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Is it a Good Idea to offer a Furnished Rental

Whether furnished rentals make more money depends on various factors such as location, target market, rental market trends, and the condition of the furnishings. Here are some considerations:

  1. Location: In some areas, furnished rentals may command higher rents because they cater to specific demographics such as tourists, business travelers, or students who prefer the convenience of a fully furnished space.
  2. Target Market: Furnished rentals often appeal to short-term tenants or those who are relocating and need temporary accommodation. If your target market consists of such individuals, you may be able to charge higher rents for furnished units compared to unfurnished ones.
  3. Demand: Evaluate the demand for furnished rentals in your area. If there’s a high demand and limited supply, you may be able to charge a premium for furnished accommodations.
  4. Marketing: Furnished rentals can be marketed differently than unfurnished ones. Highlighting the convenience and flexibility of a fully furnished space may attract more tenants willing to pay higher rents.
  5. Flexibility: Furnished rentals offer flexibility to tenants who don’t want the hassle of purchasing and moving furniture. This convenience factor can justify higher rents.

Risks and Considerations

  1. Maintenance Costs: While furnished rentals can generate higher rental income, they also entail additional costs for maintaining and replacing furniture, appliances, and other amenities. Consider these costs when determining the profitability of furnished rentals.
  2. Tenant Turnover: Furnished rentals may experience higher turnover rates compared to unfurnished ones, as tenants may stay for shorter durations. However, this could also mean more frequent opportunities to adjust rental rates based on market conditions.
  3. Legal Considerations: Some jurisdictions have regulations regarding furnished rentals, such as safety standards for furniture and appliances. Ensure compliance with local laws and regulations, which may affect the profitability of furnished rentals.

Real-Life Examples

Here are some examples from our local market. Furnished rentals in 22304 in the last 12 months (3/16/2023 to 3/16/2024).

5340 Holmes Run Pkwy #1112, Alexandria, VA 22304

The furnished rental actually has the lowest price vs comparable rentals

4850 Eisenhower Ave #205, Alexandria, VA 22304

The furnished rental has $200 to $350 premium over unfurnished comparables and on higher end for days on market

400 Cameron Station Blvd #302, Alexandria, VA 22304

The furnished rental rented between $150 to $405 more than unfurnished comparables, but takes more than 4 times as long to rent out.

Ultimately, whether furnished rentals make more money depends on a combination of these factors and your specific circumstances. It’s essential to conduct thorough market research and financial analysis to determine the best approach for your rental property.

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