Pro’s and Con’s Of Furnished Investment Properties!

by limniospropertygroup | 30. January 2019 11:01

Furnished vs Unfurnished for Owners

As an owner, you may be deciding whether to furnish or unfurnish your investment property. We have done the work for you; see below a list of the ‘Pros’ and ‘Cons’ of renting out a furnished property. Disclaimer: Please not that these are opinions only.

PROS of a furnished property:

1. Slightly higher rent

Having a furnished home or apartment adds value to your property, as your tenants save costs on purchasing their own. Therefore, your tenant will pay a higher weekly rate to live in a property that is furnished with furniture and/or white goods.

2. Shorter vacancy time

For short term tenants that are renting for a minimum of 6 months, furnished rental properties appear a lot more desirable because of the convenience. Short term prospective tenants want to move in fast and don’t have time to shop for furniture and white goods or relocate it after their short stay. Therefore, your furnished properties will generally get rented quicker if it is located inner city.

3. Appeals to corporate clients

A furnished home or apartment generally attracts corporate visitors from over east or overseas that are coming to stay for a 6 month lease. Corporate clients that come to Perth for work trips are only looking for furnished places as they need a quick and easy place to stay, without the hassle of furnishing.

4. Saves owner storage costs

By keeping your furniture and white goods in your rental property, you save yourself the hassle and money of relocating it. If you don’t have room in the property you live in, you may have to pay for storage for your furniture and white goods. However, this can be avoided if you leave your rental property furnished.

CONS of a furnished property:

1. Only targeted at a specific group of tenants

It really depends on the location of your property as to whether it is a good idea to leave it furnished. If your rental is located near the city, having a furnished rental property is the way to go. The kind of tenants that are looking for furnished apartments are usually those that are wanting short term tenancy, closer to the city due to work commitments, hence why properties in the suburbs are more suited to longer tenancy’s and unfurnished. Essentially, furnished properties are great for tenants that travel for work or don’t own furniture and don’t want to buy any.

2. The cost of damages and replacements

One of the biggest negatives about furnishing your rental property is that you have to deal with replacements of furniture or white goods that have faults or stop working. Of course, if your tenant damages any of your furniture or white goods, it is their responsibility to cover the cost. If for example, the washing machine or fridge stops working suddenly, the owner must sort out the replacement as the property must be in the same condition as the tenant received it (i.e. with goods working properly).

3. Higher tenancy turnover rate and vacancy rate

Unfortunately, having a furnished property will mean your vacancy rate and turnover rate will be higher. This is because you will be attracting tenants that will be renting from you short term. Whilst short term renting is suitable to a particular group of tenants, you do run the risk of having an empty property between tenants.

4. Cost to set up

Purchasing furniture and setting up your place does come at a cost and inconvenience you may not want. This can be a time consuming, expensive task that can be avoided.

At the end of the day, these are opinions only and we recommend you do what is best for you and your investment property! We hope that these top tips have helped you get a better insight to furnished and unfurnished. Keep an eye out for our next topic and please feel free to reach out to our property management team for any advice concerning your rental!

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