Furnished vs. Unfurnished Rental Property: Which Is Better?
Both the short-term and long-term rental markets present several opportunities for investors to jump in and be successful. However, it can be tricky to make your rental property stand out against others. As such, many investors are left debating whether to furnish their rental or leave it up to their tenants. Today, we’ll go over the differences between furnished vs. unfurnished rental property and tips to protect your investment if you decide to furnish it.
Contents of This Article:
- What Is a Furnished vs. Unfurnished Rental Property?
- Pros and Cons of a Furnished vs. Unfurnished Rental Property
- Tips for Protecting Your Furnished Rental Property
- Protect Your Rentals With Property Management
What Is a Furnished vs. Unfurnished Rental Property?
Depending on the type of rental you offer, tenants may expect it to be furnished. For instance, most Airbnbs or vacation homes are fully furnished or at least semi-furnished. On the other hand, most long-term rental properties are unfurnished, meaning that tenants move in their own furniture. However, different renters may have different ideas of what “furnished” means.
As such, landlords and Fairfax property management companies need to know the differences between each rental type. Read along as we go over the definitions of a furnished vs. unfurnished rental property and what constitutes a semi-furnished rental.
Fully Furnished Rental Properties
A fully furnished rental property includes everything a renter needs to live comfortably in each room. Generally, furnished rental properties allow tenants to move in with very little–just their personal belongings. Some of the main items included in a fully furnished rental property include the following:
- Bedframe and Mattress
- Storage Shelves
- End Tables
- Living Room Couch
- Dining Room Table and Chairs
- Coffee Table
- Utensils, Dishes, Pots, and Pans
Semi-Furnished Rental Properties
A semi-furnished rental property is a bit harder to define. After all, it has some of the same elements as a fully furnished apartment, but not enough to be considered as such. Generally, tenants moving into a semi-furnished rental can expect some key pieces of furniture. For instance, a semi-furnished rental may include some of the following items:
- Living Room Couch
- Dining Room Table and Chairs
Unfurnished Rental Properties
Most rental properties are unfurnished, including appliances and the basic necessities, but no furnishings. As such, tenants must move in their own furnishings to make the rental more comfortable and welcoming.
Pros and Cons of a Furnished vs. Unfurnished Rental Property
Most decisions regarding rental properties come with a few pros and cons to consider carefully. When choosing a furnished vs. unfurnished rental property, each option has several benefits and disadvantages. Follow along as we review some of them.
Benefits of Furnished Rentals
- Increased Rental Rates- The added convenience of a move-in ready rental property that’s fully furnished allows landlords to charge higher rates. That said, since fully-furnished rentals are more common amongst short-term rentals, that can contribute to even higher rates and ultimately offset the furniture cost.
- Higher Security Deposit Amount- With higher rental rates, landlords can charge higher security deposit rates to cover potential loss or damage. After all, you’re putting your personal property on the line, which costs money to repair or replace if it gets damaged.
- More Predictable Market- Tenants looking for furnished rentals are often short-term renters, young professionals, or students who still need to build a personal furniture collection. Once you recognize your target audience, you can market to these groups more effectively.
Disadvantages of Furnished Rentals
- Higher Tenant Turnover- Fully furnished rental units are generally used as short-term rentals, so turnover rates are slightly higher. As such, landlords must prepare for vacancies and cover costs during those times.
- Risk of Damages- Although you can charge higher rates for fully furnished rentals, you can also expect more wear and tear to your property and furnishings. As a result, you could have to repair or replace furniture more often than you’d like, resulting in higher maintenance costs.
- Potential Storage Fees- Not every renter wants a fully furnished rental, but that doesn’t mean you should let them get away. Instead of turning away a tenant who doesn’t want the furniture, owners can arrange for it to be removed and stored securely. However, this adds another cost to your monthly bills.
Benefits of an Unfurnished Rental
- Saves Money- Skipping the furnishings and decor pieces for each rental property can save you a significant amount of money. Instead of putting money into furniture, you can reinvest it into another aspect of your rental business.
- Fewer Worries About Damage- Offering furnishings in your rental properties presents more opportunity for damage. As such, if you only offer unfurnished rentals, you don’t have to worry about added property damage.
- Lower Turnover Costs- Tenants that can customize their space and add the furniture they want may stay longer. As a result, you have fewer tenant turnovers and fewer costs associated with vacancies and finding new tenants.
Disadvantages of an Unfurnished Rental
- Harder to Attract Short-Term Renters- Many short-term renters look for the convenience of moving in and out quickly. As such, it may be hard to attract short-term renters without providing furnishings.
- Unable to Upcharge- Furnished rentals present an excellent opportunity to charge higher monthly rates. However, without the added convenience of furniture, you may not get away with higher rental rates.
- Potential Moving Damage from Tenants- Tenants moving their own furniture in and out of your rental unit can present several opportunities for interior damage. For instance, moving large pieces of furniture, like tables or couches, can easily scratch flooring or damage walls.
Tips for Protecting Your Furnished Rental Property
Choosing between a furnished vs. unfurnished rental property ultimately depends on your property type and what kind of tenants you want to attract. However, there are a few risks that come with furnishing your rentals. If you decide to furnish your rentals, here are a few tips for protecting your properties from damage.
- Tenant Screening- A thorough tenant screening process is necessary for any rental property business. However, it’s even more important if you’re providing furnishings in your rental properties. After all, you want to ensure your tenants are responsible and will care for your property just as you would.
- Renter’s Insurance- It’s essential to check your insurance policy to see how much coverage you get for your furniture and other items in case of loss or damage. However, you may want to require renter’s insurance for a furnished rental property. That way, your tenant’s belongings are also covered if something damages them.
- Larger Security Deposit- Security deposits generally equal one month’s rent. However, some states allow you to charge more. So, consider charging more than the standard one-month rent amount for furnished rental units to cover any potential damages.
- Regular Inspections- Move-in and move-out inspections are crucial for all rental properties, and even more so for furnished rentals. From each inspection, you can determine how much damage was done to the unit and how much, if any, you need to withhold from the tenant’s security deposit.
- Lease Addendums- Whether renting a semi-furnished apartment or a fully furnished one, you’ll want to include additional lease addendums. For instance, you can include an itemized list of the included furniture and document the condition with photos or a walkthrough video.
Protect Your Rentals With Property Management
Whether you decide on a furnished vs. unfurnished rental property, ensuring it’s maintained well and properly cared for is important. After all, protecting your rental investment is crucial to ensure a favorable profit margin and a successful rental business for years to come. When it comes to property inspections, tenant screening, lease drafting, and general maintenance, all of these things come together to make a successful rental.
If you’re looking for someone to perform these duties and help protect your valuable investment, look no further than Bay Property Management Group. Our team of dedicated industry professionals can help manage your properties, whether they’re furnished or not. Contact BMG today to learn more about our comprehensive management services near Baltimore, Philadelphia, Northern Virginia, and Washington, DC.