Have you purchased a property and currently setting it up as a rental home? Or are you in the process of converting your current home into a rental? If you are then you may be trying to decide whether or not to furnish it.
In the past, simply including utilities is enough to draw interest from new renters but in recent years, tenants are seek more perks. More niche markets have opened up that are looking for the convenience of living in a furnished space.
Furnished rentals are appreciated for the convenience it provides to residents. They also get to save more and are spared from moving expenses. Most students and professionals temporarily relocating prefer a furnished unit.
To help property owners decide, you must know the tenant market you’re targeting. If you wish to be a successful landlord, you must also learn to adjust to market demand and changing economic conditions.
Here’s what you need to know about furnishing a rental property to help you decide whether or not it’s the right move for your investment:
How Furnished Homes Should Appear
Though furnished units contain certain items, it’s still up to the landlords’ discretion to decide what to include. A regular furnished home contains the following:
- Kitchen – stove, refrigerator, oven, toaster, dishes, coffee maker, and cooking utensils
- Dining – tables, and chairs
- Living room – coffee table, sofa, and TV set
- Bedroom – nightstand, bed, and dresser
- Bathroom – shower curtain and floor mat
Who Is the Target Market for Furnished Homes?
Different demographics are attracted to furnished homes. They can be vacationers, students, new workers or professionals temporarily assigned to an area to complete a contract. Furnished homes are also favorable for those seeking more affordable accommodations other than hotel rooms.
What Are the Benefits of Furnished Rentals for Landlords?
Here are some benefits that come with renting out a furnished property:
You Can Assign a Higher Rent Fee
Furnished homes are appreciated for their convenience so renters willingly pay more for them. Know the current rental prices around your neighborhood to determine the right rent fee to charge.
You must properly calculate the price and consider what you’re offering to renters so you don’t shortchange yourself. You also don’t want to assign a high rental rate if nearby units are priced low.
You Can Avoid Property Damage by Moving Furniture
Furnishing your rental home means less damage to your unit. A lot of the scratches, dents, and scuff marks are caused by large items being moved in and out of the rental space. Furnishing the property allows you to save on fixing these issues.
Focused Attention on a Specific Target Market
Certain demographics are attracted to furnished rentals and you can focus on serving their needs more. The typical target markets include students, tourists, and business people on short-term contracts. You can design a marketing plan that focuses on your target tenants.
Can Request a Higher Security Deposit
Given that the furnishing around your rental is your investment, it makes sense to ask for a higher security deposit. This way, if any repairs are needed, you have available funds. Make sure to include this as a lease addendum to protect your investment and limit potential disputes in the future.
You should also remain up-to-date on security deposit law in your state to ensure that you’d using and storing the funds properly.
Rent Out Smaller Spaces in Your Home
Some vacant rooms in your property can be smaller or display an irregular shape but with smart designs and furnishings, they can become attractive spaces. This is a great opportunity to make an income in these smaller areas that still appeal to those looking for lower-priced units.
Staged Homes Offer More Appeal
Furnished rentals can be more easily marketed. Since people are visual, more interest is engaged when checking out photos of furnished rentals. It, therefore, makes it easy to inspire renters to live in the rental space.
What Are the Drawbacks of Furnished Homes for Landlords?
Here are some downsides to renting out furnished properties:
You Need to Invest in Furnishings
Since residents are expecting a comfortable ready-to-move-in space, you must purchase the furniture and appliances prior to the move-in. This exposes you to greater risk and requires you to perform routine property inspections and preventive maintenance.
Any repairs that are the result of wear and tear to the furnishings will also be your responsibility.
Note that furnished units provide convenience and a lot of potential tenants seeking them are only looking to stay for a short period. That’s why they prefer a furnished rental. As a landlord, you must step up your marketing process to avoid vacancies. You also have to work quickly to make the space ready to re-rent to new tenants.
Other Furnishings Require Storage
Not all renters will need a particular furnishing and they may request some items to be removed. This means having a proper storage area for unwanted objects. You may end up paying additional storage fees to keep them in a secure space.
Is It Wise to Furnish Your Rental?
Before deciding to furnish your rental unit, consider where the property is located. If you plan to target students then make sure your property is in a college town. If you choose to serve tourists then you must be near local attractions, and if you opt to attract professionals, your rental should be in a thriving business district.
Don’t forget to consider what’s affordable for your target market. Make sure you don’t over-invest in a furnished unit if you won’t earn back the returns.
Furnished units are ideal for particular demographics but you should take into account your competitors, property location, and the rental rate that your target market is willing to pay. If you’d like help managing your properties, contact the team at Keyrenter Property Management Hampton Roads today!