There are a number of advantages to furnishing or even semi-furnishing your rental property. Such immediate and tangible benefits include the ability to charge higher rental rates. However a few cons exist as well, which you’ll need to take into account when making your decision.
As a landlord, you will want to entice high-quality tenants to sign lease agreements, so ascertaining the needs of tenants in your area and considering the advantages and disadvantages of furnishing your rental property will help you arrive at the right decision.
In which scenarios are furnished properties suitable?
1. When you want to target travelling consultants or vacationers
Most business travellers are consultants who will quickly relocate to a locale for their organisation to undertake the completion of a particular project or set of objectives. Generally speaking, this type of renter will be seeking a fully-furnished rental property to meet the needs involved in their work arrangement.
Sometimes, their organisation will commit to a year-long lease period on behalf of the tenant. In such cases, furnishing and equipping your rental property with household appliances is an excellent approach to attracting such renters that have the capacity and budget to afford typically higher rates.
2. Business leases from an organisation
Getting regular and reliable tenants for your rental property via a reputable organisation or landlord partnerships would be a very profitable arrangement for you in most cases. The tenants’ organisation might be launching long-term or short-term projects that entail deploying consultants from other locales for long periods of time.
Thus, you have an excellent business opportunity when your rental property is close to or within the company’s target location. It almost goes without saying that the organisation will require top-notch standards of living for their consultants. So they will most likely allocate an appropriate budget to cover the additional costs of a fully-furnished property with high quality amenities.
3. When you’re targeting short-term rentals from expats or students
Fully-furnished rental properties with complete amenities and household items are ideal for expats, people on vacation, students from abroad, and other types of people who need to relocate on short notice. One of the cons of this arrangement is a typically higher rate of turnover. But the silver lining is that you’ll be free to check and renovate your property more often.
The downsides of offering a fully-furnished property
1. Potentially missing out on long-term rental opportunities
Depending on the area in which your rental property resides, there may be far more families, live-in partners, or married couples that are looking to lease a property on a long-term basis. They may very well outnumber the people searching for a furnished and fully-equipped property. This is precisely why it’s important to check the demand for rentals in your area.
Your rental property may fetch a higher price when rented as furnished, but if you need to wait 3 months in between tenants, you might want to rethink your strategy.
2. Costs of maintaining furniture, amenities, and appliances
When your rental property is furnished, you’ll need to regularly maintain the furniture and make sure all household items are in good working condition. Fully-furnished units necessitate more frequent upkeep and management, whether they’re long-term or short-term rentals. Costs like garden maintenance and refurbishing your property will also need to be taken into account, unless you’ve already included them in your rental contract.
3. Vacancies and leasing fees
With your furnished rental property, you will need to take into account higher vacancy rates and possibly a greater number of leasing fees. Not all landlords will have the time or budget to cover the property’s advertising and marketing costs and handling property viewings. You will also need to bear in mind that there are seasonal periods characterised by lower rentals. You’ll need to prepare for possible disruptions in your cash flow that inevitably occur during off-peak seasons.
Offer the best of both worlds
One way to solve this dilemma is to offer your rental property with flexible furnished and unfurnished options. In this manner, you won’t lose out on potential tenants who already have their own furniture. It’s a good practice to list down all of the amenities and additional furniture you can provide at their request.