There are a number of ways in which a Landlord can decide what to provide in their investment property:
- Fully furnished & equipped – this includes all household items from whitegoods, furniture, appliances, linen, and kitchen utensils.
- Fully furnished – all furniture including whitegoods, beds, dining room tables and chairs, sofas and so on.
- Partly furnished – it varies and should be stipulated. It may include some beds, or lounges, or dining room tables and chairs.
- White goods only – again it varies and should be stipulated.
- Unfurnished – probably the most common option. No furniture, whitegoods or appliances.
There are both advantages and disadvantages to offering a furnished rental property, and the first question to ask yourself is who is your target market?
Furnished properties work well for:
- Short term tenants including executive and holiday rentals
- Tenants who are relocating and have their furniture and belongings in storage or transit
- Tenants who travel regularly as part of their job and need to live close to their workplace
The benefits of furnished properties:
- Increased rental income – you can charge a premium for the convenience of a furnished property
- Potential tax advantages through depreciation deductions
- Possibly attracting a company as a lessee who requires a fully furnished property on an ongoing basis for their staff who may come and go
Some risks to consider:
- The majority of tenants will be looking for something long-term, so it may be more difficult finding somebody who wants a furnished property. This could mean longer vacant periods.
- There is additional cost in obtaining and maintaining the furniture. A higher level of maintenance and attention is required, and you will need to promptly fix or replace any items which are not working properly.
- The higher turnover may cost more with advertising and leasing fees.
- Additional record-keeping in the form of an inventory which will require regular updating.
- Additional insurance costs for the contents.
Unfurnished properties work well for:
- Long-term tenants who want to create their own “home” environment with their own furniture.
The benefits of unfurnished properties:
- Targeting the majority of renters who are looking for unfurnished properties.
- Higher long-term lease potential providing more financial security.
- Reducing your costs by not buying and maintaining furniture and appliances.
- Less turnover and decreasing advertising and leasing fees.
- Not having to record and maintain an inventory.
Disadvantages of unfurnished properties:
- Reduced rent as you are not providing the added convenience of furniture.
- Removing the potential of an executive or company lease who need furniture and appliances for their staff.
Let’s make it a win/win situation:
Rather than targeting either market, you can aim your advertising to those wanting furnished or unfurnished by offering two different rates. Advertise at the unfurnished rate, and let potential tenants know that for an additional fee, the property can be fully furnished.
Alternatively you could include a few key items such as whitegoods, and the tenant can still use their own furniture.
Whatever you decide, always make sure it is clearly included in your agreement with the tenant in a detailed inventory which both parties sign off.