This a common question among first-time landlords. When renting out a property, you’ll often find yourself making tough decisions as to what perks you should offer tenants to stand out from the competition.
In the past, it’s been common for landlords to only offer tenants heat, water, and electricity as baseline amenities. But with increasing competition and demand from specialized markets, landlords have to do more to meet the demands of prospective tenants.
One way to increase interest from tenants is to offer furnished rental units. Furnished apartments appeal to a number of tenants. However, such homes most commonly tend to appeal to select groups of tenants, namely students, contract workers, or tourists.
In today’s article, you’ll learn everything you need to know about furnished rentals to help you decide whether it’s the right course of action for your investment property.
What is a Furnished Rental Property?
A furnished rental property is just that – a home that comes with an assortment of furniture. The term “furnished”, however, doesn’t provide a hard and fast list of what the should home come equipped with.
It’s up to you as a landlord to figure out what your specific tenant market wants and provide it. Generally speaking, though, the following are basic items a furnished apartment should come with.
In the kitchen, basic items include:
- Cooking utensils
- A stove
- An oven
- A coffee maker
- A microwave
In the bedroom, basic items include:
- A nightstand
- A bed
- A dresser
The bathroom usually comes with:
- A shower curtain
- A floor mat
- Basic storage or hooks for towels
The dining area includes items such as:
- A table
- Multiple chairs
You have the freedom to expand the list further. You can, for instance, include things like napkins and placemats for the kitchen or dining room.
What Kind of Tenants Want a Furnished Rental?
As previously mentioned, furnished units generally tend to appeal to people looking to rent a property on a short-term basis. Examples of such types of tenants include students, tourists, or anyone looking to want more than a hotel room but not planning to stay long enough to own a property or enter into a long-term lease contract.
The last thing these people want is to buy furniture and then undergo the hassle of moving or selling it a few months later. What’s more, moving furniture can be incredibly stressful and costly. Therefore, a fully furnished space will greatly appeal to them.
What Are the Pros of Offering a Furnished Property?
As a landlord, you may want to provide a furnished rental for the following reasons:
You Can Charge More Rent
Furnished apartments provide tenants with a certain level of convenience. But this comes at an added cost for tenants.
But before pricing your home, make sure to conduct a comparative market survey to find out how much you can charge without risking leaving money on the table or making your property less desirable.
You Can Charge a Higher Security Deposit
A security deposit provides a financial cushion against potential damages a tenant can cause. A furnished apartment means you have more property to protect against possible damage.
As such, you have a right to charge a higher security deposit depending on the cost of the furniture you have. In Saskatchewan, you can ask for a maximum amount of one month’s rent. You can, however, potentially go over the limit legally by adding a lease addendum.
Make sure to charge a reasonable amount, though, or you’ll risk making your property less desirable among prospective tenants.
You Can Narrow Down Your Target Market
As already mentioned, furnished units only appeal to a select group of tenants. By knowing who your target tenants are and what they want, you’ll be better able to utilize your money when advertising the property and furnishing it.
You may have an Easier Time Marketing the Property
Aside from running targeted ads, you may also be able to rent your property much more quickly. Having furniture that compliments the home will automatically make your property more visually desirable.
Prospective tenants will have an easier time visualizing what living in the home would be like.
What are the Cons of Renting Out a Furnished Apartment?
With all these benefits, there are certain downsides to renting out a furnished space. They are as follows:
Investing More Money
Buying a rental property alone is a heavy financial commitment. Having to then invest extra money in furnishing the home can prove financially burdensome to you. This is why it’s important to know what your target tenant demographic desires so that you can invest wisely in furnishings.
Tenants may Not like Your Choice of Furniture
From time to time, it’s possible that you’ll find a tenant who will be disappointed with your furniture choice. And this may mean having to store some furniture or moving it every now and then. This can cost you valuable time and energy. It’s best to go for fairly neutral pieces so that the space appeals to the widest range of tenants.
Expect Short-term Leases
Generally speaking, renters looking to rent a furnished apartment aren’t looking to stay for a long period. Most people will only be looking to rent month-to-month.
This means that you should expect more frequent vacancy periods. You should therefore have a solid marketing plan in place to reduce vacancies between tenants.
Whether to rent your property furnished or not depends primarily on the location of your property. If it’s near a college, an airport, or a business center, then renting a furnished apartment may be worthwhile.
For expert advice in this regard, look no further than Cressman Realty & Property Management. We’re a top property management company in Regina, SK. Get in touch to learn more about our services!