Renting to a Corporation - Posted by Dennis

Posted by Rich on March 18, 2007 at 19:56:41:

I have rented to companies on two occasions. In one case it was for a CEO to live near the office during the week rather than commute. They backed out at the last minute.

In the other case, the company did not screen who stayed in the house. Since we had no contract with the occupants, we were constantly going back to the company on compliance issues. The company contact was irritated and wanted us to handle the occupant issues directly, which we refused since there was no agreement between us and the occupants. Turns out they were using the house for people who could not get decent housing (illegal laborers) on their own merits. Place was a mess when they ended the lease but they did pay for everything. We had asked for names and SSNs of each occupant, but only names were ever forwarded to us.

They key is monitoring that who is there is who is supposed to be there.

Renting to a Corporation - Posted by Dennis

Posted by Dennis on March 18, 2007 at 18:44:08:

I have a higher end SFR that I am considering as a rental out of necessity as this time. The FMV is around $850K, and the rent around $4,500/mo. It will be fully furnished with the quality goods one would expect in a house at that price.
I’m thinking that I might be better off renting to a large, local company that may have the need for some of their execs, for example, to be flying in and out on a somewhat regular basis.
Has anyone done anything similar? How did it work out, and how did you find an interested company?
Thank you.

Re: Renting to a Corporation - Posted by Frank Chin

Posted by Frank Chin on March 20, 2007 at 03:58:32:


A agree with Dave. Based on the price, it’s a high end house in a high end neighborhood. Not exactly the right rental house.

The problems I see are:

  • It’s got to be convenient to airports, offices, etc.
  • You’re almost providing hotel service to a discriminating type without the support of hotel services.

I was reading in the business magazine about the CEO of Sony, a British born American citizen, criticised for living in a hotel in Tokyo rather than setting up residence in a house. His travels to Tokyo, but his family lives elsewhere.

His answer is a residence does not have the amenities of a hotel, such as dining, room service, etc. So a busy exec flying in and out, would have to make his own breakfast, fix his own bed, or else have to hire maid, chefs for the place.

By the time the company pays the rent, hires help, it would be cheaper, and certainly more convenient to just stay in a hotel, or those like hotels cropping up with efficiency suites serving the business traveler. If his family lives elsewhere, how is he or she going to entertain?? Rent a hotel suite, then go back home??

My brother had a job where he lives in NY, but was stationed in the west coast for extended periods. So the company paid for an efficiency apartment near his office, leased him a car, and paid for his meals out. He doesn’t cook, though he had a kitchen. I use to have a traveling job, and I find going to different restaurants a treat. Go home and cook a meal for one??

You have to approach it as a business problem if you are to serve this market. What are the needs of a traveling exec???

The answer may not be a $4,500/month house in the middle of nowhere.

Frank Chin

Re: Renting to a Corporation - Posted by David Krulac

Posted by David Krulac on March 19, 2007 at 17:06:43:

In general, I don’t like renting out high end stuff. It is often hard to fill the property because most people either don’t have $4,500 per month, or if they do will buy rather than rent.

The property is a poor investment property just from the numbers. For an $850,000 property you should be getting $8,500 a month or $4,000 more than you project. So you’re losing $48,000 a year right there.

Secondly renters will not take the same care of the property as an owner, even in the high priced spread.

Thirdly you may not get your projected $4,500. that’s a lot of money.

You’ll probably have longer periods of vacancy, which means no rent.

So unless there is a compelling reason to keep the place, I’d consider selling, and if you want back in that market later buying another house. Your only risk is appreciation, and many people are saying that there may not be a lot of appreciation in the near term.