Tip #263: Pros and Cons of Furnished Rentals
Some like to settle into rentals for years and often stay in the same neighborhood even after they move. Other tenants might prefer short-term rentals and the flexibility it can provide.
Depending on the type of renters you are trying to attract, furnished units can either help — or hurt — your investment.
A month-to-month lease with a furnished apartment is often very attractive to the right tenant — someone who likes to move often and doesn’t like having to haul furniture from rental to rental. A furnished room is very convenient to a renter who travels light or doesnt have a lot of extra money to spend. They might be sleeping on an air mattress in an empty studio and would be quite happy to upgrade to a dwelling that has, say, a couch or bed. If nothing else, furnishing rentals also can keep some tenants from dragging those dumpster or thrift store couches that may contain roaches or bed bugs into your clean, unfurnished apartment.
Dont assume that renters seeking furnished are all the drifter type; some renters may own a home elsewhere and are looking for something convenient for work or an extended vacation, and are perfectly acceptable tenants. These tenants may even pay a little more, especially for summer rentals. But chances are they are uncommitted for the long-term.
An apartment with basic appliances is a good draw, but many tenants are going to be dubious about moving into a furnished rental. Most will already have a full set of furniture, and won’t want to get rid of it or pay to rent a storage unit in addition to the lease with you. Many renters shy away from ads for furnished out of fear that furnished rentals will cost more, or require a higher damage deposit to cover the cost of the furnishings.
It’s true that if a tenant damages or stains a piece of furniture, it will look dirty and unattractive to the next tenant. Once you go down that path, you might find yourself having to constantly re-furnish the dwelling as often as you paint the walls. You cant assume the risk that the previous damage deposit will cover all your costs. Furthermore, tenants are often picky and may not agree with your decorating tastes. One look at the bland sturdy neutral furnishings may send them running to another rental. Perhaps the idea of a slightly used mattress makes them squeamish.
Your decision to go furnished or not will greatly impact the type of tenants you attract.
If you prefer a higher priced, short-term lease, than furnished may be the way to go. If you want long-term nesters then an empty, clean, well-maintained dwelling should suffice.
In the end the decision should be based on what is the most profitable for you.
See last week’s Landlord Quick Tip.
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