If you're renting out your home, are you wondering if you should furnish it?
There is no right answer as there are pros and cons to both furnishing and not furnishing rental properties. However, depending on the target market for your rental property, there may be a better option for you!
For instance, young professionals tend to favor ready a fully furnished rental for convenience, while families prefer unfurnished ones considering the bulk of possessions they already own.
What is a Furnished Rental?
A furnished unit means you're providing a tenant with all the required furnishing they'll need.
These are the following items you'd commonly find in a furnished unit:
- Dining set
- Kitchen appliances
- Air conditioning unit
- Water heater
- Washer and dryer
A furnished rental unit is more convenient for tenants as everything is already there for them.
Short-Term vs. Long-Term Rentals
For short-term rentals, a fully furnished unit is much more common. Renters who stay for a short period need to live in a convenient space with ready furnishing.
For long-term rentals, rentals can be semi-furnished or not furnished at all. If a tenant stays long-term, they may want to invest in their own furniture, appliances or furnishing.
Pros of Renting Out a Furnished Rental
Here are some definite advantages of fuly furnished rental property:
1. Charge More Rent
When you rent furnished properties you can charge a higher price than unfurnished units. Since the property is rent-ready and filled with convenient furnishing, renters are more willing to pay higher rent.
Tenant won't have to hire a moving truck filled with belongings, and they won't have to purchase their own furnishing. They can just arrive and immediately use the property.
That means you can charge a higher rent.
2. Reduced Rental Vacancies
Tenants tend to prefer furnished rental properties, so you will likely see a decrease in rental vacancies.
With a furnished apartment or property, you will be able to attract prospective tenants more easily.
3. Tax Deductibles for Furniture Purchases
As a landlord, tax benefits are available to you. You can list the furniture expenses as legitimate deductibles for your business.
Cons of Renting Out a Furnished Rental
Here are some definite disadvantages of furnished rental units:
1. More Costly
It takes money to invest in furnishing and appliances, and the costs can add up quick! That's why we recommend that you properly set a budget for a fully furnished property.
Not to mention, when you have furnishings in your rental, you have to account for the repair and replacement costs. Due to wear and tear, you will definitely need to repair or replace some of your furnishing every few years.
2. Increased Chance of High Tenant Turnover
Typically, tenants who prefer furnished units tend to rent short-term.
You have to be aware that short-term rentals means frequent tenant turnover. This means spending more money on property advertising and more time on tenant screening.
Pros of Renting Out an Unfurnished Rental
Here are some definite advantages of unfurnished rental units:
1. Quicker Turnover
You can lease out your home right away since you don't need to set up furnishing. You can look for interested prospects right away without worrying about the property's furniture.
2. No Worries about Furnishing Damage
You won't have to worry about whether your furnishing is in good condition because you won't have any!
Not to mention, this also means there's no need to document the initial condition of the furniture to check for property damage. This will save you time and stress!
3. More Savings
You won't need a big budget to spend on furnishing. Naturally, you save funds from not spending on any furnishing at all. You don't have to build up a sizable capital.
Also, you don't have to spend money on furniture maintenance because that would be the responsibility of the tenant!
Cons of Renting Out an Unfurnished Rental
Here are some definite disadvantages of unfurnished rental units:
1. Difficulty Attracting Tenants
Most tenants prefer to move into furnished units, so you may have trouble finding tenants to occupy your units.
2. Lower Rental Rate
Since your rental space is bare and renters have to spend on furnishing, your rent rate can't be as high as it could for furnished units.
3. Increased Chance of Interior Damage
When you rent out an unfurnished rental, it means your tenants will need to bring their own furniture. When they do so, it increases the risk for interior property damage. If tenants keep coming into the rental with new furniture, they can accidentally scratch and scuff the property's walls and floor.
There you have it – the pros and cons of renting a furnished unit, and the pros and cons of renting an unfurnished unit!
To make the best decision for you, consider the following:
- Calculate the initial cost of the furnishing, replacement and storage. Is it worth the cost?
- Study your target market. If your rental is designed for short-term renters, then you'll need to keep it well-furnished.
- Determine your rental goals. Considering your goals, is having a furnished or unfurnished unit better?
At the end of the day, there is no one right answer!
We hope this blog post was helpful. If you're seeking further help, don't hesitate to contact Windermere Property Management.