When it comes to real estate, there are so many decisions landlords have to make about what they provide. Do you invest in an SFU or multi-family complex? What neighborhood is best suited in the long run? And is it better to rent a furnished or unfurnished apartment? Well, this article will answer one of those pressing questions today.
If you’re starting a real estate business, you might be conflicted on whether furnishing your rental unit is worth it. After all, it requires a large upfront cost to get started and you also expose yourself to more property damage risk. However, we’ll highlight 5 benefits of furnishing a rental property that could offset those drawbacks. Let’s get started:
Difference between Furnished and Unfurnished Rentals
The difference between a furnished and unfurnished rental lies in the presence of furniture. While the former contains every item a person would need to live comfortably, the latter is like a blank canvas, and tenants need to bring in their personal furniture. Knowing which of these rental types is best suited for your environment and management style can help you maximize your rental investment.
Furnished apartments typically fall into two categories. Fully furnished rentals which include all fittings and furniture for a home. In which case, the renter needs only move in with their suitcase and food. On the other hand, a semi-furnished rental only has essential pieces like a bed, couch, and dresser. It may or may not include items such as bedding and kitchen utensils.
Benefits of Furnishing a Rental
1. You Can Charge More Rent
One of the most significant benefits of furnishing your apartment is that you can charge more rent. Since tenants don’t have to worry about anything from heavy-duty pieces like the couch to even spoons, it makes moving more convenient for them. In return, landlords can charge higher rental fees than their unfurnished counterparts. More so, the more luxurious your pieces are, the higher you can charge. If you have other amenities tenants look for in a rental, you can significantly increase your profit margin. Thus, you could recoup the upfront cost of your purchases within a few years with careful management.
2. You Can Create an Aesthetic Symmetry
Furnishing your rental also gives you the opportunity to practice aesthetic symmetry. With an unfurnished apartment, you don’t always have control over what your tenants decide to buy. Thus, even if their choices are an eyesore, you simply have to deal with it. On the other hand, furnished units give you more control over the design and style of your apartments.
You decide everything from the size of the TV to the color of the curtains. It can also be more cost-effective for landlords with several units. Buying your fabric, furniture, and appliances in bulk makes it cheaper. It also makes it easier to replace damaged items. For example, if the wallpaper in a particular room looks worn out, you can replace it with any excess.
3. You Have More Short-term Rental Appeal
You can attract more tenants with your stylishly furnished homes. Many investors are dipping their fingers in the short-term rental pie because they promise valuable returns in 2022. There are many people in the market for the comfort and ease of furnished units. Thus, irrespective of your budget, you can break into the space.
If you have a larger purse, you can opt for luxurious fittings. Such designs would appeal to high-end business travelers and tourists. On the other hand, budget furnishings would appeal to students or thrifty travelers.
4. You Can Fill Vacancies Faster
Another benefit of investing in short-term rentals is that you can fill vacancies faster. When you own an unfurnished property, you have to give tenants time to move your stuff out when you’re ready to evict. On the other hand, renters with only a few belongings can pack up and leave within 24 hours. Besides, since short-term rentals are hot on the market, you can easily find a replacement.
5. You Get More Tax Breaks
With a furnished apartment, landlords are entitled to several tax breaks. For example, you can deduct the upfront cost of your furniture from your taxable income. Another deduction you can legally claim is repairs for your furnishings. Thus, whether it’s a broken chair or a faulty washer, you can shave off some expenses. Besides, you can also increase your security deposit to cover potential property damage.
These top 5 benefits of furnishing a rental property reveals the extensive profit you stand to gain by investing in this rental type. With proper management, furnished apartments stand to gain more money since landlords can charge more rent. Additionally, you can enjoy the benefits of more tax breaks and consistent income due to fewer vacancies. However, when it comes to deciding what rental type to invest in, it’s crucial to do your research beforehand. Demand for furnished properties can vary from one area to the next. Although, furnished apartments tend to attract more tourists, students, and business travelers. Thus, it would be best if you considered investing in places where such populations are higher.