If you are an apartment investor, choosing to go the furnished or unfurnished route is a very important decision. You must select what will maximize your income and protect the total investment in your building. This is not an easy choice and I have made a stand so I will give you my take on the pros and cons of furnished and unfurnished rentals.
Of course, the easiest and simplest thing to do when investing in an apartment building is to rent the units unfurnished. For most, this is a nice steady income with no worries about the furniture or wear and tear on the items you bought. Some tenants like to settle into rentals for years and all you have to do is provide the occasional handyman, fix minor plumbing issues, broken windows, and the like. Some tenants prefer shorter rental terms, which means you have to renovate the apartment with paint and other maintenance to keep the units looking fresh for the next tenant.
In general, there are far fewer things to think about when renting unfurnished apartments compared to furnished ones; the lease term and maintenance are the main considerations. The property’s location, style, and upkeep of your building will determine the type of tenants it will attract, so this is an important consideration in determining whether you should rent furnished or unfurnished apartments.
With a short-term tenant, a month-to-month lease on a furnished apartment is often very attractive. For example, people in the military are generally assigned for short periods and don’t like having to transport furniture from one duty station to another. Also consider traveling businessmen and traveling nurses working short-term assignments. These are perfect tenants for furnished apartments and these large tenants cause minimal damage because their companies often rent the apartments for them, so they have an extra inventiveness to be kind tenants.
Some municipalities allow you to divide apartments into separate rooms to create shared units. Apartments with shared common areas have enormous earning potential. A furnished room is very convenient for renters who want to travel light or who want to maximize their income by sharing expenses with others. Since many people travel on assignment and have other homes, they are primarily concerned with working and having a safe place to sleep at night. We don’t want to assume that all short-term renters looking for a furnished apartment are the homeless type.
Renters who rent furnished apartments are often willing to pay a little more for apartments, primarily because they get more. Second, most will already have a complete set of furniture elsewhere and simply don’t want to have to move or store their items. Since they are using your furniture, they accept the responsibility to care for it and pay a security deposit to cover any damage. Generally, you as the landlord have a higher class of tenant.
The decision to rent furnished or unfurnished has a big impact on the type of tenants you can attract. If you prefer to attract higher priced tenants looking for shorter term leases than furnished rentals, this is the way to go. If you prefer long-term tenants who like to nest for a year or more, an empty, clean and well-maintained apartment is the right choice. In the end, the decision should be based on what is the most profitable situation for you, the investor.