Apartment Investing – Furnished or Unfurnished
If you are an apartment investor, choosing the route of furnished or unfurnished apartments is a very important decision. You have to select what is going to maximize your income and protect the over all investment in your building. This is not an easy choice and I have done booth, so I’m going to give you my insight on the pros and cons of furnished and unfurnished rentals.
Of course the easy and simple thing to do when you invest in an apartment building is to rent the units unfurnished. For most, this is good stead income with no worries of furniture or wear and tear on items you purchased. Some tenants like to settle into rentals for years and all you have to do is provide the occasional maintenance tasks, fix minor plumbing issues, broken windows and items like that. Some tenants prefer shorter rental terms which means you have to refresh the apartment with paint and other maintenance to keep the units looking fresh for the next tenant.
Over all there far fewer things to think about when renting unfurnished apartments as compared to furnished ones; the leasing term and maintenance being the major considerations. The property location, style and up-keep of your building will determine the type of renters you 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 in a furnished apartment is often very attractive. For example military service people are usually stationed for short terms and don’t like having to haul furniture from duty station to duty station. Also consider traveling businessmen and travel nurses who work on short-term assignments. These are perfect tenants for furnished apartments and these great tenants cause minimal damage because their companies often lease the apartments for them so they have extra inventive to be gracious tenants.
Some municipalities allow you to split apartments into separate rooms to create shared units. Apartments with shared common areas have huge profit potential. A furnished room is very convenient to renters who want to travel light or who want maximize their income by sharing expenses with others. Since many people travel on assignment and have other homes, they mainly care about working and having a safe place to sleep at night. We don’t want to assume all short-tern renters seeking furnished apartment are the drifter types.
Tenants that rent furnished apartment are usually willing to pay a little more for apartments, first because they are getting more. Secondly, most will already have a full set of furniture elsewhere and simple don’t want to have to move or place their items in storage. Since they’re utilizing your furnishings they are accepting the responsibility to care for them and pay a security deposit to cover any damages. Overall, you as the landlord, you have a higher class of tenant.
The decision to rent furnished or unfurnished apartments greatly impacts the type of tenants of you can attract. If you prefer to attract higher priced tenants looking for shorter term leases than furnished rentals is the way to go. If you prefer long-term renters who like to nest for a year or more than an empty clean 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.