Real Estate is a form of investment that is very popular among people. Many of these investments are converted to rental properties, which are one step further. For owners who have these in their investment portfolio, these units become a steady income source while accumulating the growth over initial investment over the year.
When you convert your property to a rental, you have two options. Either you can offer furnished property, or you can open the rental option with just the space. As every investment plan is different and every investor has a target, the same is true for rental properties. Therefore, the answer is never straightforward and depends on what you want out of your investment and how much involvement you are looking for with the property.
In urban areas, especially those with a strong Corporate or IT presence, the furnished apartments make a lot more sense than the unfurnished ones. Here the furnished apartments are preferred because the applicants are not looking for any extra effort on their end, and they want to just move in and go about their regular lives. There are a lot of rooms for rent in Brooklyn for people that won’t stay long and it would be better for them for the room to be furnished. So what does a furnished apartment include? Well, it should at least have the following:
- A fully stocked kitchen without the food materials. It should have appliances, utensils, glassware, and cutlery.
- A dining table with chairs is important if the property has space for dining.
- The bedroom should contain a bed, a dresser and if possible a desk.
- The bathroom should have a shower mat, a shower, curtain, and waste bin.
- The living room should have a sofa, coffee table, and various appliances.
There is no doubt that there is an additional investment, and before you decide to go against the concept of furnishing and renting room in house, you should go through the reasons why should you furnish your rental property:
1. You will have a Low Turnaround Time
When you have a fully furnished apartment, you have a higher tendency of filling up a vacancy faster. Tenants would prefer the property since the move-in time would be negligible, and they won’t have to worry about the necessities to start living at their new place. People looking for short-term or mid-term leases usually prefer furnished apartments because they do not have to worry about carrying any major belongings with them. The furnished apartments have a similar benefit with the vacating tenants as they do not have to carry anything out, and thus the moving out process is much faster.
2. You have much more options to choose from
The number of applications for a furnished apartment is much higher than an unfurnished apartment. This is because the tenants’ mental stress is substantial on moving as they leave their comfort zone and move to a new pad. When a house’s worth of furniture is added to the equation, it deteriorates the situation. On the other hand, the furnished apartments provide solace, and thus the number of applications for such a unit increase.
3. You get a higher price for your unit
When your rental property is furnished, you can ask for a higher price for it. So you can go ahead and list a house for rent. Don’t feel shy before asking about 15-40% higher rent for a furnished apartment. When you invest in furnishing your apartment, you have every right to ask for a higher rent, and tenants don’t shy away from paying it. Over a longer period, this increases your constant income and profit margins.
4. You get a higher security deposit
The effort and investment put in by you directly convert into the increase in security amount. Therefore, you have every right to ask for a higher amount which can be upto 3 times the rent amount when you provide a furnished apartment.
5. You save up on taxes
Each and every penny spent while furnishing comes under the cost of doing business; thus, they can be labeled as business expenses and filed under taxes. Again, you can consult a tax professional to get clarity on the issue.
Losses Associated with Unfurnished Apartment
There are some potential losses that you can accrue when you do not furnish your rental property. Please read on to get an overview of the same:
1. Catering to the Wrong Market
When you advertise a room for rent and offer an unfurnished apartment, the tenants spend money on furnishings and become complacent and look for a long-term rental plan. Although the long-term plan creates a sense of stability, the rate of profit generation is low.
2. Damages sustained while vacating and occupying
The reason may sound like a rare occurrence, but it happens quite often, and while moving in or out, there are damages sustained by the tenants or the moving company. It may range from a dent in a wall to damage to the doors. The damages at times are covered by the security deposits or through settlement with the moving company, but usually, the renovation costs fall on the owner’s shoulders.
Things to Keep in Mind With Renting Out Furnished Properties
- ● Before renting out the property, prepare an inventory of all the things you provide with the apartment. Then, please go through the inventory with the tenant and make sure they are apprised of the elements that are your property.
- Prepare an iron-clad rent agreement and make sure to protect your furnishing investment. Make sure that the tenant realizes that the things in the apartment are your property, and in case of any damages sustained, they are liable to compensate. Include the inventory in the rent agreement.
- Check the furnishings by tallying them against the inventory with your tenant before they move out.
In the end, it is totally up to the owner to furnish the rental property or keep it unfurnished before listing it. The part of posting a room for rent is not tough, and you can always rely on Cirtru to help you out with listing your property in the market to put them up for rent.