The rental market remains a thriving industry with numerous prospects for keen investors. Most will tell you that they intend to earn a higher return on their initial investment. Even so, investing is never a straightforward job. This is because property investment is a huge capital commitment, which means that one wrong move can have a serious effect, especially for someone with limited resources. One major decision you must make as an investor is whether or not to furnish a unit.
So, what defines a fully furnished unit?
Unfurnished vs Partially vs Fully Furnished Rental Homes: What’s the Difference?
Units for rent are often listed as unfurnished, partially furnished, or fully furnished. We’ll define those terms as they are often used by developers and investors alike. Naturally, the goal for investors is to rent out the property faster and at a higher rate than their loan instalment.
An apartment that is considered “unfurnished” or sometimes “bare” is one that’s virtually empty. Tenants are likely to receive the unit exactly as the owner acquired it from the developer, with no differences. Renting out an unfurnished unit can be a good starting point if revenue is not your primary concern. However, because most tenants desire at least basic furnishings, this will narrow your tenant pool. You’ll need to set a lower rental cost because your tenants would have to pay for their furnishings.
There is no set definition for this term because it refers to anything between an empty unit and one that’s fully furnished. But, in most circumstances, semi-furnished units may only include the basics, like lights, fans, kitchen cabinets, and built-in wardrobes. Essential big pieces like the bed, sofa and dining table may be included.
The term fully furnished describes a property with all the furniture a person would require in their day-to-day life. It will contain furniture like a sofa, beds, dining table, chairs, cupboards, and shelves. Furthermore, it will be equipped with curtains, lamps, a TV, a washing machine, and a dryer. Other features that are frequently present in many fully furnished properties are air conditioning and water heaters.
The Pros and Cons of Choosing to Fully-Furnish A Rental Property
The best course of action is to weigh the pros and cons of furnishing your unit, and determine whether it meets the needs of tenants in the area.
|Furnished rentals are more attractive
Tenants don’t have to spend a lot of money on new furniture, which is one of the major advantages of furnished units. Not only does it save money but it also saves time, and moving into a house that is already equipped will be a breeze. Additionally, this will help distinguish your unit from others; unfurnished units often compete based on price. This is because, if there are numerous units with similar offerings, tenants will naturally choose the unit with the cheapest rent.
|The feel-good factor
A unit that’s fully furnished is often up to date with trends. It will already be modern and stylish, with fashionable interiors and furnishings that appeal to the public at large. Likewise, there will be fewer defaults because you will be focusing on the tenant profile who has the resources and income to pay the premium.
|Generates a good rental yield
Evidently, furnished units often fetch higher rent rates as tenants pay for the convenience of the furnishings and appliances available. In addition, investors are likely to experience faster turnaround times renting out the unit. But, the premium a furnished unit can attract will also depend on how satisfactory the furnishings are, so it’s always crucial to keep the unit well-maintained
|Clash in design taste
A major concern is having unnecessary items that potential tenants might not need. As a result, if the apartment is fully furnished, there can be a conflict between your style and the tenant. It is worthwhile to extend the courtesy of the potential removal of items that might not fit their taste so that they too have more space for their personal belongings.
|Expensive and time-consuming
If you want to rent out a trendy and modern furnished home, you must budget for the additional expenditures of keeping things up to date. To stay current with trends in order to attract potential tenants, you need to continuously refresh the furnishings and design.
|Risk of damage
While natural wear and tear of furniture are to be expected, certain tenants may be a little more careless, so plan for the cost of occasionally replacing or repairing some items.
To wrap things up, we have also listed a few useful points for investors to take into consideration. Buying and owning rental properties is the first step, but wealth generation will take time. You must grow the capability to identify, assess, and purchase good real estate deals. Develop a network of reliable contractors, property managers, and other professionals who will be willing to offer high-quality services at a fair price – you could also get in touch with us 😉. The rental property market ultimately comes down to a matter of patience. Thus, before making an investment, make sure to research and study the tenant market in the area.
What are the profiles of your tenants?
In some ways, the value of a property is determined by the amount of rent that the owner can collect from their tenant. Comparatively speaking, students are more flexible and can adjust to units as they come. However, since professionals are constantly on the go, this group would prefer a fully furnished unit to save time and effort. Last but not least, both small and big families have a greater desire for fulfilment and would choose either an unfurnished home to personalise or a fully furnished unit to accommodate their wants and needs. It’s best to identify potential tenants for your property before making an investment.