2012 by Owner Corporate Housing Report
Welcome to 2013! In the last year, a lot has changed in the corporate housing and residential rental world. We’ve experienced:
- Corporate housing mergers and acquisitions.
- New laws regulating and prohibiting vacation rentals.
- Identity challenges in the corporate housing industry.
- A still uncertain economic climate.
I believe we will continue to see more of these changes in the months to come.
To help you navigate these changes with confidence, we’re excited to share our 2012 Annual Report―a summary of the results from our annual “By Owner” Corporate Housing Survey. This is the fourth year of our survey and annual report. In the pages to follow, you’ll be able to draw upon the latest data, as well as comparisons and trends from recent years.
Responses were received from property owners across the United States (36 states and the District of Columbia), Canada, and Panama. The highest response rate came from property owners in California, followed by Colorado.
The top reason for being a corporate housing landlord continues to be the long-term investment (50%). That’s up from 47% in 2011, but it’s still below the peak of 55% in 2009.
Outlook for 2013
On a positive note, 36% of respondents predict that 2013 will be better and more profitable than 2012—a similar percentage to 2011. However, 10% of respondents believe that 2013 will be less profitable, which is a notable increase from the 5.2% who had this outlook in 2011. In addition, those who are “not sure” about the future rose from 14.7% in 2011 to 18.4% in 2012.
Despite the cautious outlook described above, 92% of respondents report that their properties were profitable or breakeven in 2012. Overall, the responses were nearly same from 2011 to 2012, with property owners noting a slight increase in profitability in 2012.
Rental Rates and Discounts
60.4% of respondents say they offered the same rental rates in 2012 as they did in 2011. The great news is that 33.1% reported that they did raise their rates in 2012, and only 6.4% of respondents lowered their rates in 2012. These results are significant jumps from 2011 when 16.1% people reported lowering their rates.
Compared to our 2011 survey results, the largest increases in rental rates were for 1 bedroom, 2 bedroom, and 4 bedroom properties. The rates included later in this report are at their highest numbers since we first started collecting this data. 66% of respondents say they offer discounts for longer-term leases. Nearly half of the respondents say they offer rental rate discounts of 10% to 14% for longer-term stays.
Corporate Housing Terminology
72% of respondents list their rentals as “corporate housing,” followed by 51% who list their properties as a “furnished rental.” The most interesting trend that has emerged in the last two years is a 13% drop in those who refer to their properties as “vacation rentals.” This is most likely due to the increase in regulation and taxation of the less than 30-day rental segment, and it’s a trend we will continue to monitor.
80% of respondents say they do all their property management themselves. This is a decrease from the last two years. In the last year, we have seen an increase in the number of respondents seeking support from friends and family, as well as from real estate agents.
New! Property Management Software
The majority of respondents (55%) say they do not use any form of property management software to manage their rental property. 26% use basic spreadsheets, followed by 18% who use accounting software, such as QuickBooks™.
New! Rental Documents
We asked respondents, where did you get your rental documents (such as leases)? The most (38%) say they found their documents on the Internet, followed by 34% who say they wrote their own documents. Only 16% say they paid an attorney to have their documents drafted.
New! Leasing Trends
Based on our experience full-service, corporate housing companies, renters tour properties in advance only 30% of the time. In contrast, in the “by owner” corporate housing segment, property owners say they provide tours to renters 44% of the time. 71% of respondents say email is the primary way they communicate with their potential renters. 46% of property owners say they meet all potential renters face-to-face.
Investment Real Estate Trends
We asked respondents, do you plan on buying more investment real estate? For the third year in a row, there are more “Yes” responses (40%) than “No” responses (17%). Over the last three years, we’ve seen a steady decrease in the “No, I’m done with real estate” response.
Property Size / Number of Bedrooms
The highest percentage of “by owner” rentals continue to be two-bedrooms (36%); though, this is a 5% decrease from 2011. 33% of respondents say their rental properties have three bedrooms or more. In contrast, in the full-service, corporate housing industry, the majority of rentals are one-bedrooms (51%). The availability of additional bedrooms makes the “by owner” corporate housing segment an attractive option to renters.
Whereas the majority of corporate rentals in the full-service corporate housing industry are apartments, only 12% of “by owner” rental properties are apartments, according to survey results. Single-family homes are the largest percentage of “by owner” properties (25%) accounted for in this survey, followed closely by low-rise condominiums (23%).
The highest numbers of private corporate rentals are in suburban areas on residential streets (35%), followed by outer urban areas (27%) and central urban areas (23%).
Inclusions in a Furnished Rental
While the majority of private owners offer tenants a fully stocked kitchen (87.3%―up almost 10% over 2011), TV (85.1%), bed linens (84.5%) and towels (82.3%), there is much greater variation―and opportunity for competitive advantage – in the technology, maid services and perks that are available in each rental property. For the first time, we asked owners whether they offer a “Community Activity Pass” to renters, and 16.1% say they did.
Corporate Housing Tenants
Corporate housing tenants continue to be relatively “painless” tenants. In 2012, more than 90% of respondents say they had a positive experience with their corporate housing tenants. This percentage is consistent with the results from 2011.
Types of Renters
In 2012, the top three reasons for rentals were: business assignments (67%), relocations (43%), and family (33%). In general, the corporate housing renter pool remains consistent. There was a decrease in the number of people renting due to relocations, snow birds, and vacations. This year we added a new renter category: “temporary lodging due to a home remodel.” 23% of respondents say they had that type of renter during the year.
Length of Stay
63% of respondents say their tenants stayed an average or three months or more.
26% of respondents say they are willing to rent their properties for time periods of less than one month—down from 30% in 2011. This year, as the result of city legislation against less than 30 day stays (such as in New York City and Chicago), we added a question about who is setting limits on the minimum length of stay allowed. Only 8% of respondents say their city regulates their minimum length of stay. 22% say they are regulated by the rules of the community or the building in which the property is located.
Security Deposits and Insurance
82% of “by owner” landlords say they require some form of a refundable security deposit in 2012—down from 89% in 2011. In a growing trend, 8% of respondents say they require Accidental Rental Damage Insurance (ARDI) as an alternative to a security deposit.
Credit and Background Checks
In 2012, 28% of respondents say “yes,” they always run credit checks on potential tenants—a number that appears to be holding steady with previous years’ results. A larger amount, 30%, say ”no,” they never run reports, which also is consistent with previous years.
Approximately three out of five of respondents say they accept some form of credit card payment from their renters. 2012 is the first year that Visa/MasterCard is more popular as a credit card option (at 34%) than PayPal (at 33%).
Pets and Pet Security Deposits
Many long-term business travelers are arriving with pets. 48% of survey respondents say they accept some type of pet. Of those who accept pets, 62% say they take pets because it gets their properties rented. The most common rental period for renters with pets is one to three months.
In 2012, the average, non-refundable, one-time pet fee property owners charged was $253. The average pet refundable deposit is $344.
Marketing Trends, Resources and Results
In 2012, 44% of respondents say they spent $500 or more on their annual marketing efforts—up from 37% in 2011. 40% of “by owner” landlords say their property was always rented, while the remaining 60% say they needed more tenants.
63% say they had professional photos taken of their properties. In addition, 21% say they had used a professional decorator to furnish their properties. We believe these numbers will go up as the “by owner” industry matures. More individual owners are seeing property management as a viable income opportunity that requires polished marketing.
The majority of “by owner” landlords say they use the Internet to promote their properties. 64% of respondents say they use CHBO’s basic listing service, followed by Craigslist (44%). Craigslist has been steadily trending down in popularity since 2009; though, it is still a prominent marketing vehicle for many property owners. Respondents find they receive the most qualified leads and the most renters from Internet marketing, followed by real estate agents.
In 2012, we again asked how the “by owner” segment feels about real-time booking reservations, in which the property is leased through a computer website and the property owner has no interaction with the tenant. 16% of respondents say they have used one of these programs (down from 20% in 2011). However, the majority, 53%, say “no,” they would never rent their property without talking to the tenant first.
Of the respondents using CHBO, they tell us they use the following CHBO tools the most:
(1) The property listings (2) The MyCHBO documents page (3) The Property Owner Handbook.