The short- and long-term rental markets continue to be a booming industry with plenty of opportunities for savvy investors. However, when it comes to making your rental stand out, many owners are left wondering – to furnish or not to furnish? When it comes to deciding between furnished vs. unfurnished units, weighing the pros and cons is essential. Join us below as we discover whether it is worth it to furnish a rental property and how to protect your investment if you do.
What is a Furnished vs. Unfurnished Apartment?
When it comes to whether or not to rent furnished vs. unfurnished, expectations play a vital role. Different renters may have different ideas of what constitutes a furnished unit. However, there are some industry standards to help you understand the difference between fully furnished, semi-furnished, and unfurnished units. Check out the details below –
Fully Furnished Apartments
A fully furnished unit has everything a renter would need to live comfortably in each respective room. Essentially, fully furnished is a turnkey unit where renters could move in with little else besides their personal belongings. So, check out this list below to see the minimal furniture you will need to provide in a furnished apartment.
- Dining Room Table and Chairs
- Living Room Sofa
- Coffee Table
- Storage Shelving
- Bedframe and Mattress
- End Tables
- Window Treatments
- Dresser Storage
- Utensils, Dishes, Glassware, Pots, and Pans
Describing a semi-furnished rental is a bit more complicated since it can run the gamut from bare necessities to nearly fully furnished. However, semi-furnished typically means the tenant moving in can expect some key pieces of furniture to make them more comfortable. Check out the partial list below of furniture you can consider advertising a semi-furnished unit.
- Living Room Sofa
- Dining Table and Chairs
- Bedframe with or without a mattress
Unfurnished Rental Properties
Unfurnished units mean bare bones. So, it includes all essential items such as appliances but no furnishings. This is very common and means tenants must provide their own furnishings to turn their rental into a welcoming home.
Furnished Expectations in Short-Term vs. Long-Term Rentals
Fully furnished units are quite common in the short-term rental industry. Popular with young professionals and vacationers alike, short-term rentals allow tenants to stay in a unit from as little as a couple of weeks to several months. In fact, it is expected that this type of rental comes with everything a tenant needs to move in with their bag and live comfortably.
On the flip side, fully furnished long-term rentals, while less common, are not unheard of. Generally, long-term rentals want to make space their own by adding their personal belongings, including furniture. That said if your rental pool includes areas heavily populated with students, government contractors, or military, fully furnished units may prove desirable.
Pros and Cons of Furnished vs. Unfurnished Rental Properties
With any decision, there come the inevitable pros and cons that each owner must carefully weigh. So, to help you understand what is right for your rental, follow along with the pros and cons of furnished vs. unfurnished units below.
Top 3 Benefits of a Furnished Rental Property
- More Security Deposit Funds – When the rental unit includes items from the owner, it costs money to repair or replace these at move out. Therefore, security deposits in furnished rentals tend to be higher to cover potential loss or damage above normal wear and tear.
- Increased Rental Rates – The added convenience of a turnkey unit means owners can often charge higher rates for furnished apartments. Furthermore, since this option is more popular in short-term rentals, these shorter leases also contribute to driving up the price. These factors can help owners offset the cost of furnishings.
- Predictable Market – Tenants looking for fully furnished units tend to be young professionals, families, and students that have not yet built up a collection of personal furniture.
The Disadvantages of Furnishing Your Rental Property
- Increased Turnover – Since fully furnished units are most commonly short-term rentals, turnover rates are higher. Thus, creating the need to plan for periods of vacancy.
- More Potential Damage – While the rental rate for short term may be higher, so is the rate of wear and tear on your property and furnishings. This could lead to added replacement costs and cleaning fees between tenants. Therefore, always complete thorough move-in and move-out inspections to help distinguishing normal wear and tear versus tenant damage. Furniture will wear out over time, especially with high turnover.
- Storage Fees – Not every renter will want a fully furnished unit. Therefore, landlords should not let that renter get away if someone wants to rent without the furniture. Instead, owners must arrange to have the furniture removed and securely stored, equating to added costs.
Advantages to Renting an Unfurnished Unit
- Save money by not providing furnishings.
- Less hassle with lease addendums to protect your furniture investment
- Tenants that can make the space their own may stay longer
- Less worry about potential damage to items
- Lower turnover costs
Disadvantages to Renting an Unfurnished Unit
- Without furniture, you may not attract the short-term rental market
- Unable to upcharge on the rental rate for the added convenience of a turnkey
- The unit itself could see added damage from tenants moving their furniture in and out
How to Protect Your Furnished Rental Property
Protecting your investment property is vital in any landlord-tenant interaction, especially when you provide extra items such as furniture. Thankfully, there are ways to minimize the financial risk involved with renting fully furnished units. Check out our tips below –
- Thorough Tenant Screening – Whether furnished or unfurnished, thorough tenant screening is important to protect your investment property. Create a standard set of qualifications for every tenant that complies with all Fair Housing Laws. Typically, landlords screen for creditworthiness, criminal background, and rental history. In addition, always ask for previous landlord references, which can help you discover any red flags.
- Added Insurance – It is a good idea to require tenants to purchase renter’s insurance. However, given that the furnishings belong to the owner check with your insurance provider to see if you need additional coverages under a landlord or homeowner policy to protect the furnishings.
- Greater Security Deposit – In general, security deposits equal one month’s rent. That said, most states allow landlords to charge up to two months’ rent. Therefore, for furnished units, consider charging more than the standard one-month rent to cover potential damage at the end of the lease term.
- Move-In and Move Out Inspections – Inspections are critical to determining what is considered normal wear and tear and what is tenant damage. From these inspections, landlords can determine how much, if any, to hold from the tenant deposit.
- Lease Addendums or Clauses – Renting fully or semi-furnished units require an itemized list of included items and additional lease addendums. It is also a good idea to document the condition with photos or a video walkthrough.
Protect Your Investment with Expert Property Management
Deciding to rent furnished vs. unfurnished depends on your goals and target market as a landlord. However, regardless of what you decide, protecting your investment is key to successfully maintaining a healthy profit margin. In addition to inspections, screening, and lease addendums, professional rental management services can help owners get the most out of their investment.
The expert team of Richmond property managers at Bay Property Management Group can help owners protect their valuable rental interests. With a solid lease agreement, comprehensive tenant screening, and thorough inspections, owners can rest assured that whether furnished or unfurnished, BMG will help you get the most out of your rental investment. Give us a call today to find out more.