, ⁓ unlike the ⁓ unfurnished property where you may have someone in there for a year or two years or.

⁓ But it’s not as bad as Airbnb where you could be doing nightly stays or weekly stays. ⁓ it’s kind of what I think is the sweet spot. There is some turn, so you’re in the property, you’re making sure the property is still in great condition. I’ve had properties where ⁓ we have had them for five, 10 years and owners will walk in and be like, wow, did anybody even live here? ⁓ Because they take very good care of the property and we’re in there.

about four times a year making sure that it’s still up and perfect and in great class A condition.

Dylan Silver (05:51)
We were talking in the green room about how Texas is a really hot market for corporate housing. What are you seeing in the Texas market?

Angela Healy (06:01)
Texas

is the number one state for corporate housing. There is a lot of great businesses coming into the area, a lot of oil and gas, tech, ⁓ healthcare, a lot of great companies that utilize corporate housing ⁓ are setting up shop in Texas. ⁓ So even before kind of the exodus from California, Texas was the number one state. So I think you can only imagine what’s going on now.

with a lot of corporations moving from California over to Texas.

Dylan Silver (06:31)
I can yeah, I can definitely see the picture of things. Would you say that there is any one specific niche within the corporate housing space where you’re seeing a majority of momentum? it you know, oil and gas? Is it you know, tech workers? Is it people that are relocating? Or is it a fair mix really across the board?

Angela Healy (06:52)
It is a fair mix across the board. Some of the recent propellants have been ⁓ manufacturing. So, you know, the US is trying to bring manufacturing back into the country. And ⁓ Texas has been a, well, not even just Texas, but a lot of places, but Texas in particular has been a hotspot for building new AI data centers and semiconductor plants. you know, so there’s a lot of manufacturing going up.

We also work with a lot of car manufacturers that are building new plants in the United States. ⁓ So all of that activity will bring in additional corporate housing needs.

Dylan Silver (07:30)
If someone has an existing property and they’re using it as a rental or short-term rental, right, and they want to convert it into a corporate housing asset, what are the steps involved? Is it as simple as finding a corporate tenant and saying, hey, let’s this work?

Angela Healy (07:48)
It’s not. ⁓ So just because you have a fully furnished, like say you have a vacation rental and ⁓ it’s working well as a vacation rental doesn’t mean that it will transfer into a corporate housing rental. You really want to look at the property and figure out its highest and best use. So if you are in a vacation destination, keep it as an Airbnb nightly vacation rental.

But if you are in a city that has corporations that are very close to

and when I say very close, is it within walking distance of their corporate headquarters or wherever they might be placing the employees? It needs to be in a safe area. If it has a great school district, if it’s a home, you want to be in a really good school district. If it is a condo or a townhome, is it a gated community? Does it have a doorman if it’s a condo building?

security is the number one concern. And then what are the amenities? It needs to be kind of a class A amenity or building or finishes within the property because corporations are gonna pay top dollar for properties. And so they’re only looking for the class A. So if you’re in a transition neighborhood, ⁓ they’re not really gonna go into the transition neighborhood.

They want that safety, they don’t want, okay, well this side of the block has transferred and this side hasn’t. So those are some pieces that you have to consider ⁓ when you’re thinking about, okay, should I make this a corporate rental? About 1 % of properties out there make good corporate rentals.

Dylan Silver (09:28)
So are these mainly going to be multi-family, like a condo setup where someone is living in a condo, or might this be a single-family home in the middle of a newly built subdivision?

Angela Healy (09:43)
Yeah, it’s going to be the full spectrum. About 70 % of our rentals are one bedroom, one bath. So even though they might be bringing in, like we might have a consulting group coming in and they might need property for 20 people, they’re going to do 21 bedrooms. They’re all going to get their own separate property

and they may want them in the exact same building or within a very close proximity to each other. ⁓ So sometimes I get people that tell me, ⁓

I have this great property, but I want to be the only one in the building. Well, you create your own marketplace if you have multiple properties within that building, because then these larger groups will come and stay in your property. ⁓ So that whole misnomer that I don’t want any competition, you’re really leaving money on the table if you do that. But then on the full swing, we could have relocation. Relocation ⁓ makes up about

25 % of corporate housing and they’re going to relocate with families, with pets. They’re going to want a like for like property with where they’re coming from. So is it a house in the right school district where the kids can go to the right schools? ⁓ Does it have a fenced yard? Is it in a nice neighborhood? So it will be the full spectrum of properties.

Dylan Silver (11:37)
What’s one of the hurdles that people face when they are getting started in corporate housing investing?

Angela Healy (11:46)
So probably the biggest hurdle is if you think about our business, we have two sets of customers. One, we have to find the right properties. So we’re a real estate property manager working with individuals that own properties. So we have to find the right properties. And then on the other side, we have to have the relationships with the corporations because the corporation is not going to call one individual property owner and say, hey, I saw your one property. Let me rent that from you.

they’re finding hundreds of properties. So they want to come to a company that can service their entire corporate housing needs, not just the one property. So that’s probably the biggest thing is getting plugged into the market where other companies already have those corporate relationships. And then you’re just bringing the property piece.

Dylan Silver (12:33)
Now, for folks who are considering a corporate housing setup versus a short-term rental or even a mid-term rental that may be listed on a short-term rental platform, I’ve seen that. What’s the arithmetic that goes into deciding, does this work better as a corporate housing ⁓ product or is this a better mid-term rental that I put on an Airbnb or something like that?

Angela Healy (12:59)
Yeah, so the midterm rental corporate housing is kind of the same market. ⁓ And there are places where you can post it as kind of a do-it-yourself. There’s corporatehousingbyowner.com. There is Furnished Finders. You there are places, or you could list it on Airbnb for a minimum of a monthly stay to try to get those long-term or midterm tenants instead of the short-term nightlies.

⁓ And you can be successful. There are a lot of even individuals that are coming that ⁓ maybe they’re in between houses because they’re renovating their current home or they sold something and they haven’t bought the new one yet or grandparents that are coming in ⁓ that don’t want to stay with the grandchildren. They want their own place to go home to at night. So there are reasons for

month long or longer stays for individuals or traveling nurses, things like that. ⁓ They just don’t quite have the budgets that a true corporate rental would have. So you can certainly do it yourself. And there are a lot of times when people come to me and they’ll say, well, I think I have this great property. And I’m like, well, it’s not quite right. I do think you’re going to make more income if you do it yourself on those platforms versus me trying to, you know,

put a square peg into a round hole. Because we’re really looking for that specific property that we know that we can keep occupied more than 80 % of the time.

Dylan Silver (14:31)
When we talk about the human element involved in this, of course, if someone’s doing a short term rental, there’s going to be tons of communication typically. And that’s one of the biggest factors that people might even potentially knock someone on a rating when they’re talking about their experience. How important is that?

human element in the corporate housing space versus if you have a year to year lease at an apartment complex, how you might not be reaching out unless you need a service order or something like that.

Angela Healy (15:01)
Yes,

absolutely.

The hospitality piece of the corporate housing is the most overlooked piece. ⁓ If a company calls us and says the internet is down, that’s like a one hour we need to get that internet back up working for them. Because if they’re working from home, that’s taking away from their productivity at work. And the corporations really can’t have that. They also will call, you know, the light bulb went out in the bathroom. You know, we’ll go in and we’ll change that light bulb.

But it is more immediate service. You we have to have the service team in place to be able to respond to those requests very quickly. You know, if you’re paying for an unfurnished rental, you know, $1,200, $1,500, $1,800 per month, the expectation is one thing. But if you’re paying for a corporate rental that is $3,000, $4,000, $5,000 a month, the expectation is completely different.

and you have to be able to meet that expectation in order to have your property be successful in this market.

Dylan Silver (16:41)
Bonus question here for you, Angela. I know that you have been active in so many different cities. ⁓ If you’re looking at getting into the corporate housing space today, are there any cities that immediately jump out to you as great places to own corporate housing in?

Angela Healy (17:00)
So there’s a couple of different strategies with that market. There’s pure ROI. Where can I find the lowest expense cost property with lowest maintenance, ⁓ lowest HOA fees or community fees, things like that, that just eat away at the profit ⁓ compared to the rental price? And there’s that piece. And so you might be looking at second or third tier cities in that case.

you know, St. Louis or Dallas or Denver, you know, provide you with those kind of pricing. Or I also have people in, so we also have an office in San Francisco that are like, okay, we want to live in San Francisco when we retire, but we think in 10, 20 years, the price of the properties is going to be so expensive, we’re not going to be able to afford it. So what if we bought it now in our IRA or in our retirement?

plan, rented that property for that period of time, and then when I retire, turn that into my residence. So then your motivation might be different. This is where I’m going to want to live and where I’m going to want to have the property. And so, you know, maybe it’s okay that it doesn’t quite cash flow or give you the ROI that it does because you have another purpose for it. Or if you happen to have a piece of property already.

So we run into this quite a bit in our most popular buildings where we really kind of advertise, know, don’t sell your property. If you’re going to move out of here, ⁓ make it a rental and keep that property as one of your first rentals even. ⁓ so if they have the ability to afford the new place without selling the old one because they have rental income on the old one, can they start to build their portfolio?

Because they started in a condo and now they’re moving to a house or something and where we can rent that condo ⁓ for them and start their portfolio without you know Usually if they’ve owned the condo for a little while it’s at a good interest rate because it was a you know You purchased it for yourself. You were gonna live in it so you have a nice low interest rate and why sell that property when

In some cases, the interest rates could be 3%. I mean, that’s practically free money these days, right? So don’t sell that. Start your rental portfolio with that property.

Dylan Silver (19:27)
We are coming up on time here, Angela. Any new projects that you’re working on or anything you’d like to speak directly to our audience about.

Angela Healy (19:35)
Yeah, one of the things that we’ve been working on is trying to create a network of other property managers. So we’ve kind of branched out, I think, as far as we may be able to from a property management perspective. But are there other property managers out there that have fully furnished properties that maybe don’t have the corporate context yet? And can we partner with them to rent those properties for our corporations? So if you have a

multifamily business, ⁓ multifamily ⁓ project, do you want to turn a piece of that into, you know, maybe it’s a 300 units and you want to turn two of them into fully furnished corporate rentals? Because a lot of times when people relocate and say they have rented a corporate rental in this multifamily and then they really enjoy it, then they’ll turn around and they’ll rent a long-term property from the community. So it is also a feeder for

long-term unfurnished rentals to that complex as well.

Dylan Silver (20:38)
Angela, thank you so much for joining us today and thanks for your time.

Angela Healy (20:42)
Thank you so much for having me.