One of the biggest debates with landlords is whether to go with furnished rental apartment or not. There are various benefits that come from leasing a fully furnished apartment to your tenants, but there are some downsides as well.
In order to properly make a choice as a landlord, you need to weigh in your options, research the market, and see what matches its needs the best. We’ve gathered a list of tips that may help you decide what type of lease you want to run.
What is Furnished Apartment
A furnished apartment is an apartment that comes with all the necessary furniture for a comfortable life. Semi-furnished apartments are those that have only the basic furniture like a sofa, a bed, table and some chairs, with fewer appliances or smaller pieces of furniture.
Basically, to have a clearer picture, a furnished rental apartment should have a bed, nightstand and a dresser in the bedroom; operational appliances and utensils, dishes, pots, pans and glasses in the kitchen; dining table with a set of chairs in the dining room, and a sofa, bookshelf, few chairs and a coffee table in the living room. This may seem as an extensive list, but in the market of furnished rentals, you really have to know the needs of your future tenants.
Most of the landlords advise against renting a furnished apartment, as it requires a significant amount of money up front. There are also the issues of paying for all the utilities like cable TV or the internet during the periods when the apartment is vacant. Maintenance costs are also higher, especially when there are no tenants, so this rental method is definitely not for the less experienced landlords. However, there are also some great benefits of renting a furnished apartment.
Pros and Cons of Furnished Rental Apartment
● The predictable market – First thing that comes to mind when it comes to renting a place is – who can I rent it to? With furnished apartments, there is always a completely predictable market. People that haven’t managed to stack a lot of furniture in the past, like students, young professionals or young families always tend to rent a furnished apartment to suit all their needs. Having a property near a college or in a more urban area can help you find your new tenants easier.
● Higher rent – Renting a fully furnished apartment can raise the rent anywhere from 25% to 75%, which is great for the revenue. It also provides the feeling of safety for the tenants, as they don’t have to spend money on furniture, transport or storage.
● Higher security deposits – Another great thing when it comes to leasing out a furnished rental apartment is that as a landlord, you can ask for higher deposits. This is a general practice that comes as an insurance if some of the furniture and/or appliances get damaged.
● Potential damages – Downside is – there will always be higher costs for damaged furniture and appliances. Leasing to students leaves you with a risk of inexperienced appliance handling, which will lead to breakage. There is also a question of inspecting the premises, as you don’t want to bring the new potential tenants into a shabby place, with creaking sounds and damaged furniture, the investments are larger.
● Higher turnover – People that usually rent furnished apartments are those that tend to move a lot. This means that as soon as the semester is over, or a better opportunity shows up for a young couple – you will have to find another tenant after you check and possibly renovate the place. You can improve the flexibility of the renting methods, by finding a great storage solution. In this case, if you find potential tenants that want to bring their own furniture, storage solutions Melbourne provides amazing storage options, so you can change your place from furnished to unfurnished very quickly. You would have to keep the rent up, for maintaining the monthly storage fees, but you could find more serious and long-term tenants this way.
There are various pros and cons of renting a furnished apartment, but it all depends on the needs of the area. Higher costs and more time spent caring about the furnished rental can pay off with higher deposits and higher rents. In an area populated with the right population, renting a furnished apartment can be a serious business. Just plan ahead and do your research, and hopefully, some of these tips will help you make a decision.
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