There comes a time when you want to sell your investment property. I was interested in investing in the Destin, Florida, area and thought this was a good time to sell and do a 1031 Tax Exchange, which is a like property exchange in that you avoid paying capital gains taxes on the increased value of the property.

After renting one of my single-family homes for 15 years, I tried to sell with no luck. I thought, "Why not turn it into a corporate rental?"

This is not an easy decision when you think of the amount of time and money it takes to furnish a house from scratch. So I put it on VRBO, rented it within a couple of days for double what I was getting for the long-term rental, and the guest was going to arrive in a week.

I had three days to furnish, decorate and supply the kitchen and linens in this five-bedroom contemporary. Since then, it has been booking well and now is booked for most of the summer. The listing is now on AirBnB, VRBO, Booking.com and our vacation rental management site.

In this article, we'll take a look at the process of converting your property to a corporate rental.

Is your investment a good candidate for a corporate rental?

First, you will need to analyze the yearly cost/benefit ratio of doing a corporate rental.

For example, long-term tenants pay most of the utilities. Corporate rentals furnish all the utilities unless otherwise negotiated, so there is additional cost and accounting with a corporate rental. Management commissions are higher, but the return on investment is also significantly higher as well.

What about location? Where your corporate rental is located does not really matter, because there is such a high demand of interest from visitors, corporations or buyers needing temporary housing. A corporate rental can be six months, two years or just 30 days and still be in high demand.

The only time location does matter is when dealing with homeowner association restrictions and local zoning laws. You will need to check your local zoning rules and your homeowners association documents (if you are member) before you decide to take this path. Many jurisdictions are limited to four unrelated people or 10 related family members, but most of the corporate rental demand is from families anyway.

What are the next steps?

  • Analyze space to determine what needs to be removed and stored or what may need to be added to enhance the unit.
  • Do inventory of your space. You can get a downloadable inventory list here.
  • Do a maintenance check list of your unit.
  • Find a management company that specializes in short-term rentals (not just long term). The business model is unique for corporate rentals. I do not recommend doing this as a corporate rental by owner or VRBO, because there are many license and tax requirements that a management company can help navigate.
  • Work with management in implementing your decorating and unit setup strategy.
  • Consult your tax accountant for any tax-related implications.

What does a management company do for your corporate rental?

A management company can help analyze any issues that may prevent you from turning your home into a corporate rental and will be invaluable in helping you with your search for the perfect investment property.

Management companies should provide you the following:

  • Access to a rental reservation portal, including sales cycle with current and future net rental income and year-to-date information, calendar and owner-booking capability
  • No trip charge for regular maintenance
  • Initial property assessment and recommendations
  • Interior decorating and purchase of items (if requested)
  • Establish rental rates and estimated rental revenue
  • Take interior and exterior photos of the property
  • List properties on VRBO, HomeAway, Tripadvisor, Flipkey, AirBnB, Booking.com, Expedia and many others
  • Calender management and synchronization
  • Create a social networking campaign, including Facebook, Twitter and email marketing
  • Perform inventory of items
  • Provide linen pool or set up linens for unit
  • Schedule initial deep cleaning and unit setup
  • Manage reservations, guests and follow-up guest survey
  • Conduct routine inspections and routine maintenance without trip charge
  • Provide all accounting services, including owner statements and owner checks and payment of local county and state sales tax

In a nutshell, the opportunity to realize more income from your investment property or even your primary home is good option.

Another option is to turn your primary home into a corporate rental when you are going out of town for a major holiday. For instance, you may always go to Boston for Thanksgiving. That is a perfect time to promote your own home for corporate rental and reap the benefits of additional income.