Pros and Cons: Renting Out A Furnished Apartment
Tags: knowledge broker, knowledge broker real estate, toronto real estate, newmarket real estate, new homes, new condos, best home offer, create a home offer, rental apartment, furnished apartment, unfurnished apartment
It is a landlord's #1 priority to entice renters with their units. One of the ways landlords might think to do this is by offering a furnished apartment. A furnished apartment might be very enticing to those who would rather forgo the hassle of moving furniture into an apartment building, buying more things or who are only intending to sign a one year lease. But for every positive, there is often a negative, so before you decide to furnish your rentals here are the pros and cons.
#1 Charge More
Landlords typically will charge a higher rent for a furnished apartment. The price difference varies depending on the city and current rental prices, but you may be able to charge up to 30% more a month for a furnished apartment.
#2 Higher Security Deposit
To protect your furniture or to cover the costs of replacing damaged furniture, landlords can require a higher upfront security deposit. With higher upfront costs, landlords can feel more secure in the safety of their units.
#3 Attractive Tenants
Considering furnished apartments cost more, landlords will attract tenants who can actually afford the unit. Also, furnished apartments are typically rarer than unfurnished. This means if a tenant is looking at your rental they are motivated to commit early as there is less inventory.
#1 Shorter Leases
Because furnished leases can run anywhere from 6-12 months, the turnover rate is much higher. Plus depending on how long a tenant stays, they might start to ask you to remove some of your furniture. This might end up costing you more in storage fees than you originally imagined.
Furnishing an apartment means there is a higher chance for your furniture, bedding or electronics to get damaged or stolen. Before tenants move in, make a full inventory of everything you put into the unit. When your tenants leave, you’ll be able to check if all your items are intact and accounted for.
#3 Upfront Costs
Furnishing an apartment costs money - any renter can tell you that. Depending on the size of the unit, you may need to provide multiple beds, couches, tables of all sizes and lighting. It can add up quickly if you haven't properly budged beforehand. Of course, you can always offer a semi-furnished apartment that just includes the bare bones of a unit. The con to that is that you will not be able to change nearly as much as you would with a completely furnished apartment.
Furnishing your apartment is a great idea if you plan to rent for less than 12 months at one time. It might also be a good idea if your unit is located in high-traffic business areas or university towns. Before you make your final decision, consider what similar units are available near you, if the potential revenue is more than the initial cost and whether it will help you reach your ideal tenants. If you need more help making this decision, please click here to get in touch with us at Knowledge Broker.
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JOSHUA CAMPBELL (@knowledgebrkr)
Real Estate Broker
Coldwell Banker The Real Estate Centre, Brokerage
249 Avenue Road • Newmarket, ON L3Y 1N8