Before you get to choose whether to present your property as furnished or unfurnished, you need to ask yourself a few questions:
- What are the market demands in your area?
- Who is your target client? What do they need from a landlord?
- What value are you looking to create for your tenants?
How you choose to present your property will affect the type of tenant you attract, the rent you charge and your vacancy rates in between tenants.
In Australia, there is no legal obligation for you to furnish your property. You can choose to invest in an interior designer or leave the walls bare with a fresh coat of paint.
In your rental, you need to think about your tenants and the value you want to create.
Just like landlords, tenant circumstances vary. The option that works for one tenant may not work for another.
Some tenants already own furniture and would like to move in with it. Others prefer a fully-furnished rental property so they never have to worry about furniture.
A conversation between you and a potential tenant could help you identify a mutually-beneficial arrangement.
As a landlord, flexibility to offer a property either furnished or unfurnished will work to your advantage. It can help you avoid losing money through long vacancy periods.
Before investing, do your research.
Study the market and identify factors that might influence the profitability of your rental. For example:
- The location of the property
- The type and size of the rental unit
- Rental demand in the area
Some rentals work better with furnishing while others are better off without.
For example, modern one or two-bedroom apartments in metropolitan areas appeal more to ‘burden-free’ professionals.
These are tenants who enjoy short-term rentals. They are likely to spend a lot of time travelling for either work or leisure. These tenants prefer fully-furnished units and are willing to spend more on rent for convenience.
Is Furnishing Your Property Worth It?
A furnished rental will appeal to tenants who are ready to move in immediately.
However, the furnished rental market is changing rapidly.
Landlords invest in property redevelopment, including hiring interior designers to stay competitive.
Here, you will come across several types of tenants, such as:
- Overseas tenants who expect high-end furnishing, preferably from an interior design company.
- Mobile professionals who enjoy the flexibility and are likely to change jobs quickly.
- Consultants working on projects for long periods of time away from their homes.
- Travellers looking for a short-term living arrangement.
- Young professionals looking for trendy and affordable locations with a short commute.
- Lifestyle renters looking to experience different design and rentals styles over a short period of time.
Each tenant above will have a different set of expectations. For example, young professionals and travellers are more open to subletting.
The type of tenant you attract will depend on several factors:
- Property type
- Rental demand
- Standard of furnishing
- You will enjoy shorter vacancy periods depending on the location of the property.
- You will appeal to a wider range of tenants, including mobile and young professionals, as well as overseas tenants.
- You can easily increase the price of your rental depending on the quality of furnishings you provide.
- Any money you spend on furnishing is tax-deductible.
- Your furniture may sustain wear and tear or damage during a tenancy, forcing you to spend money on new furnishings.
- If you find tenants with their own furniture, you might have to spend money on storage.
- Maintaining a property inventory requires more resources.
- You need to pay for home insurance.
Providing a Furnished Property
The definition of a ‘furnished unit’ will vary between properties. High-end units offer luxury furniture and decor, top-end bedding and towels, plus high-quality crockery and home equipment.
A standard furnished unit will feature:
- A bed with simple bedroom furniture like a wardrobe and a chest of drawers
- Soft furnishings such as carpets and blinds
- Comfortable living room furniture
- Kitchen appliances like a fridge and a cooker
- A washing machine
As a landlord, your only obligation is to ensure all furniture and appliances meet local fire safety codes. Every fabric in the house must have a label to prove it meets these standards.
Getting the furniture in your rental insured will protect you from liability in the case of an accident.
This also means you need to keep an inventory of everything in the house. You must inspect the items in the house before and after every tenant moves in.
If an item is broken or damaged, you can charge it to your tenant. If they fail to pay you or you cannot recover the costs from the deposit, you can claim it from your insurer.
Increase your cashflow by self-managing your property.
Is Offering an Unfurnished Property Worth It?
Some tenants prefer renting out an empty unit and bringing in their own furniture. Often, these tenants are looking for a long-term lease in a unit they can turn into a home.
There are different categories of tenants who prefer unfurnished rentals:
- Those looking to invest in a long-term lease agreement.
- Tenants interested in personalising a unit to suit their taste.
- Tenants who already own furniture.
- You do have to spend money on furniture.
- You can avoid the cost of insuring a tenant’s home.
- You can enjoy longer leases from tenants who already own furniture and are looking to live in one place for an extended period.
- You avoid investing resources in inventory.
- You do not have to keep replacing furniture due to wear and tear or damages.
- You might endure longer vacancy periods waiting for long-term tenants.
- You cannot enjoy the benefits of short-term rentals.
Is There a Middle Ground?
A partly furnished property offers a middle ground that can help you lock down tenants quickly.
You can offer key pieces of furniture and white goods such as a fridge or wardrobes. Tenants can then bring in furniture that suits their personal taste.
This is an easy middle ground where you can appeal to a wider range of tenants. This can help you reduce vacancy rates significantly.
What Do Tenants Want?
Tenant needs will vary vastly.
Flexibility will help you reach out to a wider variety of tenants.
Before making a decision on whether to rent out your property furnished or unfurnished, you need to understand your target market.
Tenant needs change over time. You must stay open to tenant requests. If the demand changes, you need to stay open to remain profitable.
Will You Offer a Furnished or Unfurnished Rental?
This will depend on the type of client you want to attract and the market demands in your area.
Managing either rental will require a significant time investment from your end.
There are several things you need to manage for both rental options:
- Sending rental invoices
- Making rent collection easy for you and your tenant
- Managing your rental income and associated taxes
- Finding and scanning potential tenants
- Preparing and sharing lease documents
Lodge helps you automate all these functions. Their free property management software helps you in the day-to-day running of your rental.
You can sign up to Lodge today for free and enjoy managing your furnished or unfurnished rental now.