Offering a furnished rental property to tenants can demand higher rental yields, but this can be offset by high tenant turnover. So, is there more to a successful “rent-vestment” than the included grey futon?
1. Fully furnished and equipped – In this instance, all household items are included: everything from kitchen utensils and cutlery to beds and desks.
2. Fully furnished – You, as the landlord, provide all the furniture
3. Partly furnished – Partly furnished properties come with some lounges or tables and chairs
4. White goods only – Some or all of the white goods are supplied
5. Unfurnished – You don’t provide any furniture with the property
When Furnished Properties Work
Business Travelers Professionals will often move to an area on behalf of their company while they complete a job. Typically, this tenant will be looking for a furnished property to suit their transient lifestyle. Their company will sometimes sign a 12-month lease for their employee. In this instance, having a furnished property is a great opportunity to score a tenant who will be willing to pay a higher weekly rent to move into an already furnished property.
Regular Business Leases
Having a good tenant through a large company on your lease can, in some instances, be a good deal for you. The company may have large projects which will require people living away from their home base for extended periods. If your investment property is situated in an area where the company needs housing, you could have a great opportunity at hand. In most cases, the company will want to enforce high standards for their property and furnishings and will likely be willing to pay a premium for a nice house with included furniture.
Short Term Furnished apartments are a perfect solution for vacationers, students, expatriates working overseas on contracts, or people going through a relationship breakdown. In addition, with a higher turnover, you have the freedom to inspect the property more frequently.
Financial The main benefit of furnishing your rental property is that it can provide additional returns, higher than the standard rent on an unfurnished property. People are more willing to pay a higher rent for the convenience of moving into a furnished place.
What risk comes with having a furnished property?
Financial Loss Unfortunately, for every person hunting for a furnished, well-presented rental property, there are many more young families or couples who need a place for the long-term. Consider this: Your $400 per week investment might get $500 per week if rented as furnished, but what happens if you have to wait 3 months to find the tenant who is willing to pay the extra dollars?
Purchasing and Maintaining Furniture If you furnish your property, be mindful that you will need to monitor your furnishings and ensure your inventory is well maintained. Items need to be replaced promptly if they’re not working properly. Naturally, if you’re going to furnish your property, you’ll have to buy all the furniture.
Unfortunately, this is not a ‘set and forget’ solution. Furnished properties, whether short or long term, require a higher level of maintenance and attention. You will also need to factor in costs such as electricity and gardening, unless they’re included in the price you charge.
Vacancy and Leasing Fees Generally, unfurnished properties will be longer-term leases with minimal vacancy and wear and tear. With a furnished property and the likelihood of shorter lease terms (usually between 3-12 months), you may need to factor in a higher tenancy turnover, which means an increased possibility of vacancy and more frequent leasing fees.
Advertising, marketing, taking care of rental viewings and more of a business involvement will not suit all landlords. Remember that furnished properties also have seasonal rental periods. Be mindful that you need to be able to manage potential cash flow disruptions that can come during the off-peak.
Have the Cake and Eat It Too!
If offering your rental property as furnished makes sense for you right now, consider aiming your rental listing this way: target the people who not only want a furnished property, but also the other 90% of people who do not want a furnished property.
An easy way to do this is by placing an ad description “This property can be furnished for an extra $XXX per week”, and be sure to tick “Furnished” in the property features. This way you do not cut out tenants who have their own furniture.
A good way to increase the number of enquiries on your property would be to include a list of furniture that is available with the property on the property listing and during the rental viewings.
Whether you decide to rent out your investment property as furnished or not, the secret to success and securing the best possible tenant is having a strong property listing. Of course, that is where Home Run Realty comes in. Talk to us on 0412 739 488 to know more.