- 2 September, 2019
- PROPERTY MANAGEMENT
The different types of furnished properties
Before we get into the pros and cons of furnished or unfurnished, let’s look at the different ways a property is considered furnished:
- Fully furnished and equipped. A short term or holiday rental for instance falls into this bucket where everything including pots, pans, cutlery etc is provided
- Fully furnished – the rental property has all the furniture it needs
- Partly furnished – the rental has some furniture such as sofas, table and chairs
- White goods only – Some or all of the white goods are provided
- Unfurnished – No furniture or appliances are provided, the tenants supply it all
When is it good to have a furnished property?
Fully furnished rental properties are popular with tenants:
- Who are looking for a short term lease including executive and holiday rentals
- Tenants whose belongings are in transit or storage
- Who travel regularly for work and need a place close to their work to stay
- Tenants who don’t own any furniture and don’t want to buy any
Pros of a furnished property
There are number of benefits of having a fully furnished rental. Some of these benefits include:
- You can normally charge a premium for fully furnished properties
- Letting a furnished propety allows you to increase depreciation deductions
- It saves tenants money as they don’t need to buy the furniture themselves
- If your property is located near the CBD and is nicely furnished it can attract higher paying professionals as it better suits their fly in, fly out lifestyle.
Cons of a furnished property
Whilst you will be able to charge higher rent for a fully furnished property you may find:
- You have a higher turnover rate with tenants only staying for 3-6 months leaving you without rent while you find more tenants.
- The costs to set up the property and style it is an additional expense you may not want
- Every 3 – 5 years you’ll need to update the furniture and styling which again is costly
- Your advertising costs will be higher as you’ll need to keep promoting the property due to it being vacant more often
- You will need to pay more leasing fees to your property manager each time it is leased to a new tenant
- It takes time to maintain and monitor an inventory list of all your items
- You are responsible for replacing or fixing items quickly if they are not working
- Whilst you don’t need to take out contents insurance on the furniture and other items it is a good idea if anything is of value is in the property. This is an additional expense you need to consider
When is it good to have an unfurnished property?
75% of renters are looking to sign a long term lease, they want to find a place they can call home. This large group of renters mostly prefer an unfurnished place – or perhaps one with white goods, that they can fit out to suit their taste and style.
Pros of an unfurnished place:
- You are looking for long term lease with financial security
- Your investment is not near the CBD so you are unlikely to attract executives
- You don’t want the added expense of buying furniture and whitegoods
- You don’t want to have to manage a furnishing inventory and worry about replacement of products if they don’t work.
Cons of an unfurnished place:
- Unlikely to attract higher paying transient / exeuctive tenants
- Some tenants are willing to pay more for the convenience of moving into a fully furnished home and you'll miss out on this group
Installing a few key items and large appliances can be a great way to tap into elements of both furnished and unfurnished rentals, particuarly if you have the option to place items for furniture in storage if the tenant wants to bring their own.
Talk to your property manager about your individual property and whether they think you will do better with a furnished or unfurnished place. They know the market and the type of tenant your property will attract and how you should best position your property to appeal to them.