Seeking the greatest return on an investment property should be at the top of any rental owner’s list. One of the many decisions property owners face is whether to provide a furnished or unfurnished home. A furnished rental comes with all the amenities a person needs, from the bedroom to the kitchen. There is a market for those searching for furnished houses. However, the increased responsibility of maintaining this setup may not be the best use of time for all property owners. A property manager can significantly help in this regard. In addition to screening applicants, collecting rent, and signing lease agreements, they are also available for routine property inspections and maintenance coordination. Before deciding whether or not furnishing your rental is the right choice, there are a few details to consider.
The Essentials of a Furnished Rental Property
Furnished rentals are particularly attractive to students, interns, and business people who relocate for work. Though this market tends to lean more towards short-term rentals, there are plenty of situations where a furnished rental is desirable for those looking to settle for longer than just as few months. Long-term renters benefit the property owner of a furnished rental because they are much more likely to care for the items in their home than those who are temporarily passing through.
The goal of providing a furnished rental is for the tenants to feel at home from day one. Your target market and what you plan to charge for rent will determine the quality and design of the space. A fully furnished rental should have the proper furnishings required to make the space move-in-ready. You may choose to add art, decorative pieces, and even linens for the bed and bath.
The minimum furnishing required for each room in a furnished rental is:
- Bedroom: bed, dresser, nightstand, and bedside lighting.
- Living room: couch and chairs, a coffee table and a television.
- Dining room: dining table and chairs.
- Kitchen: stocked with utensils, cutlery, glasses, and dishware.
- Bathroom: shower curtain and liner and a trash can.
Create a space where tenants feel they can move in, have friends over for dinner, and get to bed, all without worrying about what boxes to unpack to start feeling at home.
Considerations For Renting Furnished Homes
Before deciding if furnishing your rental property is the right choice, take a moment to weigh the costs.
Can You Reasonably Offset the Cost of a Furnished Home?
The more furnishings you have, the more you will be able to charge for rent. The upfront cost of providing the amenities of a ready-to-live-in home is expensive, but a furnished home can deliver up to 20% more rental income than an unfurnished rental. You will need to account for the upfront cost of furnishings for your rental home and the cost of replacing them over time. Luckily most of these costs will also be tax-deductible as depreciable asset deductions.
To offset the costs of renting a furnished home, you will need to factor in the cost of furniture over its expected lifetime. For example, if the dining table you purchased cost $200 and should last for five years before being replaced, you need to plan on paying $40 per year to provide your unit with a dining table. Property owners should perform this estimate with all the provided furnishings and include those costs into the monthly rent.
Wear and Tear vs. Property Damage
Wear and tear is generally the property owner’s responsibility for maintaining, whereas property damage falls under the tenant’s responsibility. Some normal wear and tear examples are chipped paint, small nail holes and cracks in the wall, worn carpet, scuffed wood floors, and scratched enamel in bathroom sinks and bathtubs.
Security Deposit
A security deposit covers damages incurred by the tenant. A landlord can not use a renter’s security deposit to fix the normal depreciation of a lived-in home. It is the responsibility of the property owner to maintain and replace items as they get worn out. If the damage goes beyond the security deposit the tenant will need to pay the balance. If there is a failure to comply you may not recover your losses.
Lease Agreement
A detailed lease agreement will create clear expectations between you and your tenants. The lease should include a detailed list of furnishings and appliances provided, along with the existing condition at the time of move-in. Photographs can be a very useful tool in this situation so that the tenant and landlord have a reference in case of missing or damaged items. The lease should also state clearly the terms of property damage responsibility.
Is Furnishing Your Rental Worth It?
Tenants typically prefer to provide their furnishings. But consider the effects of tenants moving their furniture in and out of your property. That large couch is likely to scuff the hallway wall it has to fit through, not to mention the dinged doorways and scratched floors from moving bed frames and dining tables. Repeatedly moving furniture can cause significant damage to a rental. Focusing on a target audience of potential tenants who desire a move-in-ready home will save you lots of moving day stress.
Furnished rental properties are becoming increasingly popular for a certain set of renters. With home prices higher than ever, many people who would like to buy a house are unable to. This has led to a generation of more transient people who are less attached to their homes in favor of new experiences and opportunities. Dealing with moving furniture in and out, the cost of hiring movers, and the inconvenience of being tied down by so many belongings makes furnished rentals extremely appealing to many people. Whether you choose to furnish your rental or not, Rent Homes Portland property management services can help guard your property and financial interests through every phase of the rental process.
Connect with Rent Portland Homes
The high demand for available housing in Portland makes it a great opportunity for homeowners to transform their property into a profitable rental. At Rent Homes Portland by Darla Andrew, we can assist with important details such as tenant screening, lease agreements, and 24/7 emergency maintenance service. Contact us for a free rental analysis of your property by simply filling out the form on our website. We’ll handle all the details of managing your property so that you can rest assured your investment is well-maintained and occupied by dependable tenants. We’re here to help turn your home into an investment. If you’d like to learn more, call or text Darla Andrew today at (503) 515-3170.