Furnished vs. Unfurnished Rental: Pros and Cons for Landlords
As a property owner, you want the best return on your investment, so you may be asking yourself: are furnished or unfurnished rental properties better? Because there are pros and cons to both, the answer depends on your situation and preferences. Let’s dive into what goes into a furnished rental and the pros and cons for both furnished and unfurnished rentals to help you decide which is the best investment for you.
What Is a Furnished Rental?
A furnished rental is a property that comes with the basic furniture a tenant will need to live in the space, like a couch, beds, a coffee table, a dining room table and chairs, and basic kitchen appliances, but an unfurnished rental will not come with any of those items. Furnished rentals can also be described as fully furnished or semi-furnished, and although these terms are loosely defined, there are a few noticeable differences.
Fully furnished rentals, also known as turnkey, may provide items such as towels, blankets, dishes, pots and pans, and silverware. There may even be décor like mirrors and art hanging on the wall, as well as a washer and dryer included in the property. A semi-furnished apartment differs in that it provides less than a fully furnished or furnished apartment, offering basic furniture and appliances such as a couch, beds, tables, a refrigerator, and a stove.
How Much More Rent Can Landlords Charge for a Furnished Rental?
A common question landlords have is how much more rent they can charge for a furnished rental. On average, landlords can typically charge 15 to 20 percent more for a furnished long-term rental. For reference, a long-term rental refers to a few months or more, whereas a short-term rental is usually a few weeks or a month, which includes vacation rentals. For a furnished short-term rental, landlords can typically charge 40 to 50 percent more, but keep in mind that most people interested in renting for a short term are expecting the rental to come fully furnished.
With this being said, it’s important to consider both the potential benefits and disadvantages of furnished and unfurnished rentals before making a decision.
Furnished Rentals Pros and Cons
You can charge higher rent for a furnished rental
Furnished rentals may fill quicker because it saves tenants the time and money it takes to buy and move furniture
You can deduct a percentage of the cost of goods for tax purposes
You’ll spend more money upfront furnishing and decorating the unit
There are more items in the unit that can be damaged during tenancy
You may have to replace the furniture after normal wear and tear to get the same return on investment
Unfurnished Rentals Pros and Cons
Tenants may stay longer if they’ve furnished the property themselves and made the rental into a home
You won’t be responsible for getting insurance to cover their furniture or any other items they bring with them to the property
Unfurnished properties require less management because furnished properties are often more popular with short-term leases, so they experience more frequent tenant turnover
Renters may not be interested in the property due to the cost of buying and moving furniture to fill the unit
You can’t charge as much for rent (or the security deposit)
Unit could possibly face more damage during move-in/move-out process when moving heavy furniture pieces (e.g. dented walls and door frames, scuffed flooring, etc.)
How to Protect Your Investment If You Opt for Furnished
If after weighing the pros and cons you’ve decided to furnish your rental, keep in mind that there are ways to protect your investment before your next tenant moves in.
Charge a higher security deposit
Because you will likely be charging more for rent now that your unit comes furnished, you can also consider charging a higher security deposit. This will hopefully incentivize the tenant to maintain the property, as well as the items inside of it, such as the couch, beds, tables, and appliances. Just be sure that the amount you charge for the security deposit doesn’t exceed the limitations set by your state laws.
Thoroughly screen your tenants
Before you approve an application, be sure to thoroughly screen your tenants. If you’re lacking time and resources, consider listing your rental property on Apartments.com, and they we’ll do the hard work for you. Their screening reports come with comprehensive credit reports and extensive, reliable background checks. These will allow you to determine whether the applicant will be a good fit for you and your (furnished) rental property.
Perform rental property inspections
After you’ve approved the application and a tenant has moved in, you can (and should) perform rental property inspections to check in on the property’s condition (and how the tenant is treating it). Performing routine inspections (one to three times a year) is a great way to protect your investment, as long as you aren’t excessively performing inspections. Inspections are often performed during the move-in and move-out period, but it’s acceptable (depending on your state laws) to routinely check on things during the lease period.
If you choose to furnish your rental property, remember that you may be able to charge more for rent, but furnished rental properties often catch the eye of short-term tenants more than long-term tenants who wish to personalize the property to their style and needs. If you choose to keep your property unfurnished, you may not be able to charge as much for rent, but you may find that you have a larger applicant pool to choose from. Both furnished and unfurnished rental properties are valid options — the choice is yours.