Furnished Rentals vs Unfurnished Rental Properties - Creating The Best Rental Experience in 2023
As a rental property investor, you should always be looking for a way to make your properties stand out so that you can fill vacancies and keep the cash flow rolling in. However, there are a few different ways to go about this, such as offering furnished rentals instead of unfurnished ones.
However, if furnished rentals were a sure-fire way to create hot rental properties, surely more investors would take the time to furnish and decorate their rentals before putting them on the market. Well, the truth is, much like everything else in the world of real estate, operating a rental property is much more nuanced than that. While some renters may be scouring listings while searching for a furnished rental that meets their needs, others would rather get a clean slate and create a space that allows them to live more comfortably.
So, which one should you offer? Let’s take a look at the advantages and disadvantages of each option.
But first, before you start creating furnished rental properties, let us show you how you can get a fully furnished mortgage with a free strategy call at the link below.
Understanding Furnished Rental Properties
Furnished rental properties have the key advantage of requiring the tenants to bring very little of their own furniture to make the property livable. However, this also means that tenants who have their own furniture may be turned away by the fact that key pieces that they want to hold onto do not fit into the property.
However, the pros and cons run much deeper than that.
Pro: Higher Potential Rent
One of the main reasons that investors will take the time to invest in furnished rental properties is the fact that they can usually get away with charging higher rents for the same property than they could by offering an unfurnished rental. This means that once all of the furniture is paid off, the cash flow on these properties are going to be noticeably higher.
Con: Higher Up-Front Costs
While furnished rentals offer the ability to make more money each month, they are occasionally considered to be less affordable for new investors or investors working with tighter operating budgets because they are significantly more expensive to set up properly. People are often caught off guard by the cost of furniture. After all, with most cheap couches starting around $350-$400 per unit, furnishing an entire rental property can add thousands of dollars to the initial costs of setting up the property once you have filled-out every room.
Pro: Easier to Fill Vacancies
Vacancies are incredibly detrimental for rental property investors because the property’s bills do not disappear alongside the cash flow once a tenant moves out. As a result, investors are usually willing to spend a little extra to make their rental more appealing to renters if it means that they can avoid the property sitting empty.
Furnished rentals make properties more accessible to new renters and people who do not have furniture of their own to make a rental comfortable at the moment – thus increasing your potential pool of tenants.
Con: Harder to Maintain
Since the furniture in the rental is your property, it is one more thing that you will need to have insured and maintained. This means that as furniture wears down, is broken or is stolen by tenants, you will have the added pressure to restoring or replacing it.
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Understanding Unfurnished Rental Properties
Unfurnished rentals are a clean slate. They offer full control over the interior design to the renter (within lease permissions). However, they are not accessible to renters who do not have furniture of their own yet.
Here are some more of the key pros and cons that you need to know.
Pro: Tenants May Stay Longer
Since tenants have to go through the process of furnishing and designing the rental themselves, it is easier for them to feel attached to the property and less likely they will think about moving out. As well, even if they do not form an attachment, the hassle of packing up and moving every piece of furniture is often too much work for some tenants and they will choose to stay out of convenience instead.
This means you can expect much more steady cash flow from these properties as opposed to furnished rentals which make it easier for tenants to move out.
Con: Lower Rent Yield
Since the property is not furnished, it has fewer amenities than it would otherwise have furnished and thus you typically will not be able to offer as much in rent. This means that the monthly cash flow for these properties will be lower in the majority of cases.
Pro: You Won’t Need to Spend Money on Furniture Repair and Replacement
Since the furniture in the unit is not yours, the responsibility for its replacement or repair as it wears down will not fall to you. This can help lower your maintenance costs helping you save money on maintaining your property.
Con: Moving Process May Damage Unit
Since you are trusting the tenants to bring their own furniture, you are running the risks of them damaging the unit while moving in and out. Scuffed walls and damaged flooring are often very common damages that occur during the moving process that you will need to need to worry about when offering unfurnished rentals that you can typically avoid with furnished rentals.
Get a Fully Furnished Mortgage
While the benefits of furnished and unfurnished rentals are entirely subjective, it is verifiable fact that a fully furnished mortgage reigns supreme. By working with LendCity, we offer you full-service support so that you can go through the entire mortgage process quickly and efficiently.
If you would like to get started today, visit us online at LendCity.ca to apply online or give us a call at 519-960-0370 Alternatively, click the link below for a free strategy call today.