When it comes to renting out your property, you would commonly assume that there is only one way: give your tenants a one-year lease and receive a rent check every month. However, there are different ways to make bank on your property. Check out these four different strategies to creatively rent out your property.
Related: Buying a Rental Property
1. Corporate Housing
Corporate housing means renting out your property to a business. The property is fully furnished before it is rented. It is similar to hotels in the sense that services and utilities are included except that you are not responsible for housework. In fact, corporate housing is rented out by employees on traveling on business who do not want to spend more money on hotels.
The main benefit of corporate housing is that it is more profitable than typical renting. Although many factors such as location, property, and the market will dictate how much you will earn from corporate housing, it is generally more lucrative than the ordinary way of leasing. You can expect two or even three times the income from a traditional rental.
Another pro of renting out your property though corporate housing is that vacancies are not as detrimental as they would be with traditional rentals. You will still be earning much more than from a typical rental unit, and this can give you time to enhance the property when necessary, which brings us to our next point.
A common con is that will you have to spend a lot on the property in terms of amenities, cleaning, furnishing, and maintenance. Your tenants will expect a premium unit, therefore it should look and function like one, which compels you to spend more. You can calculate these expenses with Mashvisor.
Overall, corporate housing is more profitable than renting in a typical fashion. It will cost more to maintain, but when conducted properly and in the right market, the potential earnings outweigh the expenses.
2. Vacation Homes
Renting out your property as a vacation home can be a gainful investment. A vacation home is a property that is rented throughout the year, usually in a particular season, but is also used by its owner for more than 14 days or 10% of the number of days it is rented during the year, whichever one is greater.
Location is perhaps one of the most important considerations when selecting a vacation home. Beach houses and ski resorts are common forms of vacation homes. Consider what makes your selected location luring to tourists and apply that to the property you want to rent.
Like corporate housing, vacation homes are seen as an alternative to hotels. During particular seasons, vacation homes are on very high demand and thus generate a lot of income. On the opposite end, however, they will likely become vacant during the offseason. Whether you decide to rent them out during the offseason is up to you, but demand can fluctuate greatly between different seasons.
Consider renting your vacation property on Airbnb. Potential tenants from around the world can view photos of vacation rental you list, and Airbnb will take care of the transaction. To find profitable Airbnb properties, be sure to use Mashvisor.
Mashvisor data shows that on many occasions, vacation homes can cash flow better than traditional rentals. However, as mentioned earlier, vacation homes are not rented all year round as traditional rentals. Hence, it is very important to pay attention to a city’s Airbnb occupancy rate and to play with pricing correctly in order to get the optimal occupancy rate.
Keep in mind that renting out traditionally makes you eligible for more tax benefits compared to renting a vacation rental. In terms of income, it is best to check the rental strategy comparison to determine if listing the property traditionally or on Airbnb will generate a higher monthly income, cash on cash return, and cap rate.
3. Senior Co-Housing
The demographics of the number of seniors is increasing. By 2030, 20% of the U.S.’s population will be senior citizens. So, it would be a smart idea for investors to rent out different kinds of senior living homes. Some types of senior housing include nursing homes, assisted living apartments, and senior co-housing. In this blog, we will focus on senior co-housing.
Renting your properties in senior co-housing means forming a community of senior rentals in which tenants share properties. It is a very good source of cash flow, which you can calculate on Mashvisor.
Just like other types of senior housing, you need to adhere to specific laws for renting through senior co-housing.
You will also need to provide specific amenities when renting to seniors. For instance, having elevators on every floor and stair-lifts for every stairway will make your property much more attractive. Other aspects of the property, such as its proximity to public transportation and medical centers, presence of laundry facilities, and usage of electronic keys will also make the property more appealing. Always be sure to review the specific laws and requirements when it comes to renting to senior citizens, to make sure you are abiding by the law and to ensure the satisfaction of our elders.
4. Low-Income Tenants
Another way of renting out your property is to rent out to low-income tenants on government assistance, also known as Section 8 tenants. To some, renting your property to Section 8 tenants is a bad idea, due to the assumption that tenants will damage the property. This does mean that the risks of renting to Section 8 tenants compared to higher earning tenants are the same. There tends to be less risk with higher earning tenants since they will more likely be able to pay for any damage they have caused, however, there are some definite benefits of renting to Section 8 tenants.
Guaranteed rent is one of the main benefits of Section 8 investing, since the government will be paying you a big chunk of the rent. Since the government is covering most of the rent, it is less likely tenants will leave the property, leading to lower vacancy rates. Renting to Section 8 tenants can be an option if you have a property in lower-income neighborhoods.
There are different ways of renting out your property. Some ways will require high expenses but will also generate high income (corporate housing), other ways will generate good cash flow, almost guaranteed (senior co-housing and Section 8 tenants), and some ways will generate high demand during a particular season (vacation homes). Whatever method of renting your property you choose to follow, mentioned in this blog or not, be sure to review the legality of the rental. Also, depending on your circumstance and goals, consider if the particular way of renting is right for you. To search for rental properties, analyze the cash on cash return you will receive by renting out your property, and to get an idea of your property’s performance, be sure to visit Mashvisor.