Landlords as we know them are disappearing. In their stead, extended stay hosting has become the passive income stream of the future. As the world works to find a middle ground between short-term stays and long-term leases, the model for visits lasting weeks or months at a time is a rising contender for the definitive rental system.
Being a host takes a lot of managing and legal consideration. With extended stays looking to be the near-future of professional travel, taking the extra steps to ensure you are kept up with the latest trends and policies will guarantee that your space remains an active and secure business.
Read through this guide for a look at the factors that all would-be landlords need to consider before diving into today’s up and coming market for passive income.
Image borrowed from Universal Direction
1. Setting up a Lease
Setting up a lease should be your number one priority. Having a lease ensures that you and your tenants are aware of your rights and obligations. This is exceptionally handy for resolving any issues that happen to come up early throughout the tenants’ extended stay. A lease should include the essential details of the arrangement, which would be the monthly rent amount, the building rules, and the utilities and services to be provided, just to name a few.
You and the tenant both benefit from a lease. It is a written record indicating the details of the arrangement that you have both agreed upon. For one thing, it provides you, as the host, confirmation from the tenant that they have a suitable source of revenue and are able to make the monthly payments on time. On the tenant’s end, they will have the clear monthly amount and a statement of their rights as a renter that you have agreed to grant them.
Take care that your lease also complies with the laws specific to your region. These vary from state to state and city to city. Seeking the aid of a local lawyer will guarantee that your lease is valid in the eyes of the law. Prevention is better than cure, as the age old adage goes. Clarifying what you can or can’t do and getting the same information across to your tenants guarantees a smoother experience for their extended stay.
2. Making Sure You Are Insured
Insurance is something that’s always great to have but you ideally will never have to benefit from. Having more than one property means you have more things to manage. It could be hard to keep track of everything, especially with a business model geared at extended stays. And sometimes, there are just really bad days. When worse comes to worst, insurance is a major safety net you will be glad you put in the time and money for.
It’s important to keep in mind that insurance for rental property is a little different from the insurance you get for your personal residence. When it comes down to it, rental property insurance is primarily fire insurance. It covers for the majority of concerns that come up in the event of a fire such as the damages, medical expenses, and loss in rent. Considering how fire has been a rampant cause for property damage as of late, it is a good idea to guard your tenants and your finances from its effects.
Image borrowed from Centrinity
Making sure the property is financially secured is a burden off your back, but it is important to remember that this insurance does not cover for your tenants belongings. Discussing this with a tenant can save both of you a lot of trouble down the line. Even if the tenant will only be there for an extended stay, convince them to invest in some insurance for their own peace of mind. If they are frequent clients, easing them into the corporate housing lifestyle could help you accomplish this.
3. Knowing How to Handle Evictions
Extended stay hosting profit from rapidly cycling through tenants. These are people that need to be in the area over a certain period of time, but by and large are not looking to relocate there entirely. Because of this, it is important that you are prepared to evict tenants when necessary. As thorough as your screening process may be, there will be times when there’s no dealing with a tenant other than eviction. There are several reasons as to why you may need to evict a tenant. As the host you need to look out for your income, your property, and the well-being of your other tenants. This should not discourage you from catering to this demographic.
Image borrowed from MECKNC
The actual process of eviction can be tricky. Even if your tenants are only over for an extended stay, you can’t just invade their living space and throw out their belongings. Unfortunately, eviction is something you will have to take up with an attorney. It could end up being costly on your end, but it’s the better option in the long run. If you attempt any direct action, you may find yourself harassing the tenant. This could lead to them seeking aid from the law against you, rather than the other way around.
Keep in mind that hiring a property manager allows you to have someone else deal with this responsibility. There is nothing wrong with seeking out trained people to sort out your business. Evictions can be very emotionally, and at times legally, straining. Hiring property managers proves especially useful if you are managing more than one property, which is often the case with extended stay properties.
4. The Market for Extended Stays
Now, take note that not everyone looking for a place to rent is planning to lay down roots. Likewise, not everyone who travels is out on a vacation. When looking to provide room and board to the broad set of people on the go, it pays to remember that a today’s travelers are changing, and that a lot of the amenities provided by conventional bed and breakfasts can prove more distracting than relaxing.
For example, if given the option, traveling professionals will likely forego the luxuries of booking a hotel room if it also means having a more conducive work space. Likewise, experiential travelers tend to look for immersion over luxury when planning their trips—so a living space needn’t be extravagant.
Given these reasons and a whole slew of others, it makes sense that even the most modest and serviceable extended stay units would can stand to make a lot of revenue in the long run. Extended stays focus on the increased frequency of tenants coming and going. It means you earn more often, and that you will get to interact with a wider sample of the world’s travelers.
5. Alternatives to the Traditional Landlord Model
We mentioned at the beginning of this article that being a typical landlord is on its way out. Between the various legal considerations to be made when handling a leased tenant and the drama that can erupt when rent comes in late, it makes sense for people to preserve their interests and free up as much of their time as they can.
Many could-be landlords are opting for the more versatile way of handling their rental properties, and listing themselves on sites like 2nd Address. These platforms handle everything: developing your property’s branding, connecting you with prospective guests, facilitating secure payments, and assisting in disputes.
These alternatives are an upgrade to an age-old business model. Beyond making things convenient for hosts, they’re also appealing to guests—who are increasingly reliant on digital channels to plan and book their travel accommodations.
To sum it up: the new market for extended stays and travel accommodation have gone digital, and savvy landlords have followed suit, taking the initiative to rebrand themselves as hosts. Will this model be sustainable in the long term? All signs suggest so.
The most important thing to keep in mind if you’re thinking of becoming a landlord is this: think again. Changes in the playing field have made hosting extended stays more viable, and much more profitable thanks to their higher turnover rates.
While the rewards of becoming an extended stay host are great, so are the challenges that come with it. If you’re preparing a house or apartment with this business model in mind, note that you still have legal obligations that come with the territory of renting out a space. While they may be significantly easier to deal with than they would be under the traditional landlord model, these responsibilities will make or break your success.
Prioritize the essentials and fasten those safety nets. The property rental business is all about adaptation, and playing the long-game—and with these tips in mind, you’re certain of a smoother operation.