Should landlords furnish rental properties before renting out?

Home seekers come across terms like furnished and unfurnished quite often in their house-hunting journey. A landlord planning to rent out a house to tenants should be able to gauge the preferences of prospective tenants. Furnishing a rental property makes sense if the landlord is targeting a specific tenant group such as students and working professionals. The decision to furnish a property can directly impact a landlord. It can benefit them in terms of higher rental income and reduced vacancy rates. In this article, we help landlords understand whether furnishing a rental property can be beneficial.

What is a furnished property?

A furnished property refers to a property that has all the basic furniture, essential household appliances and fixtures, which enables a tenant to move in immediately without investing in these items. Typically, a fully furnished apartment includes:

• Furniture: Wardrobes, chairs, tables, sofas, beds and mattresses
• Appliances: Chimneys, stoves, air-conditioners, refrigerators, washing machines, microwave, geyser, etc.
• Fixtures: Lights, fans, plumbing fixtures, etc.
• Household essentials: Cleaning supplies, kitchenware, curtains, etc.

Unfurnished properties 

An unfurnished property, as the name implies, refers to a property that is devoid of any furniture, appliances, or other furnishings. The tenant is responsible for making their own arrangements to furnish the property. 

Semi-furnished rentals

There is another category of properties in terms of furnishings – semi-furnished properties. Renters prefer such properties because they offer the benefits of a partially furnished home with essential features provided by the landlord, while still having the flexibility to customise the remaining part. 

Click to read about fully furnished vs semi-furnished vs unfurnished property

Tenants who prefer furnished rental properties 

Students

Furnished rental properties appeal to students the most. One of the reasons could be the need for immediate move-in. Renting a furnished home saves the cost, time, and effort of buying and arranging furniture.  

Working professionals

A furnished home is suitable for busy working professionals for the convenience it offers. One can move into the home right away with their personal belongings, saving the hassle of packing and unpacking. Moreover, furnished apartments are ideal for such people with short-term rental needs.

First-time renters

First-time renters, who may have relocated to a new city, often find themselves uncertain about their rental needs in terms of furnishing. Sometimes, the idea of furnishing a house may seem overwhelming. So, opting for a fully furnished house can be a good option for such home seekers. 

Benefits of furnishing rental properties

• Competitive edge: Furnishing a rental property may give several strategic advantages to a landlord over other homeowners catering to the tenant demand in the same area.
• Helps target specific tenants: Furnishing a property can be beneficial for a landlord who prefers to rent out to a specific tenant group, such as students or working professionals.
• Higher rental value: Furnishing a property benefits a landlord by increasing the property’s rental value. The rental value typically increases by 20% to 40%. Moreover, landlords can charge premium rent above the standard market rate for the furnishings they have provided. 
• Higher security deposit: In case of a furnished rental property, a landlord can demand a higher security deposit from tenants. This is usually done to secure the furniture and appliances in case of damage. 
• Faster occupancy: One of the effective ways to get tenants quickly is to offer them a furnished property. This appeals to prospective tenants and reduces the period of vacancy for the landlord, making it a win-win situation. 

Things a landlord should consider before furnishing a house

Assessing the rental market trends

Preparing a house before renting it out is an important task for a landlord as it helps attract the right tenants. However, at this stage, a landlord must also decide the level of furnishing they would like to provide for the tenants. Studying the rental market can help landlords make an informed decision. This involves understanding the tenant groups – students, expats or working professionals or families. Depending on the type of tenant the area is attracting, the landlord can opt for a fully furnished, semi-furnished, or unfurnished rental property. 

Furnishing costs vs rental yield

Budget is a key consideration for landlords before renting out a house. This will help them assess the financial viability and avoid overspending or investing in poor-quality furnishings that can lead to frequent repairs and impact the rental experience. At the same time, going for fancy and expensive furniture to impress tenants can backfire. Instead, opting for low-maintenance options can be more beneficial and tenant-friendly, fetching good rental returns. It is crucial for landlords to set a realistic budget for furnishing their house. Moreover, landlords must compare their overall furnishing costs with the rental yield they expect. 

Time considerations

Time is a key factor that landlords must not overlook. Sometimes, finding the right tenants is all about the right timing. It is essential for landlords to ensure the house is ready for occupancy before the peak rental season starts. Otherwise, a landlord may miss out on the rental income opportunity waiting for tenants. Furnishing a property involves a lot of time and effort. So, it is better to start planning early. 

Legal considerations

Renting a property requires certain legal considerations. Landlords should include important clauses in their rental agreement. For example, the agreement should clearly specify the security deposit amount, conditions for refund and the permitted deduction a landlord is allowed to recover the damages beyond normal wear and tear. This is necessary to prevent potential disputes with tenants.

Semi-furnished rentals

Going for a semi-furnished rental offers a middle ground for landlords who do not want to incur huge expenses but want the benefits of furnished rentals. Such properties allow ample scope of personalisation for potential tenants while giving them the convenience of basic facilities such as built-in storage, refrigerators, stoves, light fixtures, window treatments, etc. So, a landlord who is unsure of furnishing a house can go for a partially furnished rental option for tenants. 

Here is a checklist for landlords when furnishing a property

• Appliances: Most landlords fear the rough handling of expensive appliances by tenants. So, they can instead go for alternative options like a single-burner stove instead of a microwave or appliances purchased through second-hand or wholesale. 
• Materials: Consider low-maintenance materials such as laminates instead of real wood, which need a heavy investment. 
• Interiors: Some smart decisions when designing interiors can save landlords from huge investment costs and potential repair expenses. For example, installing shower curtains instead of a shower cubicle, flexible and space-saving furniture like DIY wall shelves, etc. 

Housing.com News Viewpoint

The decision to furnish a rental home should be made after considering several factors such as the type of tenants the landlord is targeting, available time and budget considerations. Typically, unfurnished and semi-furnished properties appeal to long-term tenants such as families. Furnishing a property can be beneficial if the landlord is targeting students, corporate professionals, etc. 

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