Rental Properties: To Furnish or Not to Furnish?

Rental Properties: To Furnish or Not to Furnish?

Rental properties can be great investments and provide month-over-month profit for owners, while simultaneously accruing equity over the longer term.

Some owners have a single rental property, while others have multiple properties as part of their overall investment portfolios. Every investor’s goals will be different, and rarely is a choice plainly right or wrong, or the solution to an issue black and white.

One major question property investors face is whether to offer their long-term rental properties furnished or unfurnished. And, of course, not one size fits all.

This is an area in which working with an experienced property management firm can be a tremendous value add to your investment. In some parts of a city or an area, furnished rentals make much more sense than in others. The best property managers and management firms will live and breathe the markets they serve and be well-positioned to provide advice based on historical and recent data and experience.

The Pros of Furnishing

  1. HIGHER RENTAL RATES – Without question, furnished rentals will fetch a higher rental rate than unfurnished rentals – usually around 15-20furnished rental investment property percent more. The potential tenants for such properties roll in moving costs, costs of furnishing, and depreciation of assets into what they consider to be a tenable monthly rental rate.
  2. QUICK MOVE-INS – Tenants that desire furnished rentals typically do not require much time to take occupancy. They usually do not need to pack the location they are leaving, hire movers or arrange the purchase and delivery of new furniture, whereas those renting unfurnished often will. This can lead to far less downtime for your rental, likely improving your bottom line. 
  3. HIGHER SECURITY DEPOSIT – Even if you still charge a percentage security deposit or “one month’s rent” security deposit, you will be able to command a higher deposit with a furnished rental.
  4. TAX INCENTIVES – Talk to your tax professional about the benefits of furnishing your investment property. Having an idea of the benefits of writing off a portion of the money spent on furnishings may help you make the best decision to reach your goals
     The Cons of Furnishing

The Cons of Furnishing

  1. UPFRONT COSTS – Furnishing a rental property costs money, and unlike the expense of acquiring the property itself, the furnishings’ values will not appreciate.
  2. DAMAGE TO FURNISHINGS – Pieces like sofas, tables, beds, dressers, and chairs are use items and will sustain damage during tenancy.
  3. COSTS OF REPAIRING AND REPLACING ITEMS – When a property is leased as a furnished property, those furnishings and their upkeep become another maintenance item. The costs of repairing and replacing items over time add to an owner’s overall carrying costs.

The Pros of Unfurnished Rentals

  1. LONGER TENANCY – When a tenant furnishes a property, it gives them an enhanced sense of home, which can lead to longer, moreunfurnished rental investment property consistent tenancy. Less tenant turnover can lead to greater stability and predictability toward reaching your investment goals.
  2. LOWER INSURANCE COSTS – The cost of property insurance for a dwelling alone (typically known as a fire policy) can be significantly less than insuring the dwelling and its contents. Tenants of unfurnished properties often (and sometimes must) carry renter’s insurance for their possessions within the property, reducing the overall insurance costs to the property owner.
  3. LESS MANAGEMENT – Often unfurnished properties require less attention from owners and property managers as the tenancy turnover rate is typically less, as fewer matters need to be addressed.

The Cons of Unfurnished Rentals

  1. LOWER RENTAL RATES – Unfurnished properties never will command as high of rental rates as furnished properties. Thus, periodic percentage rent increases are less, and, overall, the property will not bring in as much money.
  2. MOVE-IN/MOVE-OUT DAMAGES – It happens. It happens a lot. Even the most professional movers will inevitably ding a wall or a door jamb when furniture is moved in-and-out of a property. Some costs associated with such damage may be covered by retaining some or all of a security deposit, or through settlement with the moving company, but often those costs will fall to the property owner.

There is no slam dunk, 100 percent correct or incorrect answer as to whether to offer a property furnished or unfurnished.
Sweyer Property Management works with hundreds of property owners, managing a wide range of properties, including furnished and unfurnished properties. Give us a call today and let us lend our experience and expertise to you when making the decisions to best maximize and protect your rental properties.


If you have investment properties and do not use a professional management company, we hope you will consider doing so. The experts at Sweyer Property Management will be happy to provide a free quote through our website or, if you prefer, give us a call at 910-239-1338.
 
Sweyer Property Management is a full-service professional property management company that specializes in all aspects of rental management. If you’re an investor or property owner looking to learn more about our services and what a professional property manager can do for you, reach out to us today at 910.239.1338 or via our website.
 
Sweyer Property Management has exhibited continuous growth throughout the Wilmington, Leland and Hampstead areas while maintaining an excellent Google+ rating for customer service. To inquire about the company’s full-service management services or to take a tour of homes for rent in the area, visit them online at WilmingtonForRent.com
 

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