Furnished my first unit for $9,400. A company signed four months at $2,950.

I bought a three-bedroom townhouse in a suburb about six miles from a business park with a few engineering and medical device employers. Closed in the fall. Plain rent for the townhouse is $1,900 and that's what I underwrote it at, so everything below is upside I didn't need.

I'd been reading this room for months and the thing that stuck with me was to have a buyer before I bought a mattress. So before closing I emailed eleven people: HR contacts at four employers I could identify in the business park, two staffing firms, three relocation management companies, and the two corporate housing providers that show up in my market. I said I'd have a furnished three-bedroom available in about 60 days and asked what they typically pay and what they require.

Six replied. Four said get on the vendor list, which is a process. One provider offered to master lease it at $2,150, everything on them. One staffing coordinator at a medical device employer said she has an ongoing problem placing validation engineers who come in for eight to sixteen weeks in groups of two or three, and hotels aren't working for them.

I went with her. Furnished it for $9,400 over three weeks, mostly one retailer's delivery package for beds and sofas, plus a used dining set and a lot of kitchen stuff from a warehouse store. First lease was four months at $2,950 including utilities, internet, and a cleaning every other week. Company signed as tenant, three named occupants, invoice on the first, net 15. They paid on day 9 both times I invoiced.

Running costs while occupied are about $500 a month, so I'm netting roughly $2,450 against $1,900 plain. That's $550 a month over plain, or about $2,200 across the four months, on $9,400 of furniture. Not paid back yet.

The part that nearly broke it: they asked for a certificate of insurance with their entity as additional insured and a signed vendor form with net terms, and I had four business days. My agent handled the COI. The vendor form had an indemnity paragraph I didn't understand and I paid an attorney $600 to read it, which was worth it.

What I'd keep: emailing eleven people before owning anything. Ten hours of work and it changed what the first year looked like.

17 replies

1renee_dubois Get yours

The eleven emails is the whole post. Everything after it is execution.

Question on the master lease offer you turned down. $2,150 with nothing on you versus $2,950 with utilities, internet, cleaning, and vendor paperwork on you. Your included costs are $500, so you're at $2,450 net when occupied. That's $300 a month better than the master lease, and only when occupied. If the lease gap between the validation engineer groups is more than about six weeks a year, the master lease wins. Did you price that out or was it a preference for control?

1aaron_fitz10 Get yoursPRO6

@cairn beat me to it, that was my exact reaction. $300 a month of spread for taking on all the operating risk sounds thin to me. Though I suppose the master lease provider would have wanted a term and a right to renew at their number, so you'd be locking in the thin end.

1samantha_ruizAU4APRO6

I'd take the direct relationship at $2,950 every time, and not for the $300. Once you're the person that staffing coordinator calls, you get told about the next project before anyone else does. Under a master lease you're invisible to the actual demand and you find out what your unit is worth when the provider renews.

@anchor what happened at month five? You wrote four months and then stopped.

2megan_doyle15 Get yours

Basic question and sorry if it's obvious. When you say the company signed as tenant, does that mean the engineers aren't on the lease at all? Who do you go after if they wreck the place?

1luis_carrera Get yours

@rigging the company is the tenant, so the company is who you have a contract with, and the occupants are named so you know who's legitimately there. That's actually the appeal, you're collecting from an entity with an accounts payable department instead of from an individual. @anchor, was there a security deposit or did they refuse one? I've read that larger firms sometimes won't post deposits and you're relying on the corporate obligation instead.

1dpatel_reCS4A

The number I care about is annual furnished occupancy and you don't have it yet. One four-month lease tells you the rate is real. It tells you nothing about whether that unit runs eight months furnished or four.

At $550 a month over plain, eight occupied months a year is $4,400 and the package pays back in a bit over two years, before replacement. Four occupied months a year is $2,200 and you're carrying vacancy at a higher included-cost base while the furniture depreciates. Same rate, completely different investment.

Also worth being precise: your $500 included cost is the occupied number. Utilities and internet during a furnished vacancy don't go to zero, they go to maybe $250. That's the line most people forget when they compare furnished to plain, and it's why gap weeks hurt more than they do on an unfurnished unit.

1dmitri_v6CapitalPRO6

The $600 to the attorney on the indemnity paragraph was the best money in this post. Corporate vendor forms are drafted by the corporate side and they routinely ask the housing provider to indemnify them broadly, including for things arising out of their own occupants' conduct. Sometimes that's negotiable, sometimes it's take it or leave it depending on how much they need you. What did the paragraph end up saying, and did they let you strike anything?

1aliyah_bAU2APRO6

$9,400 for a three-bedroom is lower than the numbers I've been writing down. Was that everything including linens and the kitchen, or is that just furniture?

1devon_pierce Get yoursPRO5

@tally I'd want the itemization too. My working estimate for a three-bedroom has been $14k to $18k and if $9,400 is achievable that changes several deals on my list.

@anchor, six miles from the business park. Did anyone push back on the distance? Everything I read says corporate furnished works downtown and I keep hitting that wall.

1omar_haddadActivePRO11

Three weeks to furnish a three-bedroom with delivery lead times and a used dining set is fast. Either you got lucky on the sectional or you were flexible about what you'd accept. On my rehabs the furniture package is always the thing that slips, and it slips because someone decides the gray sofa is wrong after it's ordered.

1gregpowell66AG4BPRO8

One thing nobody's asked. Three validation engineers in a three-bedroom means three people cooking, three sets of laundry, and probably three cars. What's the parking and what did four months of that do to the unit? I'd expect the wear from three unrelated adults on short assignment to run harder than a family on a two-year lease.

0paulgrant17PassivePRO5

How did you screen them, or did you? If the company is the tenant and they hand you three names, do you run anything on those names, or is the corporate signature the screening?

1karen_whitfieldPG4APRO7

The part that impresses me is that you underwrote it at $1,900 plain and bought it on that basis. Everything since is optional. That's the position that lets you say no to a $2,150 master lease without sweating.

2kevin_lombardPG1BPRO5

Saving this whole thread. @sextant's point about utilities not going to zero during a furnished vacancy is something I would not have thought of for another year.

1tashaford30PB2APRO7

@anchor, did the four providers who told you to get on the vendor list ever come through? I lost a deal partly because I assumed vendor approval was a formality and it turned out to have a two-year operating history requirement. Curious whether you're in any of those queues now and what they asked for.

3luis_carrera Get yours

Rereading this, the emails went out before you closed. So if the deal had fallen apart you'd have been emailing eleven people about a unit you didn't own, and one of them is now your best contact. Did you tell them it was under contract, or did you present it as available?

3marcus_hale41CG4A

I'll push on the one variable that actually breaks this. Your buyer is one staffing coordinator at one employer with a specific recurring need. She changes jobs, or that validation program finishes, and your $2,950 goes away in a single phone call. The four vendor-list applications are the thing that makes this a strategy instead of a relationship, and they're the part you haven't finished.

I'd spend the next four months of paperwork time on those queues while the current lease pays. Concentration in a single counterparty is fine at one unit. It's what kills people at four.