Are you having trouble making up your mind whether to furnish your rental units or not? Like many important decisions that landlords must make, there are pros and cons on either side that must be weighed carefully.
This article will articulate the advantages and drawbacks to furnishing a rental unit.
With furnished units, tenants can expect the rental space to be complete and ready to move into. When a unit is described as being furnished, the following items may be available:
- Water heater
- Air conditioning unit
- Kitchen appliances (cooking stove, microwave, refrigerator)
- Large appliances (like a washer and dryer)
- Cabinets, dressers
- Dining sets
- Cookware, glassware
- Beds with comforters and sheets
- Couches and chairs
Advantages of Furnished Rental Units
Fill Vacancies Quickly
With fewer moving expenses involved, a furnished rental property is very attractive to renters. There’s no need to hire a moving van, lift heavy furniture and purchase new items for the home.
Anyone who has had to have a fridge or a stove moved knows how inconvenient it can be. If you get everything ready for your renters, they’ll jump at the opportunity for such convenience, particularly if they’ve recently moved to Texas and don’t have many furnishings.
Rent Price Can Be Set Higher
When a unit is completely furnished, the landlord can assign a premium price. This will likely mean greater returns over time. The furnishings can be used over and over again. Before long you’ll recover your purchase expenses with the higher rent price remaining higher. In this way, furnishing a unit can be a great investment.
Attract More Prospects
Marketing a furnished unit is easier, since plenty of prospects will be looking to save on furnishing costs. You’ll be able to attract newly-arrived tenants without much furniture, or tenants who know they’ll have to relocate at a set future date.
Furnishings are Tax Deductible
Landlords can enjoy the tax breaks for furnished rental properties. When you’re filing your taxes, it’ll be possible to deduct the cost of appliances and furniture.
Tax deductions on furnishings will save you money, which you can invest elsewhere.
Greater Flexibility With Shorter Leases
There’s no doubt that frequent turnover can be a downside for landlord. However, there are some positives if your tenants won’t be staying long-term.
You’ll be able to alter and adjust your rental rates and property policies. You also won’t have to wait for the end of a year-long lease in order to change lease conditions or to increase your rent price.
Disadvantages of Furnished Rental Units
Less Affordable Rent
If you furnish your unit, you’ll need to raise the rent cost in order to recoup the cost of appliances and furniture. Depending on what kind of demographics you’re hoping to attract to your rental property, it’s possible some prospective renters may be priced out by this increased rent cost.
Similar properties in the rental market may be able to charge less when they don’t have to worry about providing furnishings to tenants.
Increased Risk of Damages
There’s always a risk when tenants will be using your property on a daily basis. You’ll have to contend with normal wear and tear.
Once an item is past its life expectancy, you’ll have to replace it. Superb maintenance is essential in order to keep property damages at a minimum.
Pitfalls of Short-Term Rentals
Furnished units typically don’t inspire longer tenancy. They’re more suited to tourists, and those looking for temporary living spaces. As such, you need to conduct plenty of tenant screening, marketing and frequent inspections when new tenants move in and out. All of these tasks are time-consuming.
These are rental properties that leave it up to the renters to decorate their own space and purchase their own furniture and appliances.
Advantages of Unfurnished Rental Units
Normal Wear and Tear is Irrelevant
If you don’t provide appliances and furniture, you won’t have to maintain them either. You won’t have to budget for repair and replacement of an item due to normal wear and tear. Your funds can go towards your rental home renovation projects instead.
No Responsibility Towards Tenant Furnishings
When the renter’s microwave oven breaks down, you won’t have to engage the services of a repairman to have it fixed. It won’t be part of your home inspection to test and monitor the efficiency of appliances either. It’ll be each tenant’s responsibility to make sure the appliances are in top shape.
Tenants May Stay Longer
Shifting furnishing responsibility onto tenants is a form of investment for them. They’ll be the ones picking and acquiring furniture that will match the rental property.
This will create a feeling of attachment, as they build up a sense of home by filling it with their own items. As a result, they’ll be more likely to settle down longer.
Frees Up Your Time
Since property inspections will be limited to the essential areas, you will be saved from spending more time checking wear and tear. You’ll also be dealing with fewer complaints when it comes to maintenance and repair.
It will be up to renters to purchase additional insurance to cover damages or losses of belongings.
Disadvantages of Unfurnished Units
Unfurnished units typically come with longer leasing periods, compared to furnished units. This means that landlords have to wait longer when adjusting rental rates and leasing conditions. For example, if a landlord decides they want to ban pets from a rental property, they’ll have to wait for the tenancy to expire first.
Vacancies Fill More Slowly
Since plenty of people like the convenience of furnished units, it can take longer to find renters. While a rental unit is vacant, the landlord will still be on the hook for its maintenance expenses, which can cut into revenues.
These are the benefits and the drawbacks of furnished and unfurnished units. To arrive at the right decision, it’s best to make an assessment of the needs of your target market.
Are your target renters young and prone to relocating? Will they be students who will go home after the semester? Are they professionals who are stable in their careers and already own some furnishings? Are they families who’ve moved plenty of times and have accumulated their own furniture?
These are some of the vital questions to ask yourself before deciding whether or not to furnish your property. Be sure to be clear in your property listings about what furnishings will be provided to prospective renters.