When it comes to real estate, it’s easy to identify the top features that every renter wants– prime location, guaranteed safety, and parking. But some decisions leave property owners and landlords scratching their heads on what renters want and what would be most profitable.
The question of whether to furnish or not is a crucial one to answer to make sure you’re making the most of your units and maximizing your investments. As the name implies, a fully furnished unit refers to an apartment pre-installed with all the furniture and appliances renters may need. It has most of the home essentials, right from the big stuff like beds, tables, and sofas to even the dishes and cups. All the tenant needs to bring is their personal belongings because the landlord provides everything else.
This article might not be a detailed furnished apartment guide, but we can give you some much-needed insight into whether furnishing your units is worth it.
Advantages of a furnished apartment
Furnished units are in high demand
There’s no denying that furnished apartments are gaining significantly more traction. While this option tends to be more attractive to short-term tenants, some people could indicate interest for the long-term as not everyone is cut out for the costly and time-consuming task of furnishing a house.
You can rent out your property quicker
Of course, a high demand easily translates to fewer vacancies. Areas with a high student population or young working professionals tend to rent out furnished apartments quicker. If you use virtual tour software that gives prospective renters the option of a digital inspection, having furniture in your space can provide a better image of what it would be like to live there and influence their decision.
You can charge a higher rent
A great benefit of providing pre-installed furniture and appliances means you can charge your prospective tenants more. Furnished apartments can cost up to 20-50% higher than their unfurnished counterparts, depending on the length of the lease and the quality of the fittings. If you plan to furnish several units, you could buy identical pieces in bulk at a discounted rate and still make a decent turnover.
The security deposit is larger
Landlord-tenant agreements often specify a certain amount as a security deposit, which the landlord can take out in the event of any damage. More items are at risk with furnished apartments so property owners can ask for a higher security deposit to protect them from potential loss. This way, your fittings are insured.
You can get tax breaks
Taxes can be a pain, but did you know furnishing your apartments makes you eligible for tax deductions? Depending on your jurisdiction, the tax breaks that apply to furnished units can save you a bit of cash or be a huge relief. You can deduct various kinds of expenses that go to maintaining your apartment, from insurance to supplies, and even hiring employees that look after your apartments.
Disadvantages of a furnished apartment
Higher cost of buying and maintaining furniture
While there are several benefits of including appliances in your unit, there are downsides too. The most obvious of which is the high cost of buying and maintaining the furniture. The fixtures you install are bound to experience some wear and tear over the years, and you’ll inevitably have to cough out some cash for repairs or to buy new furniture. While security deposits, insurance, and tax breaks can cover up for inevitable tenant damage, you might still have to cut your losses in some instances.
Less room for customization
One advantage unfurnished apartments have over their furnished counterparts is that they allow tenants to make the space theirs. Everyone has a unique taste, and even if you try to keep the furnishing as generic as possible to appeal to everyone, not every tenant will appreciate your choices. Considering that the renters can’t bring in their furniture, they might be dissatisfied with the overall outlook of the apartment and choose to opt for something that better suits their taste.
Higher tenant turnover
People in the market for furnished apartments are typically after short-term leases. They are students or young professionals looking for somewhere to stay for a couple of months or years and then move on to the next place. As a landlord, that means you have to deal with more tenants regularly. While it might be uneventful for the most part, you’re bound to come across the occasional problematic one.
Asides from that, short leases mean a higher tendency for the unit to remain vacant for longer.
Final verdict
A furnished apartment can increase your rental value if you have the right target market. Areas with college students, sessional workers, and young professionals are likely to demand furnished apartments. And that increased demand subsequently translates to more income for you. On the other hand, if your locality has more retirees looking to downsize or families with their furniture, then the chances are higher they’ll want unfurnished units.
Rather than opt for one, you could always strike a balance between the two and opt for a semi-furnished apartment that comes with a few, typically larger fixtures but still offer tenants more flexibility in customizing their space.
After weighing the possible benefits and downsides of including furnished apartments in your brochure, you might decide to opt for one. In that case, you must be aware that it means taking on more managerial responsibilities to limit the amount of damage. While that might be a reasonably easy trade-off for some property owners, it could also be the reason others shy away from including this option.Â
Well, that’s where finding the right rental property management company comes in. A full-service rental property management team could stand in for you to conduct thorough move-in and move-out inspections, tenant screenings, and much more that can help you minimize damages and make more profit in the long run.