i have been approached by a large construction company about leasing my home for the next couple years while they are doing work around town. they are going to sign a yearly lease. i have to furnish the house. my question is how do i go about working the numbers to adjust the rent to cover my expense of buying the furniture?? i know of several places that i can get cheap furniture that will save some money but i have no idea how to figure a fair price. they are currently putting their workers up in hotels so anything i tell them will be a huge savings but i want to make sure im asking a fair price. any insight on this would be very helpful
It is not only the expense of buying the furniture but maintaining it, as well. It also depends upon what you are supplying. Are you supplying the dishes, flatware, pots, pans, etc? Those break fairly frequently and need to be replaced between tenants.
But ultimately, you can only charge what the market will pay. Here in Cambridge, MA, there is huge demand for extended stay, fully furnished rentals so the rents are pretty high. I'm able to judge my rental rates by seeing what others are charging for similar units. But since this construction company is putting its workers into hotels, I'm guessing there is no extended stay market in your area.
the furniture is the only thing i'm really worried about. i have a bunch of extra dishes and things like that so those costs will be very small. im just wondering what my time frame should be in terms of getting my money back from cost of the furniture?? i'm just wondering if i should factor in $300 or $500 into the monthly rent to make sure i recoup the costs from buying and maintaining the furniture. the guy i'm dealing with to get the lease set up seems like a pretty straight forward guy so i'm sure we can agree on something, i just dont want to short change myself and end up losing on this.
there really isn't an extended stay market where i am. it's a smaller town. i talked to a friend of mine in town that works for a company that probably has the largest rental business in town and he said they dont offer any properties furnished so he didnt have any idea what i could get. so i dont really have anything to compare
What about researching rents in the nearest city that does have an extended stay market?
Even if you are using extra dishes that you do not need to purchase, you will need to calculate replacement costs. We stocked one of our units with extra flatware we owned. Our nearly perfect tenants used dish detergent that contained lemon and completely destroyed all of the flatware! (Who would have thought they'd sell dish detergent that eats stainless steel?!?)
You need to include both purchase price and replacement costs in your calculations. And there is the added costs associated with more frequent turn-overs. It is an odd arrangement for the construction company to be doing the leasing versus the tenants. Is the construction company signing a long term lease? Will they be placing the tenants? What happens with the furniture, etc when their work around town is done?
This seems like a pretty unusual and complicated business arrangement that warrants getting a lawyer's advice.
I would add at least $500 a month for the furniture. When you are renting to company, aka Corporate Housing, the rates should be a lot more like a hotel. Compare your local Extended Stay options to better understand what you should be charging. Make sure the property is properly insured and the company knows it is a furnished rental. This may add $200 a year to your insurance but I assure you after 25 years doing corporate housing never skip on the insurance. Also take a look at the annual report from Corporate Housing by Owner for more things to know. You should NET $5,000 to $10,000 more per year as a Corporate Housing rental. Also since it is a construction company I would add maid service every other week into the cost of the rental so you can ensure the property is properly taken care of.
thank you for this advice. that is about the number i had in my head but it seemed like a lot to add on to the rent, plus the utilities, made it seem ridiculous. i know they are trying to save money on hotels as that is what they are currently having to do for the guys. hopefully it will work out.
Did anything come of this?
They approached you?
Have you considered charging an upfront fee to cover the furniture in full and leave rent as you would have had it?
That protects you in case the company breaks the lease or doesn't renew after 1 year. It allows you to ignore "maintenance /replacement costs" of the furniture. They purchased it and it only has to live the life of their stay. They damage it, their security deposit covers replacement.
A corporation working in the area for the next few years will likely be able to cover this upfront fee. It is also not a difficult sell.