A Furnished Rental Property
When it comes to furnishing a rental property, you can choose to include everything that a prospective tenant(s) would need to be able to just bring their suitcase and move straight into your investment property, or it could include a select number of appliances and furniture items. More commonly, you’ll find the first type advertised for rent. A furnished rental house or apartment is generally very appealing for certain markets, including students and professionals on a work contract. These types of people are looking for accommodation ready to move in to, complete with all furnishings they require to live comfortably. As a result of this convenience, they are more likely to pay a higher rental price, which is one of the main benefits of renting out a furnished property.
Because of the type of people a furnished property generally attracts, shorter rental periods are often requested. While this can be a negative as discussed further down, it can also be a positive in that you are able to update and increase the rental price more often than if you had a long-term tenant locked into a particular price – this is especially good for rental markets that are on the rise, and can result in a lot of additional income revenue that could otherwise be missed.
As mentioned above, as well as having a fully furnished house or apartment, you can also have a partially furnished one where white goods and some of the larger furniture items (such as dining tables and couches) are included, or even give the tenant the option to choose what they would like included as part of their tenancy agreement (e.g. they may choose to have all white goods included for a slightly higher rental price, or white goods, dining set and beds included for an even higher rental price) – this flexibility is great for tenants of different life stages and the extra convenience of being able to choose what they want included to suit what furniture they currently have, can result in your property getting leased out a lot quicker than if they need to spend time sourcing furniture they require themselves. You’ll just need to make sure that you have storage space available elsewhere to be able to store the furniture they don’t want included. The last benefit is the tax advantages you can receive as a landlord through furniture depreciation – a lot of furniture can be written off straight away, or at an increased rate which means more money back in your pocket.
An Unfurnished Rental Property
A rental property free of furniture is often the most popular choice for families and couples that are looking for a long-term rental. It is seen as a bigger investment if they have to purchase all of their own furniture and move it into the property and as such, they are more likely to stay for extended periods of time. This is a benefit in that you get consistent rental income for long periods, which minimises any lost income as a result of having a vacant property, as well as reduced marketing fees (having a higher tenant turnover as is often seen with furnished rental properties means having to regularly advertise the property for rent which can add up in costs).
Landlords who offer unfurnished properties also don’t have to worry about the added expense of purchasing the furniture to begin with, as well as pay for the ongoing maintenance of it which is a big benefit for some, especially if they live in a different city to the property and can’t often visit to replace/update their rental furniture. If you rent out a furnished property, there’s also the risk that your furniture can be damaged, and that it will cost more to repair or replace it than the bond put on the property. Tenants can also argue that the furniture was low-quality or faulty to begin with, which can cause issues and potentially put the landlord out of pocket at the end of the day. It’s also recommended that if you are renting out your property fully furnished, that you get it all insured – which is an added expense that unfurnished properties avoid.
Lastly, the type of furniture in a property can actually be off-putting to prospective tenants if it isn’t in a style that they like or if it’s limiting – e.g. it only has a queen and a single bed, yet there are two couples looking at moving in that would require two queen beds, or if there’s a family with two kids who would need another single bed. Having an empty property ready to go allows your tenants to see your house or apartments as a blank slate that they can personalise with their own furniture and décor.
What’s right for you?
When it comes to renting out your investment property as furnished or unfurnished, it’s a good idea to consider what type of tenant you want. Do you want students and working professionals on a contract that will generally want shorter rental contracts but are happy to pay a higher rental price, or do you want families and couples that are looking for long-term accommodation at a lower rent? Another consideration is the location of your property – are you close to universities for students to want to rent out your place, or close to the city or commercial areas where there would be contract workers from different regions needing to stay? If yes, then definitely consider a furnished option. If your property is further out in the suburbs, you may want to rent it out unfurnished to allow the families and couples to move in with their own furniture. You’ll also want to consider your current financial state – can you afford to spend money upfront furnishing an apartment and reap a higher rental return, but potentially have more periods where your property is vacant and you aren’t receiving any income at all?
If you have a rental property in Perth and are unsure whether to include furniture or not to attract the best tenants for you, contact our specialist property managers. We can help work with you to determine the most effective rental strategy to suit your investment and your financial goals.
Reach out to us today to have an obligation-free chat about our property management services.