To rent out your property furnished, or unfurnished – that is the question. As always there are advantages and drawbacks to both options. Baxton Property Management Company looks at what’s involved in making the smart choice.
The long and the short of rental strategy
Your goal in renting out the property plays a big role. Are you renting long term in order to get a good return on your investment property? Or are you wanting to fill the unit while you take a contract on the mainland for a couple of years? As with any big choice, a lot of planning and research is needed to make a sound decision on whether to choose the furnished or unfurnished option.
Are you renting out short or long term?
In general, the market for furnished units is much smaller than for those that are let unfurnished. Furnished housing represents only 1% of the rental market in general. However, the same unit can generate as much as 50% more in terms of daily rental revenue than it would in the general market.
From these figures it seems that if you are looking for long-term tenants, unfurnished is the better option. The chances are strong that tenants looking to settle for a while in a rental home, will have their own furniture and not want to sell or store it over a long period.
However, in short term leasing, furnished units are more attractive to tenants, because moving a household of furniture can be expensive. That’s not a cost tenants looking for rentals based on a daily, weekly or (at the most) 6 months’ tenancy, are wanting to incur – particularly when they will have to pay for moving it again soon. This group can include tourists, as well as high quality tenants in town on assignment for a short period, who are bringing corporate support and salaries with them, but no furniture.
What tenants are you hoping to attract?
The geographic location of your property affects the type of tenants that will be searching for accommodation there, and their particular needs. If your property is on a popular beachfront, you could be much better off renting it out as furnished holiday accommodation for part of the year, than as a permanent abode.
On the other hand, if you live near a university, and you are looking at renting out a bachelor’s pad, furnishing the unit makes a lot of sense. This is what students look for, and the demand is high.
Disadvantages of renting out furnished units
- A detailed inventory of everything in the unit must be kept, and checked whenever a tenant moves out. Furniture might be subject to heavier wear and tear than you expect based on the lifespan of similar furniture in your own home.
- Maintenance is much higher on furnished units, and malfunctions on the TV, stereo or even the toaster may result in call outs. Your insurance premiums will also increase, in order to cover the content of the unit.
Advantages of renting out furnished units
Why are you considering renting your place furnished? Do you have to go and buy the furniture, or do you already have it? The expense of buying furniture could be high, yet if your property is in an area where executives are likely to be for a few months at a time, by all means, it may seem like a sensible investment.
If you have furniture available, and would have to sell it second hand to clear the unit, you might not get much for it. And storing it, or trying to replace it later if you plan to return one day, can be costly. It would be unwise, however, to leave valuable and irreplaceable family heirlooms in a unit you plan to rent out.
What about taking the middle ground?
Renting partly furnished leaves you with more options, and less negatives. This flexible option is often the perfect solution, as you are not required to supply as much furniture. It also offers the tenant a choice – they may decide to bring their own bed, for instance, while being grateful for the use of your comfy couch.
How much is enough?
Whether furnished or partly furnished, the unit should look “lived in”, but not cluttered. It could put tenants off renting it if the place is crammed with the landlord’s furniture or looking like it’s a storage unit. Some landlords with more than one property, can change furniture around, or it can be put into storage.
The bottom line is that the more flexible a landlord is with regard to this issue, the better. For more info on issues of interest to tenants and owners, visit Baxton on-line.
Written and syndicated by
– Baxton Media.
#1 – Australia’s Property Management Specialists