Furnished vs. Unfurnished Rentals – A Landlord’s Guide
Furnishing a rental property is a considerable expense. Should you spend the money or let your tenants furnish your unit? Here are a few things to consider when making the decision.
Benefits of Furnishing Your Property
- You can demand higher rent. A well-furnished property rents for 25 to 75% more than an unfurnished property. However, the higher the rent, the less likely the tenant is to stay long term.
- It may be rented more quickly as tenant saves on initial set up costs associated with furnishing.
- First-time renters will find furnished options less daunting when all they need is to bring their personal belongings.
- If you furnish and style the apartment in a tasteful manner, it will hopefully demand respect and better treatment from your tenants.
- When the tenancy ends, you will have the option to use the contents yourself or use in your other rental properties.
- You can deduct a percentage of the cost of goods for tax purposes.
Benefits of Keeping it Unfurnished
- Tenant may stay longer as they’ve furnished the place to suit their needs and the space. Furnished properties are typically rented as a temporary measure i.e. a travelling professional or student, between houses, waiting for furniture to arrive from long-haul move etc. but empty ones, allow tenants to make the space their own.
- They may be happier tenants having chosen and designed the space in their own style
- You are not responsible for insuring their furniture or any other items they bring to the property.
- You don’t need to worry about wear and tear on your belongings.
- Carrying costs can be transferred to tenant whereas when the unit is furnished, the expectation is that the higher rent includes all utilities, cable/internet etc.
- One year leases are most common for unfurnished properties whereas you’d likely be negotiating shorter terms for furnished apartments.
- Unfurnished properties require less management than furnished ones since typically they experience more frequent tenant turnover.
So What’s Best for You?
Typically, smaller properties, near the downtown core and amenities, attract younger, more mobile tenants who are more likely to enjoy the convenience of a furnished apartment. They are also easier to furnish inexpensively.
While landlords with larger apartments or houses are best to leave them unfurnished, since tenants are likely to be older and may have families, and thus, more likely to have accumulated furniture etc. over the years.
Do your due diligence and evaluate your market before deciding!