“Should I rent my house furnished?”
This is a question that many new landlords in Denver often ask themselves. To start off, there is no law that compels landlords to offer their rental properties furnished or unfurnished—it’s a personal choice.
There are advantages and disadvantages to offering a property furnished or unfurnished. Remember, though—your end goal should be to earn as much income from your investment as possible, no matter the choice.
So, should you offer your Colorado property with furniture, appliances, bathroom scales, and kitchenware?
Or, should you offer it with nothing but bare walls and floorboards to let the tenants design it themselves.
Reasons Why You Should Offer a Furnished Rental
1. You may earn more.
Although furnishing your apartment will cost you more money, your extra investment can go a long way in increasing your ROI. According to Trulia.com, with a furnished apartment, you can expect to earn up to 20% more in rental income compared to an unfurnished apartment.
The more furniture you have, the more you can expect to collect in rental income.
In addition, offering a furnished property can help you claim a part of your tax bill. Furniture, especially if it’s expensive, is a depreciable asset.
You don’t have to buy furniture to furnish your investment property. There are many local companies that can provide them to you for a fee. If you don’t have the cash to purchase the furniture yourself, consider this option.
2. Furnished properties are attractive.
Furnished properties are extremely attractive to renters looking for move-in-ready opportunities.
Such renters include students and professionals searching for short-term stays.
3. You can charge premium rent.
Tenants looking for furnished apartments typically seek short-term accommodation. Furnished rentals often attract tenants looking to rent for just a couple of months.
That said, short-term tenancies usually offer better ROI than long-term tenancies.
4. You can demand more respect.
Furnishing an apartment in a tasteful manner can demand respect from your tenants.
What Type of Tenants Will Your Furnished Apartment Attract?
Furnished apartments attract a different type of tenant than your traditional unfurnished apartment. Quality furnished apartments attract great tenants that are willing to pay higher rent and tend to rent long term.
If you furnish your apartment to a good standard, expect to attract:
- Corporate tenants
- Short-term tenants
- Tenants from overseas
- Lifestyle renters
- Mobile expatriates looking to live in areas that are trendy, affordable or commutable
What exactly is a furnished apartment?
Renting a furnished apartment is beneficial because moving is easy. The exact items a furnished apartment contains depend on the landlord and location. Here are some general things a furnished property should have:
- Electronics and entertainment – Good examples include a telephone and TV. You can also offer phone services, stereo equipment or a DVD/gaming system.
- Bathroom – Naturally, a toilet and shower come standard. Other options can include bath rugs, shower curtains, and sink accessories.
- Kitchen – This may include appliances, cookware, bakeware, utensils, dish towels, and potholders. Appliances can include a microwave, toaster, coffee maker and oven.
- Bedroom Furniture – At the bare minimum, bedroom furniture should include beds, dressers, closet storage, and nightstands.
- Living Room Furniture – This can include couches, coffee tables, and desks. Of course, the items may vary depending on whether your tenant is a corporate client or a college student.
Reasons Why You Should Offer Unfurnished Rentals
An unfurnished property is more likely to appeal to renters searching for a long-term home. An unfurnished apartment includes very minimal fixtures and fittings. The minimum requirements for an unfurnished property are suitable heating, a fitted kitchen, and fitted carpets.
Here are a few reasons why you should consider offering an unfurnished property:
1. You’ll attract long-term tenants.
An unfurnished property gives renters the option to customize their space. This is not the case with furnished apartments as they’re more of a temporary solution than a long-term one.
2. You may avoid high maintenance bills.
The fewer items your rental unit has, the lower your maintenance responsibility. Moreover, an unfurnished property gives you more space to work with when you need to make changes to the home’s decor.
3. You have a higher chance of making your tenants happy.
With an unfurnished property, tenants are free to customize their home. They can buy the furniture and appliances they want as opposed to having no alternative to consider when renting a furnished unit.
That said, make sure that your tenants don’t go overboard with their customizations. Ensure your lease is clear on what alterations are and aren’t allowed. For example, you may prohibit subletting or paint color changes.
4. You aren’t responsible for your tenants’ items.
Offering a furnished apartment means you’ll have to take an insurance cover for those items. This isn’t the case with an unfurnished property—the tenant becomes liable for their items.
A greater number of landlords are requiring that tenants provide proof of renters’ insurance before they can sign the lease. Renters’ insurance helps protect properties against loss, damage, or theft.
What’s Best for You?
Whether you offer a furnished or unfurnished property largely depends on your specific location.
If you have a larger apartment, consider offering it unfurnished. Tenants looking for an unfurnished property are likely to be older and have a family and are, therefore, more likely to have acquired furniture over time.
If you have a smaller property, especially close to downtown amenities, consider offering a furnished apartment. Such areas usually attract younger, more mobile tenants that are likely to appreciate the convenience of a furnished apartment.
If any of this seems daunting to you, don’t hesitate to contact us at McGuire Property Management & Sales for more information.