Offering a furnished rental property to tenants can demand higher rental yields, but this can be offset by high tenant turnover.
In Australia, there are a number of ways for landlords to make their property available for lease:
5 ways to offer your property
1. Fully furnished and equipped
In this instance, all household items are included: everything from kitchen utensils and cutlery to beds and desks.
2. Fully furnished
You, as thelandlord, provide all the furniture.
3. Partly furnished
Partly furnished properties come with some lounges or tables and chairs.
4. White goods only
Some or all of the white goods are supplied.
You don’t provide any furniture with the property.
When furnished properties can work
1. Business travellers
Professionals will often move to an area on behalf of their company while they complete a job. Typically, this tenant will be looking for a furnished property to suit their transient lifestyle. Their company will sometimes sign a 12-month lease for their employee. In this instance, having a furnished property is a great opportunity to score a tenant who will be willing to pay a higher weekly rent to move into an already furnished property.
2. Regular business leases
Having a good tenant through a large company on your lease can, in some instances, be a good deal for you. The company may have large projects which will require people living away from their home base for extended periods. If your investment property is situated in an area where the company needs housing, you could have a great opportunity at hand. In most cases, the company will want to enforce high standards for their property and furnishings and will likely be willing to pay a premium for a nice house with included furniture.
Furnished apartments are a perfect solution for vacationers, students, expatriates working overseas on contracts, or people going through a relationship breakdown. In addition, with a higher turnover, you have the freedom to inspect the property more frequently.
The main benefit of furnishing your rental property is that it can provide additional returns above the standard rent on a property. People are more willing to pay a higher rent for the convenience of moving into a furnished place.
What risk comes with having a furnished property?
1. Financial loss
Unfortunately, for every person hunting for a furnished, well-presented rental property, there are probably a lot younger families or couples who need a place for the long-term. Consider this: Your $400 per week investment might get $500 per week if rented as furnished, but what happens if you have to wait 3 months to find the tenant who is willing to pay the extra dollars?
2. Purchasing and maintaining furniture
If you furnish your property, be mindful that you will need to monitor your furnishings and ensure your inventory is well maintained. Items need to be replaced promptly if they’re not working properly. Naturally, if you’re going to furnish your property, you’ll have to buy all the furniture. Unfortunately, this is not a ‘set and forget’ solution. Furnished properties, whether short or long term, require a higher level of maintenance and attention. You will also need to factor in costs such as electricity and gardening, unless they’re included in the price you charge.
3. Vacancy and leasing fees
Generally, unfurnished properties will be longer-term leases with minimal vacancy and wear and tear. With a furnished property and the likelihood of shorter lease terms (usually between 3-12 months), you may need to factor in a higher tenancy turnover, which means an increased possibility of vacancy and more frequent leasing fees. Advertising, marketing, taking care of rental viewings and more of a business involvement will not suit all landlords. Remember that furnished properties also have seasonal rental periods. Be mindful that you need to be able to manage potential cash flow disruptions that can come during the off-peak.
At Baxton we understand the market and we know which properties work well furnished and those that won’t. When you engage our services we have a vested interest to always provide you the best advice as our income is linked to yours.
Written and syndicated by
– Baxton Media.
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