A recent article in The Boston Globe by Katie Johnston found that Boston’s short-term housing market is on the rise since more patients, relocating professionals, traveling nurses, etc. find that staying in a fully furnished apartment is much nicer than staying in a hotel for an extended period of time. After all, staying in an apartment which is residential in nature vs. a hotel which is transient is going to make your stay that much more comfortable. Plus, most corporate apartments include a fully stocked kitchen, cable, internet, phone service, secured building, amenities, etc. all for one great rate.
According to Smith Travel Research, Inc. – a hotel research company based in Tennessee – extended stay properties grew 4x faster than all other hotels from 2007-2012. In Boston, the amount of extended stay properties grew twice as fast as available hotel rooms.
Our newest franchise owner, Patrick Flynn, of Northeast Suites/AvenueWest Boston was featured in this article: “Increased hiring by biotechnology and pharmaceutical companies is adding to the demand as new employees look for permanent housing.” More companies are relying on contractors to get the job done in a matter of weeks or a couple months. Short-term housing is a better alternative than staying at a hotel during this time. Currently, Patrick has about 120 fully furnished apartments in the Boston metro area and 80+ across the nation. He expects his revenue to double to more than $3 million this year with the influx of people needing short-term, fully furnished apartments.
There is a large number of European guests needing temporary housing while they receive treatment at nearby hospitals in Boston. A recent study conducted found that the US Food and Drug Administration is approving cancer drugs faster than European regulatory agencies. Many clients come over to Boston to seek the newest cancer treatments that are currently unavailable in their counties.
The rise in extended stay properties nationwide means there is a greater demand for short-term temporary housing. Why not choose a corporate housing unit for your next short-term stay? These can be true home-away-from home properties that make you more comfortable while getting adjusted to your new city.
A recent article posted at NBCNews.com Business uses Zillow’s Break Even Horizon to determine the top 10 cities where renting is more economically sound than buying and how long it takes on average to break even if purchasing a home. This figure is calculated based on the net cost of purchasing a home vs. renting the same house. Here are the top 10 cities renting costs less than buying:
New York City, NY. Zillow Break Even Horizon: 5 Years; Zillow Rental Index: $2,016; Annual Change in Zillow Rent Index: 19.4%
Renting an apartment in the city would save more money than purchasing a home unless you were going to be living in NYC for more than 5 years. The average home price is $462,500. A 20% down payment is going to be $93,000 for a home this much and with the current rate of 3.277% and a 30 year fixed mortgage, you are looking at a monthly mortgage payment of $2,145 which is higher than the current rental index.
Seattle, WA. Zillow Break Even Horizon: 4.3 Years; Zillow Rental Index: $1,850; Annual Change in Zillow Rent Index: 4.7%
Waterfront property in Seattle averages about $392,200 as of December 2012.
Boston, MA. Zillow Break Even Horizon: 3.9 Years; Zillow Rental Index: $2,299; Annual Change in Zillow Rent Index: 11.3%
Based on 25 new single family homes for sale in Boston, MA, the average home costs $727,200. A 20% down payment is $145,000 with a 3.277% interest rate, your monthly mortgage payment would be $3,334. Renting in Boston on average would be a monthly savings of $1,035.
Washington, D.C. and San Francisco, CA tied for 4th for the amount of years it would take to break even if purchasing a home.
Washington, D.C. Zillow Break Even Horizon: 3.7 Years; Zillow Rental Index: $2,439; Annual Change in Zillow Rent Index: 7%
There has been an increase in new home development in the D.C. area. As of December last year, the average home cost $402,400 which is up by 10%.
San Francisco, CA. Zillow Break Even Horizon: 3.9 Years; Zillow Rental Index: $3,281; Annual Change in Zillow Rent Index: 12%
San Fran has seen an 18% increase in home sale prices year after year! Currently, the average home costs $770,600. A 20% down payment of $154,000 with the current interest rate of 3.277% would be a $3,529 monthly payment. By renting, you would save on average of $248 a month.
Portland, OR. Zillow Break Even Horizon: 3.6 Years; Zillow Rental Index: $1,423; Annual Change in Zillow Rent Index:
Portland has the most bike commuters in the U.S. Last year, 21.49% of homes sold were sold at a loss, but the average value of homes has risen 8.8% ($257,400).
San Diego, CA. Zillow Break Even Horizon: 3.4 Years; Zillow Rental Index: $2,116; Annual Change in Zillow Rent Index: 2.9%
The average San Diego home value is up 11% making the average home $404,100.
Los Angeles, CA and San Jose, CA tied for 7th place based upon the number of years it would take to break even after purchasing a home in either location.
Los Angeles, CA. Zillow Break Even Horizon: 3.3 Years; Zillow Rental Index: $2,311; Annual Change in Zillow Rent Index: 2.3%
Los Angeles has a very high unemployment rate and the home rates dropped about 35% which actually makes L.A. more affordable for home owners. The average home costs $399,800 which was up by 9.7% as of December 2012. If you put down a 20% payment of $80,000 with the 3.277 interest rate with a fixed 30 year mortgage, your monthly payment is going to be $1,863.
San Jose, CA. Zillow Break Even Horizon: 3.3 Years; Zillow Rental Index: $2,513; Annual Change in Zillow Rent Index: 4.5%
San Jose, CA has a lot more people interested in purchasing homes since the average annual income is $92,500. San Jose has a very high employment rate with over 6,000 technology companies. The average home in San Jose is $544,600 so if you put down 20% ($109,000) + 3.277% + 30 years = $2,514 monthly mortgage payment which is $1 higher per month than the current rental index!
Denver, CO. Zillow Break Even Horizon: 2.8 Years; Zillow Rental Index: $1,468; Annual Change in Zillow Rent Index: 9.3%
As of December 2012, Denver’s average home value was up by 14.1% with the average home costing $233,700.
Austin, TX. Zillow Break Even Horizon: 2.7 Years; Zillow Rental Index: $1,516; Annual Change in Zillow Rent Index: 6.2%
At the end of last year, Austin had an overall home value increase of 4.7% = $209,900.
Nashville, TN. Zillow Break Even Horizon: 2.6 Years; Zillow Rental Index: $1,190; Annual Change in Zillow Rent Index: 3.8%
The average home cost is now $140,000, which is up by 6%.
Most of the cities listed above experienced an overall increase last year in their median home values which is great news overall for the market!
Renting is much more prevalent these days than purchasing a home. Many times, people who are relocated prefer to stay in a rental before deciding to purchase a more permanent living solution. Renting is also great for individuals who want to explore a new city but don’t want to stay there permanently.
Many apartment communities do typically require a year lease to be signed and there are 5 factors that need to be taken into consideration before you sign on the dotted line:
- Laundry. Typically, apartment complexes do not include a washer and dryer in the units themselves but have a common laundry area. Sometimes, washer and dryer hook-ups are available in the units and it might be wise to consider purchasing a washer and dryer or you can rent these. Azuma Leasing rents washers and dryers for a small monthly fee. They are located in most of the states, excluding New England and many of the northern states. If you are okay with sharing a common laundry area, be sure to take note of where the facilities are located in relation to your unit; if weather will be a factor or if you have to climb stairs with your heavy laundry.
- Refrigerators. Sometimes, this is an appliance that is not included in your rental. Azuma Leasing also rents refrigerators or you can consider purchasing one.
- Proximity. Be sure you find out how close you are going to be to your neighbors and what types of sound proofing (if any) the complex has utilized for noise cancellation. Opting for a top floor unit will eliminate noise from overhead but not necessarily next door.
- Storage. Most apartments do not typically offer ample closet space. Sometimes, a unit will come with a storage unit on the balcony. If the unit you want doesn’t have enough room to store your belongings, there are alternatives. Certain furniture items come with built-in storage. There are other organizational tricks online that will help you maximize your space without cramped living.
- Decor. You found the perfect rental within your price range and area but don’t like the outdated feel of the interior of the apartment. Ask your landlord if you could do some small repairs, painting, and updating for a discount in your rent. Be sure that it is agreed upon in writing and be sure you know of any limitations so you don’t get charged for these updates later on.
Most of these items are not necessarily deal breakers but they are important factors to consider before you get into a year-long lease.
Corporate housing is a critical “product” in the larger, extended stay lodging segment. As an industry, we need to understand that corporate housing is no longer just for traditional business travelers. There are many individuals and families seeking long-term housing, and we need to educate these renters on how corporate housing is an attractive extended stay option. Consider this: There are more than 600,000 relocations in the U.S. defense industry each year, and there are more than 200,000 traveling nurses! These individuals are already familiar with extended stay lodging. If we embrace what they already know, there will be a much shorter learning curve in educating them about corporate housing.
Stay in a residential setting instead of a transient one the next time you are called away on an extended stay business trip; are displaced from your home; are relocating to a new city and want to try an area out before renting long term or purchasing a home; are having a medical procedure away from home; off-base military housing; etc. The possibilities are endless for “corporate housing.”
What is Corporate Housing and what questions should I ask when choosing a property and a provider? CHPA, The Corporate Housing Providers Association has a best practices guidelines and Certifies individuals as CCHP, Certified Corporate Housing Professionals. Northeast Suites takes their commitment to excellence to another level to ensure your stay is as peaceful and seamless as possible.
While many professionals believe that all corporate housing companies and leasing agents are the same, the truth is that there are important and unique differences between the three popular types of corporate housing companies. It is critical for relocation professionals to understand these differences when deciding on what kind of company or agent to work with.
First, there are “service companies.” These companies rent apartments, furnish and equip them, then offer the apartments as corporate housing rentals.
Second, there are “apartment companies,” which own or manage large apartment complexes. These companies use some of their inventory as furnished corporate housing units.
Third, there are “management companies,” which are real estate property management companies that manage properties owned and furnished by individual real estate investors. A relocated executive with a family and/or pet probably would appreciate a unique home in a neighborhood setting that is managed by a management company, whereas a company needing to place numerous executives in similar properties may need 20 units all the same and located within an apartment complex.
Once a relocated professional has chosen the right “kind” of company to work with, it is important to understand that each company offers different services and amenities. Asking the right questions of your corporate housing management company or agent will ensure a more pleasant experience for all. Some important questions to ask include:
Rates. What does the monthly rate include? Are there preferred rates for larger accounts? Are there additional fees? These questions will help a guest enter into a corporate housing lease agreement more knowledgeable and confident.
Location. Is there a local office or on-site contact should the guest require assistance? If the company does not have a local office, ask how the company handles client requests and property issues.
Services. What additional services does the corporate housing company provide? For example, is there 24-hour maintenance service or other amenities that will make the stay pleasant?
Accreditation. Is the company a Corporate Housing Providers Association (CHPA) member? CHPA is the trade organization for the corporate housing industry and requires specific levels of professionalism, excellence, customer service, and ethical standards. Ask whether the leasing agents are Certified Corporate Housing Professionals (CCHP). The CCHP certification means that the corporate housing professional has met clear industry standards. These accreditations will enable a relocation manager to distinguish a quality corporate housing agent from the pack.
Experience. What percentage of the corporate housing company’s business is involved in corporate relocations? Finding an experienced provider can be a bonus in this changing marketplace.
Protection. How are the company and its vendors insured? This is especially important to find out when working with management companies that manage properties offered by individual homeowners.
Policies. What is the company’s policy when a guest does not like the property? Does it have other options available to accommodate that guest?
Because not all corporate housing management companies and agents are the same, it is of the utmost importance to ask as many questions as you can think of each and every time. The experienced and quality companies will be able to address all your questions and concerns with ease.
Corporate housing often is misunderstood as only a business-to-business product when it actually is a defined element of the overall lodging industry that is used by individuals every day. In simplistic terms, corporate housing provides short-term furnished housing, offering dozens of reasons everyday people need and use it. In fact, corporate housing is not just about traveling business executives and relocated professionals, but also about the 200,000 annual traveling nurses; 600,000 annual military personnel and their dependents; displaced homeowners because of insurance issues or divorce; professional athletes who get traded from city to city; theater professionals filming a movie or traveling with a show; consultants on a project; employees at training programs, on extended vacations, on extended family visits, or having out of state medical procedures; elected government officials serving outside of their district; personnel involved in special events or large sporting events; traveling professors or graduate students; and many others.
In other words, corporate housing is not just for a relocated or traveling businessperson, but for anyone who wants the space, convenience, and comforts that a home away from home can offer.
Before you depart the unit, you should fill out the departure side of the “unit condition form” or if one wasn’t provided, add to the list you created at the beginning of your stay. To be the most thorough, you should schedule a walk-through with your landlord and/or leasing agent to review the “unit condition report” with you and have them and you sign off on the written form/list and date it. This way, when it comes to getting your security deposit back, you will already be prepared about what to expect.
- Research the amount of days your landlord/community has to refund your full or remaining security deposit. This varies by state. In CA for example, the landlord only has a 21 day window to get these refunded. Most other states are 30 days unless otherwise specified.
- If any damages were deducted from the security deposit, the landlord/community/leasing agent must send over a detailed statement showing what was deducted from the security deposit. If you have all of your ducks in a row including before and after photos with a time date stamp and your copy of the unit’s condition upon arrival and departure, you should be able to fight any damages that have been taken out if you didn’t do them.
- The landlord/agents are entitled to do their own inspection report once you have moved out of the unit. During this inspection, damages that might not have been identified on the unit condition form may be found once the unit is free of the tenant’s possessions. If applicable, these items will be deducted from the security deposit.
- If a cleaning fee wasn’t charged up front, then cleaning charges may be deducted from the security deposit. If there are any damages to the carpets, the tenant can be charged for the useful life of the carpet or the remaining life. For example, the carpet is 8 years old but it was expected to last for 10 years. The initial cost of the carpet was $1,000. The tenant cannot be charged the full amount but they can be charged for $200 which would add up to be the remaining 2 years left on the carpet.
Taking photos and recording details of any damages in the unit no matter how small prior to moving in and out can be huge when it comes down to getting your full security deposit back once you move out.
Be sure you submit any correspondence between you and the landlord/leasing agent in writing. As always, before signing any contract, be sure to do all your research ahead of time so you know what you are getting yourself into.
We hope this series of posts was helpful for all current and future renters.
As the corporate housing industry evolved in the 1980s, a number of large corporations believed it would be cost effective to purchase and furnish condominiums for their employees’ exclusive use. These companies believed that do-it-yourself corporate housing could save thousands of dollars. But the truth is that going it alone actually was much more costly and extremely frustrating. In fact, many companies signed up for way more than they bargained for.
Elaine Quiroz, president of Corporate Housing Strategies, Roanoke, Virginia, agrees and says that most companies that try to set up their own corporate housing apartments eventually return to working with a corporate housing provider for two reasons, the first of which is that they often do not consider how involved and costly it can be to set up a new corporate apartment. “They often underestimate the time and money involved in scheduling, paying connection and delivery fees, and the costs for furniture, housewares, telephone, electricity, water, and Internet,” says Quiroz.
Second, Quiroz says that these companies also do not take into account the “set-up time involved,” such as waiting four hours for the cable company to simply show up or fixing a leaky dishwasher at 2:00 a.m. Plus, it takes many hours to coordinate set up and take down of a property, not to mention cleaning, inspecting, and coordinating transition details with the guest. These additional activities can add up to hundreds of wasted hours, and time is money. In addition to the time and effort involved in do-it-yourself corporate housing, there also are a lot of hidden costs involved with owning and/or managing a property. Companies must provide an upfront down payment (when purchasing a property) or pay a security deposit (when renting an apartment). They also may have to sign a long lease and pay rent each month regardless of whether there is a guest in the apartment. On top of that, the company must furnish, service, maintain, and insure the property—all very costly and timely endeavors for an organization whose core job function is not property management.
Quiroz says it never occurred to these companies that corporate housing was not a one transaction deal. “It’s not like buying a television, where you shop around, make a purchase, walk out of the store, and it’s done. When a corporate housing provider arranges your housing, they are the point-of-contact for the guest from start to finish providing move-in instructions and a host of other questions the guest will inevitably have.”
Corporate housing and extended stay hotels are two vastly different types of accommodations that often are thought to be interchangeable. While both offer short-term, furnished accommodations, it is important to understand that the similarities between the two lodging types end there.
Corporate housing typically offers larger square footage, costs less than hotels, offers full customer service, and is used for stays averaging one month or more (the average corporate housing stay is 81 days, according to the 2008 Highlands Group Corporate Housing report). While these differences are significant, Paul Bates, president of Corporate Accommodations, Inc., Pittsburgh, Pennsylvania, says he believes these superficial differences do not really define the true disparities between corporate housing and extended stay hotels. Instead, Bates defines the difference as residential housing versus transient housing. Corporate housing provides complete temporary housing solutions within a stable residential setting unlike extended stay hotels, which are surrounded by an open parking lot and are filled entirely by transient guests. Understanding these unique and sometimes subtle differences between corporate housing and extended stay hotels can save a company thousands of dollars and provide guests with a more pleasant and positive stay.