The pros and cons of furnishing a rental property

We are often asked by our investors if they should rent their property out furnished or not? Below we list the pros and cons.

Pros and cons of furnishing a rental property
  • 31 October, 2018
  • Rental, Landlords, 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, or 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:

  • The potential to charge a premium for fully furnished properties.
  • Letting a furnished property 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 can be costly.
  • Your advertising costs will be higher as you’ll need to keep promoting the property due to it being vacant more often.
  • 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 it is optional to take out contents insurance on the furniture and other items it is a good idea. Especially if you have items of value in the property. This is an additional expense you need to consider.

LJ Hooker NZ

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