The Pros and Cons of Furnishing Rental Properties
As a property owner, often you will face the hard decision of whether to furnish your property before renting it out to tenants. Before making a decision, new landlords should always evaluate certain factors before determining whether furnishing an apartment is worth the effort and expense.
Thus, here are some pros and cons that Xynergy Realty has compiled:
- Short term leases
If you’re targeting vacationers, students or expatriates that are working overseas, furnishing your apartment might be a good idea. Furnishing your home will most likely attract those looking for a short term lease as it will reduce the effort on their side.
This also allows you to have more flexibility on your contract length, thus making it much easier if you happen to want to use the property as a vacation home.
- More money
Furnishing your apartments will definitely allow you to raise your rent above the standard rent prices on a property. Landlords can charge about $50-$100 more in rent per week for a furnished apartment.
As furnished apartments bring convenience and lower initial costs for tenants, most people are willing to pay more for it. Additionally, landlords of short stay apartments have the flexibility to change prices as they aren’t bound by leases or regulations.
- Less damage
If your property is located in the CBD Area, furnishing your apartments might be the right step to take. As it attracts more short term stay tenants, furnished units means that you will decrease the chances of having damages on the walls from renters moving in and out. However, there is still a risk of depreciation due to daily wear and tear.
- Location Sensitive
If your property is located in the suburbs, furnishing your apartment is not a good idea. The furnished market is very location sensitive, and furnished properties that are located in CBD is much more popular than those located a bit far from the city.
It is best to target tenants who are professionals flying between cities for work, who’d rather stay in an apartment than staying a few days a week each time so location is definitely a determining factor.
- Higher Initial Costs and Depreciation
The thing about furnished apartments is that landlords should first purchase all of the furniture. To fully furnish an apartment with high quality furniture, landlords should expect to pay about $3000-$5000. If you’re have a high end unit, you could probably end up paying more for decorations.
That does not include maintenance due to wear and tear. Be realistic if you can truly afford to furnish your rental and the maintenance, despite tenants paying more than the standard rent rate.
- Matching tastes with tenants
When you decide to furnish your property, it may seem convenient for some tenants, but some might disagree as to how you furnished it. It could be that they have different taste or cultural influences might also affect how you furnish a property.
Basically, even though it can be ideal for some tenants, there are some renters that prefer to have the flexibility of furnishing their own property, especially those who are looking at long term leases.