Questions such as “How much more rent will I get if I rent my property furnished? Should I include the white goods, or should I take everything with me when I leave?” are on the rise and the responses provided back to these clients are varied each time.
Yes, if a property is offered fully furnished a higher rental yield is expected. How much higher? Well, that is determined by where the property is located, what furnishings are on offer, the quality of the furniture and the overall presentation of the property. From experience, for apartments 10 per cent to 20 per cent higher returns and for houses 20 per cent to 40 per cent higher returns, over leasing a property unfurnished. However, before a landlord heads down the furnished garden path, they need to be aware of various factors that may impact their financial success should they elect to lease their property furnished.
The first factor is the tenant market. As a business development manager and leasing agent, I know there is always a tenant market seeking furnished properties. Whether a tenant is looking for fully furnished or partly furnished, there is always a tenant out there. In saying this, landlords need to recognise that the furnished market varies greatly from the unfurnished market. Vacancy rates for furnished properties can be much higher than unfurnished. Lease terms are normally expected to be shorter – to compliment a job contract, a short stay in a new city or whilst a shipping container full of their own furniture is being delivered from overseas or interstate. Yes, the landlord receives more rent for the property, however, how much will the upkeep of all the furnishings cost? Will this outweigh the extra income received? Will items have to be replaced after each tenancy ends? Will the landlord be happy paying higher management fees and charges for agents to manage furnished properties?
If you’re a landlord that has a property in the CBD of a capital city (or on the city fringe) and is offering fresh, modern and presentable furnishings with near new white goods and have the flexibility of offering of a lease between 3-12 months, then yes, I would say offering your property furnished is an avenue to consider. Although, do your sums. After six months if your tenant vacates, will you be willing to pay another leasing fee, advertising charge, inventory cost? Will you have enough funds to absorb the vacancy period? Are you still happy paying higher management fees? If the answer is no, then don’t take the risk. Especially with the onslaught of accommodation through Airbnb in capital cities around Australia, tenancy choice for furnished accommodation has never been so fruitful.
Offering lower vacancy rates, larger tenant markets and longer lease terms, renting your property unfurnished might have greater investment clout than leasing a property furnished. As with all investments, where there is risk there is the potential for gain. However, playing the unfurnished market is like buying blue chip stocks – slow and steady often wins the race.