Although there is no defined set of rules on whether to furnish your property on not before renting out, it is important to figure out the differences between them. Understanding these differences will help you determine if it is worth investing more in your rental property. First thing first; before delving into advantages and disadvantages of renting your property furnished or unfurnished, landlords should know target segment for each kind of property. Furnishing your property, after spending huge sum of money, would be a futile effort if your tenants simply do not require it and do not want to pay for additional furnishings. For example, family tenants usually have their own set of furniture, appliances etc. On the other hand, students and bachelors mostly look out for furnished properties.
Let’s discuss the pros and cons that we had earlier left behind.
|Furnished Rental Property|
|Higher rental from tenants who wants furnished space.
Gain access to highly rewarding corporate rental market. Companies typically are willing to pay more for furnished and ready to move in rental properties.
|· Initial investment to furnish a property is very high.|
|In certain areas, there is higher demand for furnished properties. Hence, it is easier to find tenants, especially who are willing to pay higher rentals.||· Furniture and appliance do not come cheap. Maintenance and replacements can cost you big money.|
|· You can save on furnishing, storage and transportation expenses, if you intend to move into your premise when it is vacant.
|· With more furniture and fixtures, it would be difficult to record their conditions during tenant move-in. Poor documentation can lead to conflict with tenants during their move-out.|
|· Claim tax deduction from furniture and fixture maintenance bills.||· Expect shorter tenancy for furnished properties as tenants are mostly bachelors and professionals.|
|·||· Demands more attention of landlords towards maintenance and replacements.|
|Semi-Furnished Rental Property|
|· Low/no furnishing and maintenance costs to landlords
|· Difficult to demand premium rentals. Lower ROI from rental income.
· Unfurnished properties are clearly out of contention with regards to entry into lucrative corporate market.
|· Easier move-in and move-out documentation, minimizing conflicts with tenants.
|Unfurnished housing can potentially put off prospective tenants, even if they plan to furnish it after moving in.|
|· Expect longer tenancy as tenants have locked in their money to furnish the property. This makes move-out literally a hard work.||·|
It’s simple, understand supply, demand dynamics of the micro-market where your property is located – families or young professionals/students or corporate and gauge your ROI from the two options before taking your decision.