Landlords, do you have rental properties within a college town? Do you often have tenants looking for short-term leases? Is your property manager getting calls looking for furnished rentals? If so, should you offer furnished rentals? Let’s take a look at the benefits and risks of offering furnished apartments.
The Risks of Offering Furnished Apartments
Before you make up you choose to offer furnished apartments and other rentals, consider these risk factors:
- Offering furnished rentals narrows your target market. There is a specific niche group that is looking for a furnished apartment.
- You have to buy the furnishings. First, there is the cost of buying all the furnishings. Second, there is the cost of the maintenance of all the furnishings. Not all tenants will treat the furnishings with care, so the life expectancy will be reduced.
- Not everyone will like your taste. There are the goodwill furnished apartments and then there is the Ikea furnished apartments. Depending on your market demographic, you will need to carefully choose the decorum to attract a tenant.
- Higher cleaning costs. A rental is cleaned and prepared for the new tenant. Furnished rentals require more time and effort to remove the evidence of previous use.
- Tenant turnover. Furnished rentals tend to be short-term tenants. Unless there is a high demand for short-term furnished rentals, this can impact the vacancy rate of your property. College rentals, however, will have the same tenant turnover whether they are furnished or not.
The Benefits of Offering Furnished Apartments
While there are some downsides to offering furnished apartments and houses, there are also some measurable benefits. Consider these:
- Furnished rentals appeal to a specific group. Properties in college towns will have a high demand for furnished rentals. Areas that have a large influx of new residents maybe looking for short-term furnished rentals until they can find a house of their own. Large hospitals often hire temporary staff that need furnished housing.
- Furnished apartments rent for more. Depending on the location of your furnished apartment, the rent increase can be substantial. It may not take long to pay off the cost of the furnishings.
- Furnishings are tax deductible. These are short-life items that can either be expensed in the year of purchase or depreciated over a short period of time.
- Free apartment staging. Advertising an apartment or house that is furnished is often easier to rent. What is more, it is pretty easy to move the furnishings from one apartment to the other depending on the tenant’s needs.
- Furnished apartments have less move-in damage. A substantial amount of damage occurs when tenants are moving their stuff in and out of a rental. We are talking about drywall dents, scratches, scraped tiles, carpet tears etc. A furnished apartment greatly reduces, if not eliminates, this damage.
Whether to offer furnished apartments depends a lot on the demand within your market area. If you are looking to profit from college students, then offering furnished rentals is a great idea and it can be a profitable one at that.