What’s Best for Your Rental Property
Furnished or Unfurnished: What’s Best for your Rental Property?
A good case can be argued for both furnished and unfurnished rental property. To decide what is best for your rental property it will be helpful to have access to real, current and relevant market trends. Reliable rental information will provide you with important details and help you determine common trends relevant to your neighborhood, accurate pricing parameters and vacancy rates for both categories. Acquiring this information, however, can be tricky. While government sites, property management companies and individual realtors readily offer their opinions, we would suggest that reliable information should come from a local source that has plenty of transactional volume in your area to support the analysis.
Reasons why you might consider renting your property as a Furnished Rental
As would be expected, furnished properties typically gather higher rental pricing. There are many instances when a furnished rental is in high demand and such demand tends to be elevated in urban centers, international cities or vacation hot spots. But often overlooked are the local renters who need to relocate temporarily due to the quick sale of a home, major renovations, damages to their residence or a change in marital status. Furnished rentals can be sought after anywhere, however, are most certainly in higher demand in bustling city centers, like Vancouver, Toronto, New York and Montreal. In a previous article, we discussed the new bylaws and regulations for short term rentals in Vancouver and throughout British Columbia. This, of course, has been a hot topic as the demand for furnished housing and the rise of the sharing economy have become commonplace. As you consider renting your property furnished, please also consult your local bylaws for rentals under 30 days as each city will have their own regulations.
What does fully furnished mean?
Fully furnished means that a house, condo or rental property is equipped with all the furniture and home accessories that make for comfortable living. While comfort may be subjective, keep in mind that the furnishings and décor should reflect the calibre of your rental property and the neighborhood. If your condo is located in an upscale building or high-end area of your city, your furnishings and décor must match its stature and cater to the expectations of the clientele renting there. This means that “fully furnished”, could mean a few different things depending on where and to whom you are renting. Basic furnishings may suffice for affordable student housing, but plushy throws and accent pillows would be expected for a stay at a luxury residence, like this one at the Bisha, downtown Toronto.
Things to include in your furnished rental
While this list will be more extensive for some properties than others, we have listed some basic furnishing requirements and recommendations:
- The living room area should have a sofa, coffee table and extra lighting like a table or floor lamp. Add some extra luxury with accent cushions, a trendy throw, a piece of tasteful art, an area rug and home accents like a vase or candles. It is these touches that will add warmth and style and differentiate you.
- The bedrooms must have standard items like a bed frame, night stands with beside lighting and storage for clothing. Perhaps a desk or chest of drawers if space allows. Adding a duvet, extra decorative pillows and throws and crispy linens will add to the comfort and overall ambiance of the space.
- The dining or eating area should have a good quality dining set including extra seating for guests. Make certain to add tableware extras like a centerpiece, vase and place settings. Ensuring you have the correct amount of table settings, appropriate glasses and some serving plates add that extra touch client will notice.
- The kitchen should be fully stocked with enough utensils and cookware to make a nice meal and entertain. Small details like a potato peeler, cheese grater, corkscrew and wine glasses will go a long way.
- Bathrooms should have at minimum a shower curtain, waste bin and a floor mat. Including things like toilet paper and bathroom, cleaning accessories should also be standard. Add a soap dish, matching toothbrush holder and a good set of quality towels to make your rental property feel comfortable and complete.
The above are only basic pointers and there are real considerations that must go into the significant upfront cost in adequately furnishing a luxury suite. Additional expenses to consider are the maintenance costs and that of all utilities, internet and cable TV (or Netflix/Apple TV) that are expected to be included in the rent. Renting your property fully furnished can be beneficial and very profitable, although much is to be accounted for and it may not be recommended for first-time landlords. Before you take the leap, we would advise that you seek the advice of a licenced property manager in your area.
When it comes to unfurnished rentals, which have historically been the mainstream in the rental market, there is also an upside for both landlords and tenants alike. It is important to once again understand your local rental market to determine the demand for unfurnished rentals. With the rise of furnished accommodations in major cities, it is easy to overlook the increasing demand for long term, unfurnished housing in those areas. Sometimes, profitability can be the same or higher based on a few significant factors. You can learn more about rental property markets from experts here.
One of the obvious benefits of unfurnished rentals are long-term lease commitments, the decreased chance for vacancy, less turnover, less maintenance and no replacement costs for damaged or depreciated furnishings. There are also less service calls about malfunctioning items, like a TV or the iron, and more significantly, there are no utilities or cable bills to pay.
Our resident expert and Licenced Property Manager, Vera Sal suggests that if you have recently purchased a rental property as an investment, you may want to consider renting it unfurnished, “Your overhead on things like utilities, linens and furnishings will be much lower, but you may not recoup the costs of furnishing an entire home for quite some time. If you were to purchase a property with existing furnishings or you were going to rent out your already furnished residence, then a furnished rental would make sense and when managed correctly, can be very profitable.” Vera also points out that a furnished property will cost you more in property management fees, “Generally, if you decide to use a property management company to deal with your property and its tenant, the fees will be lower for an unfurnished rental. There are a lot less inventory counts, move in & move outs and maintenance calls when you’re managing a long-term, unfurnished tenancy. We too charge less for unfurnished property management. ”
Things to remember
Of course damages to your property can occur if it is rented furnished or unfurnished. You may also consider restricting things like hot tubs, aquariums or other furnishings that may not comply with strata bylaws or your insurance coverage. This could include barbeques, large patio umbrellas, portable fire pits, etc. Renting your property unfurnished can offer multiple potential benefits and can save you from some additional headaches of which much is written in the news. Again, property management is not for the inexperienced only, it is for everyone who doesn’t want to take a deep dive into liabilities, obligations and the daily tasks demanded.
There is much to consider when renting your investment property, furnished or unfurnished. Assessing your personal investment goals, along with your local market demand is a must and should be carefully researched before bigger commitments are made. It is wise to consult with a property manager who specializes in each, or both options, with a large transaction history in your area. With over 3000 rental units in both categories, we hope to be a helpful resource to anyone making this decision.