This guide will explain the ins and outs of corporate leasing to help you truly understand the process.
If you’re just getting started with the corporate lease concept, there’s a lot that you should know.
The basic premise is simple.
But once you start down the rabbit hole, many questions arise that can make the process confusing.
In this post, you’re going to learn everything you need to know. This guide will explain the ins and outs of corporate leasing to help you truly understand the process.
It’ll also help you understand how Travelers Haven uses a blend of tech and traditional corporate leasing strategies to make the process simple for everyone.
Let’s dive in.
What is a Corporate Lease?
Technically speaking, a corporate lease is:
Note that a lease agreement is sometimes different from a rental agreement.
This will become important later on when we begin discussing what corporate leases have to do with short-term rentals and travel lodging.
A lease agreement is a contract between a tenant and landlord that gives the tenant the right to live in a property for a fixed time — typically for a six or 12-month rental period.
Rental agreements are very similar to lease agreements. However, they do tend to vary in the length of the contract.
Unlike a long-term lease agreement, a rental agreement may provide a tenant with a shorter rental period, for example, 30, 60, or 90 days.
Lease agreements and rental agreements can also tend to differ in language about who is leasing and living in the property.
A lease may specify that a company is obtaining (leasing) that property to sublease it out under the lease terms. In contrast, a rental agreement is more likely to describe an arrangement where the lessee agrees to occupy the space.
How Does A Corporate Lease Differ From A Personal Lease?
A corporate lease is different from a personal lease in the following ways.
(Don’t worry. This is more straightforward in practice than it sounds.)
A corporate lease is a lease used by a business entity (usually a corporation, but sometimes an LLC) to secure several lodging units (generally apartments, houses, or condos). The entity can then choose to sublet out to remote and traveling workers who need short-term rentals and corporate housing options.
On the other hand, an individual secures a personal lease from the property owner or manager when they seek to live in the housing unit.
Property owners sometimes lease out blocks of units to businesses under corporate leases at a discounted rate.
They get a discount due to leasing a high volume of units at once.
Then the entity leasing those units can sublet those units to traveling workers as short-term rentals to turn their profit as a middle-man.
This is the basic framework behind how many corporate leases operate.
Understanding the Nuts and Bolts of Corporate Leasing
Property owners who buy or build investment property need to fill their units to the maximum occupancy as quickly as possible to avoid losing money on their investments.
Therefore, it’s in their best interest to make sure they rent out every single unit 100% of the time.
Here’s the thing about short-term rentals:
For the most part, short-term rentals tend to rent out for about the same in rental payments every month as a regular-term rental, if not slightly more.
But it’s also understandable that these types of rentals will tend to experience a bit of downtime between renters.
This is due mainly to the shorter terms of the rental agreements made by remote workers, and the flexibility that’s generally implicit in such rental contracts.
See, these remote workers may not need to stay in one place for an entire year or even for six months.
They may only need to rent a unit for 30 days.
This is where the idea of corporate leasing (and corporate tenants) can be leveraged quite profitably for all involved — especially short-term rentals.
Corporate Housing Basics
The Corporate Housing Providers Association defines corporate housing as:
Fully furnished temporary housing — typically in an apartment setting.
The definition goes on to say that professional providers coordinate these units to include furniture, housewares, amenities, cable, phone (including a phone number), electricity, water, etc.
And this is all generally included in one inclusive payment to the property management company.
For rental periods of 30 days or more, corporate housing can also be described in several other ways.
Here are some terms you may hear used interchangeably:
- Short-term rentals
- Furnished apartments
- Corporate apartments
- Temporary apartments
- Extended-stay apartments
- Temporary furnished rentals
- Short-term stays
- Executive suites
- Serviced apartments
Corporate housing aims to be a full-service solution.
It should come with a full range of amenities so that remote workers and traveling professionals can find the comfort and convenience of home even while away on business.
Corporate Leasing and the Real Estate Business
Getting into the nitty-gritty details of corporate leasing in the real estate business is a pretty complicated topic.
But for this post, here’s what you need to know.
Corporate leasing is a viable option for property investors who buy real estate and want to turn it into rental property investment. They can rent out one or more units to corporate lessees who then plan to sublet those units to companies needing lodging for their remote teams or individual traveling workers (e.g., traveling nurses, construction workers).
Generally speaking, real estate investors can afford to sublease bulk numbers of units to corporate leasing entities at a reduced cost due to the sheer volume.
Now, this isn’t always how these types of deals go down. But this is a fairly common phenomenon in the short-term housing industry. It represents the model for how short-term housing works regardless of whether you’re talking about New York, California, or anywhere in between.
These savings allow the corporate leasing entity to sublet those units as short-term rentals and corporate housing options for remote and traveling workers. The fact that they’re saving money means they can make their service profitable while keeping their rental rates in a competitive range.
Can You Sublet a Corporate Lease Through Airbnb?
Airbnb has created some murky, uncharted territory in the zone of corporate leasing.
The basic idea behind Airbnb is that it gives individuals the opportunity to rent out extra rooms, houses, or apartments.
But when it comes to corporate leasing, this gets complicated.
For example, can a company pay for many Airbnb rooms and then sublet those rooms out as short-term rentals to traveling professionals?
This is an excellent and confusing question.
The technical term for this is property or rental arbitrage.
Or, more specifically, Airbnb corporate rental arbitrage.
Technically, there are ways to go about this.
But it’s not an ideal option for the average remote worker or travel manager who needs to book corporate housing for an extended stay away from home.
The reason being is that Airbnb units themselves don’t tend to be very sustainable options for corporate housing.
At best, they can serve as a workaround in cases where you need very temporary housing to fill in a housing gap between other short-term rentals (or where there are no other corporate housing options available).
But it’s not as economical or as simple as on-demand housing.
What is On-Demand Housing, and How is Travelers Haven Different?
On-demand housing, also known as workforce housing on-demand, is a new and completely customizable corporate housing option. At Travelers Haven, we help bring top-quality, affordable, customizable temporary corporate housing solutions to clients traveling all over the United States.
It works like this.
First, we get a housing request.
We get the details about the location, the length of the stay, the type of accommodation required, what amenities you need, and other specifics.
Do you need office space? Is access to common areas preferred? Do you need a certain number of square feet (a certain number of bedrooms, bathrooms, etc.)? Are you looking for a base rent amount to fit into your budget or per diem allowance?
We make sure that all these things are nailed down and recorded before we even begin searching for a property.
Then, we do the research — and find you a great short-term rental that’s not only move-in ready but convenient in every possible way.
We also act as the rental manager and handle things like utilities, cable, WiFi, rental applications, etc.
You simply make your monthly rent payment directly to us, and we take care of everything else.
Not only does on-demand housing tend to be convenient, but it also helps you save money.
Travelers Haven saves remote workers an average of 43% on corporate housing rates. Learn more about us here.
What Role do Management Companies Play in a Corporate Lease?
Management companies are generally in charge of renting out corporate housing to remote workers.
These companies also do things like keep the lawn, maintain the buildings, do light housekeeping and linen services (sometimes), provide security for the rental, etc.
This will also usually be the entity responsible for collecting payment for the rental.
Travelers Haven, for example, takes on the role of the management company when you choose to find on-demand housing through our service.
This is another great thing about on-demand housing:
You get to work with a company you can trust.
What’s the Difference Between a Corporate Lease and a Vacation Rental?
Corporate leases and vacation rentals are very similar. In fact, in some cases, they’re considered the same thing.
The main difference is that corporate leases tend to last for 30 days or longer, while vacation rentals usually lease for a period of fewer than 30 days.
How to Find Corporate Leasing for Your Company and Team
Finding corporate leasing for your company and team will require you to do quite a bit of internet searching.
You can also use sites like Airbnb, though they’re only selectively useful.
Our favorite option is on-demand housing, which goes where no other housing options can — in the sense that it’s a service that provides you with everything you need for your stay.
There are several advantages to choosing to go this route:
- Dedicated account managers mean one single point of contact
- Customizable furnishings and houseware packages
- One monthly bill helps to simplify payments
- Live customer support
- Pet friendly
- A transparent cancellation policy
- Easy lease extensions
- Innovative technology lets you manage your travel requests, submit maintenance requests and make your payments through an easy-to-use portal
- Find housing anywhere in the United States, from big cities to small towns
- Get flexible leases, starting at 15 days
- Easy, fast, dependable, and up-front
A Quick Glossary of Leasing Terms
For you, the traveling professional or corporate travel manager, some of these terms may be selectively useful.
So we’re going to include a quick glossary to help you understand some of the terms you may come across:
A commercial property, also known as commercial real estate, is a property used specifically for business or to generate income.
Commercial property, also known as commercial real estate, is a property used specifically for business or to generate income.
A gross lease is a commercial lease in which the tenant pays a flat fee, which encompasses not only rent but all other costs associated with ownership. This would include renovations (if needed), property management, etc.
Lease Cash Flow
For real estate investors, reporting cash flow for a lease can be tricky. Here’s a post describing how this process works in greater detail.
A lease default happens when someone fails to comply with the lease terms. The most common example of this is when a renter fails to pay the agreed-upon monthly payment for the lease.
Net lease is a different type of contractual agreement where the lessee agrees to pay a portion (or all) of the insurance fees, property taxes, and maintenance costs for the property.
A security deposit is a sum of money paid at the start of renting a property. You generally get this money back either at some point over the lease term or at the end of it if you paid all expected balances.
That’s everything you need to know about corporate leases, how they work, and how to find the one you need.
It’s complicated stuff. But here at Travelers Haven, we’re used to it.
We know how difficult it can be for hardworking travelers to find housing. And that’s why we do what we do.
We hope that this guide has been helpful.
If you’re ever in the neighborhood, don’t hesitate to stop by!
See you on the other side.