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Furnished VS Unfurnished

They say that the more we have in life the more upkeep we have, more to maintain. This is really relevant when it comes to the Furnished VS Unfurnished Rentals debate. Leaving and including a fridge or washing machine with a rental property is a common thing but it’s likely those things will need repair or upgrading down the track.

The common question I get asked is; Is it better to lease out your property furnished or unfurnished?

For full disclosure, I stand pretty firmly on the unfurnished side of this debate so while this blog is for anyone interested in Property Investment and Property Management, I’m probably just going to be justifying why I hold that position. I have some valid reasons.

Leasing furnished properties is really the exception and not the rule, and furnished properties being offered with residential leases are not all that common these days, as furnished properties are more likely to be on the short-term rental market.

At several stages over the years when managing furnished properties, I’ve had to call owners about replacing or upgrading furnishings. I remember one time when a landlord was outraged that they had to pay to replace a vacuum cleaner that had stopped working, to simplify the process and reduce the cost, off to The Good Guys I went to get a new vacuum cleaner. The fact is though, the more you leave within a property the more responsibility and upkeep costs you have as a landlord, and that goes for anything you provide with your rental property at the outset.

So, if you really do want to lease your property furnished or with any inclusions, that’s something to be mindful of and prepared for. From both the agent’s and landlord’s perspectives, the upkeep and management of a furnished property are a lot more involved, thorough inventory reports are needed to be provided with the properties for one thing, and maintenance issues are simply more frequent.

From a tenant’s point of view, it’s quite clear cut, a tenant will either want a property furnished or unfurnished. Finding out their motivations and the likely longevity of that tenancy is something for all parties to be thinking about and ensuring it works for all. In my experience, long-term tenants have their own furnishings and want to put their own stamp on a property.

What is more common are instances where a landlord may want to leave a one-off appliance, most commonly a fridge or washing machine and so your rental listing should indicate that, and prospective tenants told by the agent when viewing the property. That one-off inclusion then just needs to be listed on the Ingoing Condition Report and photographed, and the responsibility to maintain that appliance will be on the owner of course as mentioned earlier. So, while it might be convenient to leave something behind, consider if it lines up with your longer-term plans.

Here are some pros and cons that might help.

  • Owners are likely to save time, money, and effort. i.e.  removalists and ongoing storage
  • If it presents well then it can help when leasing VS presentation of a vacant property
  • Rent achieved (maybe) slightly higher, dependant on overall presentation and quality of included furnishings
  • Ability to switch to the short-term market should the need or vacancy arise
  • The owner is responsible to maintain anything included with the property, i.e. furniture, and appliances
  • Furnishings are subject to wear and tear and upgrades and replacements will be needed; wear and tear cannot be claimed
  • Damages cannot always be claimed in full, damaged items have to be valued on their depreciated value which is dependent on the age of the item
  • The prospective tenant pool is much smaller, as the majority of tenants demand long-term and unfurnished property
  • Increased changeover of tenants, as tenants seeking furnished properties typically want shorter leases. They are generally not long-term tenants. They may be on short-term work contracts, traveling, etc.
  • Agent costs may be slightly higher due to the increased initial and ongoing work required
  • You will need to be flexible; some tenants will want to negotiate what stays and what goes
  • The time frame in which to lease the property is typically longer, although this can be seasonal and dependent on your pricing, overall offering, and location
  • Tenants can sign up for a furnished property and later break their lease, meaning your property was just a much cheaper Airbnb
  • Increase in advertising and reletting costs due to higher turnover
  • Be open to un-furnishing or partially if the ideal tenant comes along requesting flexibility. You should present this option in your advertising if you want to make that available to prospective tenants.
  • Find the right agent that wants to help with your furnished property and knows what they need to cover in terms of documenting the tenancy and properties condition and inclusions. Someone that already manages furnished properties already would be ideal.
  • Furnishings and overall colour scheme will have to be neutral with some key points of interest such as art, great rugs, and homely touches. A complete IKEA display suite might not attract tenants.

As for me, I’ve found over the past 5 years that leasing and managing furnished properties doesn’t align with our goals of long-term clients and tenants, so my tip about finding the right Property Management provider is key here. From my perspective, I feel that it is always in the owner’s best interests to have tenancies that span a reasonable duration, to have less to maintain, and therefore less ongoing costs. When referring to ongoing costs, we must take into account that there will likely be an increased turnover of tenants, more vacancy between tenancies, and associated reletting costs. Remembering that the pool of tenants seeking properties that are furnished is smaller which may mean that the vacancy period can stretch out.

Lastly, I think some properties are better suited than others to be leased furnished, so it’s worth getting an agent through who can assess the pros and cons of your particular property, namely its location, and presentation. While we might not be the agents to work with your furnished properties, we’re happy to share past experiences and our tips of course.

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– Antonio

Director & Property Manager