Have you faced the decision of whether to furnish your rental property?
Perhaps you are moving out of your own home and want to know should you leave your furniture behind for a renter to use.
The obvious benefit to an owner of leasing an apartment furnished is achieving more rent. But what is the rent premium, and does it justify the extra costs? Here are the main points for and against,
Big Tip when Furnishing your Rental Property.
If you decide to furnish a rental property (or move out and leave all your furniture there), a premium rent is only achieved when it is styled with coordinated finishes.
It’s also better if the apartment is not only furnished but has a fully fitted kitchen (crockery, cutlery, pots and pans, glassware, etc) and laundry (iron, mop, broom, brushes) as well as modern whitegoods. The objective is to fit out the apartment so someone can move in, just with their suitcase, and nothing much else (apart from linen).
Why to leave the furniture in your apartment.
Obviously achieving a higher rent is the primary driver to lease an apartment furnished with the premium anywhere from $50-$100 per week. Interestingly this wasn’t the case during Covid when the long-term rental market was flooded with furnished apartments, (normally used for short stay like Airbnb or Stayz) but the long term furnished market is now back in balance.
If you are moving out of your own apartment, the other reason to leave your furniture behind is to save the trouble and cost of moving and storing all your stuff. This depends on how long you are going for, and if you have somewhere to leave it. Depending on how new or recently renovated your apartment is, once you have moved everything out, you might discover the apartment needs freshening up with a coat of paint and some minor repairs.
Some other benefits are, if you are just going for 6 months it is really hard to lease an unfurnished apartment for anything less than 12 months and remember, some costs may be amortised or expensed in your tax return.
What are the costs and reasons not to furnish your rental apartment?
If you are moving out and leaving your furniture behind then you don’t have the normal cost of furnishing it, depending on what you need to buy in your new place. Otherwise, don’t underestimate how much it costs to furnish an apartment properly (and keep it maintained).
An often-overlooked issue or cost is that a furnished apartment tends to attract shorter term renters. I’m not talking about 1 or 2 weeks, I mean 3 or 6 months vs a normal 1 or 2 years. This means each time a renter changes the owner incurs more advertising costs, more leasing fees and more lost rent during the renter change over time. This could amount to several thousand dollars each year.
There will inevitably be wear and tear so be prepared to replace some items if / when you return to your home or within your investment horizon. Remember if the apartment is leased with a washing machine and it breaks down it needs to be replaced by the owner.
What is best for you
From the many discussions we have advising owners we find the question of whether it is best to offer the apartment furnished or not, depends on each owners personal situation which we work through in our meeting.