Pros and Cons of Furnished and Unfurnished Rentals

How to Determine if Furnishing a Rental is Right for You

The Advantages and Disadvantages of Furnished Properties for Rental:

Following are some main advantages and disadvantages of furnished rental properties that you as an owner must consider before renting it out:

Advantages:

• The rates of furnished rental properties are higher than the unfurnished rentals. They are generally 15- 20% higher. The rental rates include the factors such as moving cost, furnishing cost, and depreciation of the assets.
• Furnished rental properties are more likely to attract tenants who wish to move in right away. Such tenants do not have to waste time packing from their current location, which can definitely speed up the rental application. They also do not have to hire movers or purchase any new furniture, where as tenants who rent unfurnished rentals have to go through all these phases. And it takes them longer before actually moving to the new place, costing the owner extra income.
• The furnished rental properties have high-security deposits. You as an owner are enabled to demand a higher security deposit. Due to the less extra effort of shifting and a more organized and furnished place.
• The furnished properties can enable you to take the tax benefits. You can coordinate with your tax professional to know about these tax benefits. The amount invested in the furnishing of this property can come under the tax benefit. This information will enable you to reach your goal.

Disadvantages:

• There are a lot of costs linked with the furnishing process. There is a lot you have to look over before actually renting out your furnished property.
• There can be chances of the furnishings being damaged like sofas, tables or chairs, etc.
• There is a lot of repair and maintenance cost associated with the furnished property. This repair cost can increase over time and hence increasing the overall cost.

The Advantages and Disadvantages of Unfurnished Rentals:

Following are some main advantages and disadvantages of unfurnished rental properties that you as an owner must consider before renting it out:

Advantages:

• The furnished property enables the tenants to feel more at home, which can lead to them increasing the duration of their tenancy. The whole duration of tenancy becomes easy and consistent, and less tenant turnover shows the greater stability of your property.
• The fire policy like the cost of property insurance for dwelling alone is much less than the dwelling and the content. The tenants have to carry insurance for their dwellings within the property. This in turn reduces the insurance cost for you as an owner.
• It is said that most unfurnished properties need less attention as you do not have to invest your time and efforts to furnish them for your tenants. So, fewer cases or issues need to be addressed by you as an owner.

Disadvantages:

• Generally, unfurnished properties cannot demand high rental rates. The percentage increase is also less. It shows that unfurnished properties do not let you more money than furnished properties let you make.
• There are higher chances that during the moving and shifting the moving companies can unconsciously damage any of your tenant’s furniture or any precious belonging. This cost of damage while moving in and out can be covered by a security deposit, or you can cover it through the moving company. But in some cases, this damage cost falls to you as an owner.

We at Collaborative Property Management work with many property owners to help manage both their furnished and unfurnished rentals. So, if you need any property management services, give us a call. And let us extend our services to the best of our abilities. It will enable you to make the best decision to maximize your rental properties.