Corporate Housing Running Costs: $131K Monthly Budget

Corporate Housing Running Costs

Running a Corporate Housing operation in 2026 requires monthly operating expenses between $120,000 and $140,000 during the initial ramp-up phase This high fixed cost base—driven primarily by property leases ($50,000/month) and payroll ($32,916/month)—means profitability hinges entirely on achieving the target 650% occupancy rate quickly Variable costs like cleaning and booking fees add another 140% to revenue This guide breaks down the seven critical recurring expenses you must model precisely, showing how fixed overhead of $76,000 per month dictates your cash flow needs You must maintain strong working capital, as the model shows minimum cash dipping to $40,000 by September 2026, despite achieving breakeven in the first month

7 Operational Expenses to Run Corporate Housing

#	Operating Expense	Expense Category	Description	Min Monthly Amount	Max Monthly Amount
1	Lease Payments	Fixed Cost	The largest fixed cost is the Property Lease Payments, set at a non-negotiable $50,000 per month.	$50,000	$50,000
2	Staff Wages	Personnel	Total gross payroll for 2026 is approximately $32,916 monthly, covering 55 full-time equivalent roles.	$32,916	$32,916
3	Taxes & Insurance	Fixed Cost	Fixed monthly costs for Property Taxes and Insurance are $12,000, budgeted regardless of occupancy.	$12,000	$12,000
4	Utilities	Variable Cost	Utilities are split, with 40% of revenue ($6,495 monthly) tied to occupied units plus common area costs.	$6,495	$6,495
5	Booking Fees	Variable Cost	Booking Platform Fees consume 50% of gross revenue, equating to about $8,119 per month in 2026.	$8,119	$8,119
6	Cleaning Services	Variable Cost	Professional Cleaning costs are 30% of revenue, estimated at $4,871 monthly, scaling with unit turnover.	$4,871	$4,871
7	Admin & Software	Fixed Cost	Essential fixed costs for Property Management Software ($1,500) and General Administrative Costs ($2,500) total $4,000 monthly.	$4,000	$4,000
	Total	All Operating Expenses		$118,401	$118,401

What is the total required monthly running budget for the first year of Corporate Housing operations?

The total required monthly running budget for the first year of Corporate Housing operations is driven by fixed overhead, which we estimate at $55,000 per month for a 50-unit portfolio, plus variable costs tied to occupancy and unit turnover.

Quantifying Fixed Overhead

Fixed costs include base property leases, core management salaries, and essential insurance policies.
If your fixed overhead is $55,000 monthly across 50 units, that’s $1,100 per unit just to keep the lights on.
To cover this fixed cost alone, you need about $1,833 in gross revenue per day across the portfolio (55,000 / 30 days).
This means your break-even point is defintely higher than your Average Daily Rate (ADR) suggests; you must model this coverage threshold first.

Managing Variable Spend & CPAR

Before diving into the operational specifics, founders must map out the foundational elements required for their launch plan; you can review What Are The Key Components To Include In Your Business Plan For Launching Corporate Housing? here. Variable costs, like utilities and housekeeping, directly impact your Cost Per Available Unit (CPAR), which is the true measure of unit efficiency, not just occupancy rate.

Expect variable costs—utilities, cleaning, restocking supplies—to run about 18% of gross revenue.
If your average ADR is $250, a 18% variable cost eats $45 per occupied night immediately.
CPAR is fixed costs plus variable costs divided by total available units; this metric shows true unit profitability.
Focus on reducing turnover frequency; cleaning costs are a major variable leak that eats into contribution margin fast.

Which cost categories represent the largest recurring expenses and how can they be optimized?

For the Corporate Housing operation, the two biggest drains on cash flow are property lease payments at $50,000 per month and payroll expenses hitting $32,916 monthly. Understanding this cost base is crucial before scaling, which is why you need a solid grasp on What Is The Estimated Cost To Open, Start, And Launch Your Corporate Housing Business?. If onboarding takes 14+ days, churn risk rises, defintely impacting these fixed costs.

Lease Cost Control

Lease payments are $50,000/month, the single largest fixed cost component.
Review current property agreements for early termination clauses or re-negotiation windows immediately.
Evaluate property utilization rates to identify units consuming capital without generating sufficient Average Daily Rate (ADR).
Consider shifting portfolio strategy toward management agreements instead of direct leases where possible.

Payroll and Administrative Efficiency

Payroll totals $32,916 monthly, demanding tight control over non-revenue generating roles.
Analyze the $32,916 payroll to see if non-core functions, like routine maintenance, can be outsourced.
Outsourcing maintenance converts a fixed payroll liability into a variable cost tied to service demand.
Ensure administrative staffing scales strictly with occupied unit count, not just potential inventory size.

How much working capital cash buffer is required to sustain operations during low occupancy periods?

The minimum cash buffer for Corporate Housing operations should target $40,000 by September 2026 to ensure liquidity, especially considering that slow payments from large corporate clients can severely compress your actual cash conversion cycle.

Cash Buffer Sizing

Target reserve is $40,000, set for Sep-26.
This amount should cover at least 3 months of fixed operating expenses.
If monthly fixed costs are $13,000, the buffer provides 3.08 months of coverage.
Calculate runway: Fixed Costs / Monthly Revenue During Low Occupancy.

Mitigating Payment Delays

Corporate contracts often use Net 45 or Net 60 payment terms.
Delayed receivables mean you defintely need more cash on hand than you think.
This working capital gap is a primary risk for extended-stay models; see Is Corporate Housing Generating Consistent Profitability?
Action: Negotiate smaller milestone payments or require 50% upfront for new large contracts.

If actual occupancy falls below the 650% target, how will we cover the $76,000 monthly fixed overhead?

If occupancy drops below the 650% target, you must immediately trigger cost controls and secure bridge financing to cover the $76,000 monthly fixed overhead. Understanding the revenue potential, like what the owner of Corporate Housing makes, helps frame this risk How Much Does The Owner Of Corporate Housing Make?. The primary focus shifts to calculating your precise break-even occupancy rate to define the urgency of these actions.

Define Cost Reduction Triggers

Set occupancy trigger at 600% for immediate action.
Cut all non-essential marketing spend instantly.
Review vendor contracts for 10% immediate savings.
Start renegotiating master lease terms now.

Model Break-Even and Secure Capital

Calculate break-even occupancy based on $76,000 FOH.
Determine required Average Daily Rate (ADR) needed.
Explore short-term credit lines or owner capital injection.
Defintely model scenarios for 45-day cash runway.

Key Takeaways

The total required monthly running budget for corporate housing operations averages $131,649, heavily influenced by a fixed overhead base of $76,000.
Property lease payments ($50,000/month) and staff payroll ($32,916/month) constitute the two largest recurring expenses that must be rigorously managed.
Sustained profitability is entirely dependent on quickly achieving the target 65% occupancy rate, as variable costs like booking fees consume 50% of gross revenue.
Operators must secure substantial working capital, as projected cash reserves dip to a minimum of $40,000 by September 2026 despite achieving initial breakeven in the first month.

Running Cost 1 : Lease Payments

Lease Cost Reality

Your primary fixed burden is property leases, hitting $50,000 monthly. This non-negotiable expense dictates your minimum viable revenue threshold immediately. You must model this commitment across 3-5 years to check long-term viability before signing anything. Honestly, this number sets the pace for everything else.

Lease Inputs

These payments cover the core real estate for your furnished corporate housing units. To budget accurately, you need the signed lease term (e.g., 36 months) multiplied by the fixed monthly rent of $50,000. This cost is independent of your occupancy rate, unlike utilities or cleaning fees. It’s the bedrock of your overhead.

Input: Signed lease term length.
Input: Fixed monthly rent amount.
Budget impact: Highest fixed operating cost.

Managing Leases

Since the $50,000 is fixed and non-negotiable, optimization centers on unit density and lease structure. Avoid signing long-term agreements for units you haven't proven out first. A common mistake is assuming short-term flexibility; you're locked in. Focus on driving high Average Daily Rate (ADR) to cover this cost quickly.

Negotiate staggered start dates.
Prioritize high-ADR corporate clients.
Avoid early termination penalties.

Commitment Check

If your projected revenue from $50,000/month in rent doesn't yield sufficient contribution margin after variable costs, you have a structural flaw. Compare this $50k against your Staff Wages ($32,916) and Taxes/Insurance ($12,000); these three items defintely require substantial, reliable cash flow just to keep the doors open.

Running Cost 2 : Staff Wages

Payroll Snapshot

Your 2026 payroll commitment is fixed at about $32,916 monthly. This covers 55 FTE roles necessary to run operations, spanning from the General Manager down to the Housekeeping Supervisor. This cost is a baseline overhead you must cover every month.

Staffing Structure

This $32,916 payroll estimate sets your baseline staffing burden for 2026. It includes all gross wages for 55 FTEs, which is significant given the high-touch nature of corporate housing service delivery. This figure must be budgeted before calculating net profit, as it’s a major fixed operating expense, right after lease payments.

Covers 55 FTEs across all departments.
Includes roles from General Manager to support staff.
This is gross payroll before employer taxes.

Wage Control Tactics

Managing 55 roles requires strict scheduling discipline, especially for variable needs like housekeeping. Avoid overstaffing during low-occupancy dips, which deflates contribution margin fast. A common mistake is assuming all 55 roles are needed year-round; phase hiring based on projected occupancy ramp.

Tie housekeeping hours to unit turnover rates.
Use part-time staff for peak service times only.
Review compensation bands against local service benchmarks.

Payroll Risk Check

Since this payroll is a fixed operating cost, high turnover among the 55 staff members introduces hidden expenses. Replacing a General Manager or specialized technician can cost 1.5x their annual salary in recruitment and training, significantly impacting your cash flow before revenue stabilizes. That’s a defintely hidden drain.

Running Cost 3 : Taxes & Insurance

Taxes and Insurance Floor

Property taxes and insurance are a fixed overhead burden of $12,000 monthly for this corporate housing operation. This cost hits your Profit & Loss statement immediately, demanding coverage even if every unit sits empty.

Estimate Inputs

This $12,000 covers required property taxes and liability/casualty insurance policies necessary to operate legally. You need finalized annual quotes for property insurance and local tax assessments to lock this figure in. It sits above the $50,000 lease payment, adding to baseline fixed expenses.

Property tax assessment rates.
Liability insurance quotes.
Annual policy duration.

Manage Fixed Costs

Since these costs are fixed, optimization focuses on minimizing the underlying asset valuation or coverage limits after securing initial quotes. Avoid over-insuring the furnished interiors beyond replacement value. A common mistake is bundling all coverage without separate risk assessment; shop policies annually. Honestly, this number is defintely non-negotiable month-to-month.

Review coverage annually.
Bundle policies carefully.
Ensure accurate asset valuation.

Fixed Overhead Impact

The $12,000 tax and insurance cost must be covered before you earn a dime from operations. Paired with the $50,000 lease and $32,916 payroll, your baseline monthly burn rate before revenue hits is substantial. This fixed cost dictates a minimum occupancy threshold just to cover these baseline obligations.

Running Cost 4 : Utilities

Utility Cost Split

Utilities are structured as a mixed cost; $6,495 monthly is tied directly to occupied units, representing 40% of revenue. The remaining fixed portion for common areas is embedded within your General Administrative Costs, so monitor turnover closely to manage the variable exposure.

Calculating Usage Costs

The variable utility spend hinges on your revenue realization, specifically the 40% allocation. You need to track actual unit-days occupied versus projected revenue to validate this $6,495 estimate for 2026. Also, isolate the fixed common area utility spend, which is currently bundled into the $2,500 G&A bucket.

Track revenue against 40% variable spend.
Isolate common area fixed usage.
Verify unit turnover rates.

Managing Utility Exposure

Since 40% of revenue is exposed, efficiency in occupied units matters a lot. Focus on energy retrofits in units turning over frequently. A common mistake is ignoring sub-metering potential in high-use properties. Defintely negotiate bulk rates for internet, which is often bundled here.

Implement smart thermostats city-wide.
Audit internet service providers annually.
Incentivize low-usage tenants (if possible).

Fixed vs. Variable View

Understand that the $6,495 component scales with your top line, which isn't ideal for margin stability. True fixed overhead must exclude this usage-based cost to calculate accurate break-even occupancy. Keep the common area utility cost separate for better operational control.

Running Cost 5 : Booking Fees

Booking Fee Impact

Booking platform fees are your biggest operating drag, taking 50% of gross revenue. For 2026 projections, this variable cost hits $8,119 monthly. This high take-rate directly crushes your gross margin before considering fixed overheads like leases. We need to address this cost structure now.

Variable Cost Drivers

These fees cover customer acquisition and transaction processing through third parties. They scale directly with revenue, unlike fixed costs. You calculate this based on total revenue multiplied by the 50% rate. What this estimate hides is that this cost is higher than cleaning services at 30%.

Revenue percentage: 50%
Projected 2026 monthly cost: $8,119
Scales with ADR/occupancy

Fee Reduction Tactics

You can’t negotiate the platform rate, but you can shift volume off-channel. Every booking you drive directly to your own website avoids this 50% hit, effectively doubling the margin on that revenue stream. Defintely focus on building direct relationships.

Incentivize direct bookings.
Negotiate lower rates for high volume.
Build proprietary CRM channels.

Margin Pressure Point

Since this cost is 50%, your contribution margin on platform bookings is razor thin, maybe 50% before other variable costs like utilities (which are 40% of revenue). If your fixed costs are high, growth via these channels might just increase your cash burn rate.

Running Cost 6 : Cleaning Services

Cleaning Cost Control

Cleaning services are a major variable expense, consuming 30% of gross revenue in this model, estimated at $4,871 monthly. This cost scales directly with unit turnover and occupancy volume. You must manage turnover frequency to control this significant operating expense.

Estimating Cleaning Spend

This 30% allocation covers the deep cleaning and turnover services needed after every guest departs. To budget precisely, you need to map your expected unit turnover rate against your projected Average Daily Rate (ADR). If your model assumes 15 units turn over monthly, that drives the $4,871 estimate. Honestly, this is a direct pass-through cost tied to guest volume.

Inputs: Unit turnover volume.
Benchmark: 30% of gross revenue.
Impact: Scales directly with demand.

Cutting Cleaning Costs

The primary lever to lower this cost is increasing the Average Length of Stay (ALOS) to reduce how often you clean. Negotiate fixed-rate contracts with preferred vendors instead of paying spot rates; this can yield savings of 5% to 10% off standard per-unit fees. Also, review if amenity spaces require the same intensive cleaning schedule as occupied units.

Increase average length of stay.
Negotiate vendor volume discounts.
Avoid paying high spot rates.

Turnover Risk Assessment

High turnover drives this cost up fast. If your $4,871 estimate relies on 15 turnovers monthly, hitting 20 turnovers means cleaning costs jump to roughly $6,500, immediately crushing your contribution margin. Keep a close eye on guest satisfaction scores to prevent unwanted early departures, which defintely inflate this line item.

Running Cost 7 : Admin & Software

Admin Fixed Base

Your baseline administrative overhead is $4,000 monthly. This covers essential Property Management Software at $1,500 and general overhead at $2,500, setting your minimum burn rate before considering leases or wages. This is your fixed floor.

Cost Breakdown

This $4,000 figure is your non-negotiable software and overhead floor for running the business infrastructure. The Property Management Software cost of $1,500 is likely based on per-unit licensing or a flat SaaS fee. General Administrative Costs of $2,500 cover things like basic office supplies or shared cloud services that keep the lights on.

Software license fee: $1,500
General overhead: $2,500

Control Overhead

You must scrutinize the $2,500 general admin budget first, as it’s the easiest to cut. Don't overpay for software licenses if you have low unit counts; negotiate volume discounts early. Utilities for common areas are often baked into that $2,500, so track them defintely.

Audit software seats quarterly.
Bundle small SaaS subscriptions.

Fixed Cost Leverage

Since Lease Payments are $50,000 and Staff Wages are $32,916 monthly, this $4,000 admin cost is relatively small but critical. It represents zero revenue generation, so ensure the software drives efficiency to justify its fixed presence against the much larger operating expenses.