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Pros and Cons of Offering a Furnished Rental

This article explores the benefits and drawbacks of furnished rentals specifically for long-term rental properties. There are both advantages and disadvantages for landlords offering furnished rentals. However, this is not a simple exercise of weighing pluses vs minuses, there are other factors such as the size and location of the property to be considered. For example, one or two bedrooms rentals near public transportations tend to attract working professionals and are likely to do better as a furnished rental.

Here is a breakdown of the pros and cons:

Pros:

  1. Higher Rental Income: Furnished rentals typically command higher monthly rent compared to unfurnished properties. The specific amount varies but typically around $100 to $500 more depending on the size of the property, quality of furniture, and the overall design. This extra rent allows landlords to maximize their rental income and potentially offset the costs of furnishing the property.
  2. Attractiveness to Tenants: Furnished properties are often more appealing to certain tenants, such as those relocating for work or study, professionals on temporary assignment, international tenants, or individuals seeking temporary housing solutions.
  3. Competitive Edge: In markets where furnished rentals are less common, offering a furnished property can give landlords a competitive edge and attract a wider pool of potential tenants.
  4. Tax Benefits: Landlords may be eligible for certain tax deductions related to furnishing and maintaining the rental property, potentially reducing their overall tax liability.
  5. Less Wear and Tear to the Property: Furnished properties may experience less wear and tear on the structure and finishes, as there are less damages associated with move large bulky items around in the process of moving in and out of the property.

Cons:

  1. Higher Upfront Costs: Furnishing a rental property requires a significant upfront investment in furniture, appliances, and decor. This can eat into the landlord’s initial budget and may take time to recoup through increased rental income.
  2. Maintenance and Replacement Costs: Landlords are responsible for maintaining and repairing the furnishings in the rental property. This includes the cost of regular cleaning, repairs, and potential replacement of damaged or worn-out items.
  3. Risk of Damage or Theft: Furnished properties may be at higher risk of damage or theft compared to unfurnished rentals, as they contain valuable items that tenants may not own themselves. Landlords need to consider this risk when selecting tenants and securing appropriate insurance coverage.
  4. Limited Tenant Pool: While furnished rentals may attract certain types of tenants, they may also deter others who prefer to bring their own furniture or have specific preferences for decorating their living space. This can limit the potential tenant pool and increase the time it takes to find suitable renters.
  5. Storage and Inventory Management: Landlords need to account for storage space to store furniture when the property is not rented or if tenants request removal of certain items. Additionally, keeping track of inventory and ensuring all furnishings are in good condition can be time-consuming.
  6. More Turnover Expenses: Tenants for furnished rentals tend to be shorter-term tenants, thus Landlords can incur extra expenses such as vacancy (no rent), marketing fees, utilities expenses, cleaning expenses, etc. These extra costs can easily eat into the extra profits from the higher monthly rent.

Ultimately, whether offering furnished rentals is advantageous for landlords depends on factors such as the local rental market, size and location of the property, target tenant demographic, financial considerations, and personal preferences. If you’re unsure if you should offer furnished or unfurnished rental, consult local professionals to get their opinion.

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