Executive Rentals: Pros and Cons
The number one question I get about Income Property is whether or not people get to keep the furniture. The answer is usually no. We use the furniture for staging and we have professional photos taken so the homeowners can use them for the rental listing. The exception to this is when we’re creating executive rentals. Executive rentals are usually short term and they come fully furnished with as many amenities as possible. Whether it’s a businessperson in town for work, or movie crews filming on location, executive rentals can bring in big bucks, but they also cost more up-front.
- Executive rentals can bring in a lot of money. They can demand double, or sometimes even triple what the same space would rent for in a more traditional rental situation.
- Since executive rentals cost more to rent you can usually count on getting a higher caliber of tenant.
- Depending on provincial/state rules, you may be able to collect all the rent upfront (if it’s a short-term lease) and collect a damage deposit (refer to your provincial/state policies regarding landlord-tenant relationships).
- Due to the large amount of money you can ask for an executive rental, you usually only need to rent for about half the year in order to make a profit.
- Executive rentals require a fair bit of work on your part because most are short-term. Expect a high turnover rate.
- Because of the high turn-over, landlords of executive rentals are constantly in a cycle of posting the apartment for rent, reviewing applications and screening tenants. Some people hire a placement/management company to take care of this, but if you choose to do so, that’s another cost that eats into your bottom line.
- There’s a level of unpredictability that comes with these types of rentals. Due to the nature of executive rentals your unit won’t always be rented and there’s no certainty about when it will be.
- Tenants who pay a lot expect a lot (and rightfully so). Executive rentals need to be equipped with high-end finishes, nice furniture, complete sets of dishes, cable, internet – the list goes on. But the more you can provide the more you can charge (within reason).
- You’ll need to have the unit professionally cleaned between tenants. This doesn’t have to cost a lot, but when you have a high turnover rate it adds up.
Executive rentals are just one type of rental unit you can invest in. Two other popular types are Student Rentals and Secondary Suites. For more information, please visit my Real Estate Investing page.
Photos courtesy of RTR Media / Income Property