Renting out a property comes with many hard decisions, and one of the first is whether to offer it furnished or unfurnished. While there are certainly benefits to renting out a fully furnished property, there are potential drawbacks. To make an informed decision, it’s important that you weigh the pros and cons of each option and discover which aligns more with your business goals. That’s where Apartments.com comes in.
In this guide, we’ll settle the debate of furnished vs. unfurnished rentals and help you decide which is right for your rental business. We’ll cover the advantages and disadvantages of each option, as well as tips for furnishing your property if you choose to do so. Let’s get started!
Key Takeaways:
- Furnished rentals can generate higher income, attracting short-term renters willing to pay a premium for convenience and move-in readiness.
- Landlords offering furnished units benefit from tax deductions on furniture and appliance purchases, repairs, and maintenance.
- Unfurnished rentals tend to attract long-term tenants, resulting in lower turnover and less wear and tear on the property.
- Furnishing a rental comes with higher upfront costs and more ongoing maintenance, making budgeting and regular inspections essential.
- Location and tenant demographics are crucial—furnished rentals are ideal for vacation spots and urban centers with transient renters, while unfurnished units suit stable, long-term markets.
What Is a Furnished Rental?
A furnished rental is a property equipped with essential furniture and appliances needed for comfortable living. This typically includes items like a couch, beds, a coffee table, a dining table with chairs, and basic kitchen appliances. Furnished rentals are often categorized as either fully furnished or semi-furnished, with some key differences between the two.
Fully furnished rentals, also referred to as turnkey properties, go beyond the basics. In addition to furniture staples, they often include amenities like towels, blankets, dishes, cookware, silverware, and even décor such as mirrors and wall art. Semi-furnished rentals, on the other hand, are a bit more bare-bones. These properties aren’t empty by any means, but they do provide fewer items than fully-furnished options, offering only essential furniture and appliances, such as a couch, beds, tables, a refrigerator, and a stove.
What Is an Unfurnished Rental?
An unfurnished rental is a property that comes with little to no furniture, offering a blank canvas for tenants. These spaces are generally empty, aside from essential items like kitchen appliances and fixtures. The only exceptions might be built-in features, such as shelves or desks, but beyond that, tenants are free to decorate and furnish the space to their liking.
Unfurnished rentals are typically more appealing for long-term tenants. If a renter plans to stay the long haul, they’ll want to personalize the space and make it truly feel like home. On the other hand, tenants on short-term leases often prefer furnished options, which better suit their temporary needs and transient lifestyles.
Pros and Cons of Furnished Rentals
Now that we’ve covered the basics on furnished vs. non-furnished rentals, let’s dig a little deeper. Earlier, we mentioned that furnishing a rental property has its advantages. However, it also comes with a fair share of drawbacks. The chart and explanations below outline each of these pros and cons, and what they mean for both landlords and tenants.
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Pros of Furnished Rentals for Landlords |
Cons of Furnished Rentals for Landlords |
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Higher earning potential |
Higher upfront costs |
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More widespread appeal |
Limited flexibility |
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Tax write-offs |
More wear and tear |
Benefits of furnished rentals
Higher rental income
One of the best things about furnishing a property is that you can charge more for rent. This is because the convenience of not having to purchase and move furniture can be attractive for tenants, who are willing to pay a premium for it.
Attracts a wider pool of tenants
As mentioned earlier, unfurnished properties typically only appeal to long-term tenants. Furnished properties, on the other hand, attract a wider applicant pool of both long-term and short-term renters. For a rental business, this means more potential leads and less risk of vacancy.
Potential for tax write-offs
Renting out a furnished property can have several tax benefits. As a landlord, you can claim deductions for the cost of purchasing and maintaining furniture, appliances, and other amenities in your furnished rental property. You may also be able to deduct expenses related to repairs and improvements on these furnishings.
Drawbacks of furnished rentals
Higher upfront costs
A big drawback that comes with furnishing a rental property is the upfront costs, especially if you’re going the fully-furnished route. Furnishing a home can rack up a heavy tab for furniture, appliances, and décor. If you choose this option, make sure to plan for these initial expenses and budget accordingly.
Limited flexibility for tenants
Many renters want their space to feel like their own. Furnished rentals make this a bit more difficult, as tenants have limited flexibility when it comes to furnishing and decorating the space. This lack of customization could deter potential renters or dissatisfy those who already occupy the unit.
More wear and tear
Furnished rentals often experience more tenant turnover and, consequently, more wear and tear. Because the furnishings aren’t their own, tenants are more likely to overlook their maintenance and care. When they move out, landlords are then left to repair or replace furnishings/appliances, creating more expenses and workload.
Pros and Cons of Unfurnished Rentals
Next, let’s discuss the pros and cons of unfurnished rentals. Just like their furnished counterparts, these properties have their equal share of benefits and drawbacks. The chart and explanations below outline each of these pros and cons, and what they mean for both landlords and tenants.
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Pros of Unfurnished Rentals for Landlords |
Cons of Unfurnished Rentals for Landlords |
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Lower initial costs |
Lower earning potential |
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Room for personalization |
Limited tenant pool |
|
Less tenant turnover |
Fewer tax write-offs |
Benefits of unfurnished rentals
Lower initial costs
An upside to renting out an unfurnished property is fewer initial costs. Because you won’t need to invest in furniture, appliances, and décor, you can dedicate your budget to other property management aspects like landscaping, renovations, and other high ROI items.
Room for personalization
Unfurnished rentals offer a blank canvas for renters, giving them the chance to make their space their own. This ability to personalize can result in longer tenancy agreements, as tenants are less likely to leave once they feel settled and have put their own stamp on a property.
Less tenant turnover
When a tenant feels at home, they are less likely to move out. This is the best-case scenario for a landlord, as it means fewer vacancies and less time spent on advertising, showing the property, and finding new tenants.
Drawbacks of unfurnished rentals
Lower earning potential
The main drawback of renting out an unfurnished property is its lower earning potential. Tenants are typically willing to pay a premium for the convenience and ease of furnished rentals. In contrast, unfurnished properties require renters to invest more time and effort in furnishing the space, making them far less likely to justify paying higher rent.
Limited tenant pool
Another disadvantage of unfurnished rentals is the limited tenant pool. Furnished rentals appeal to a wider range of potential tenants, including students, young professionals, and those who are temporarily relocating for work or travel. Unfurnished properties, on the other hand, usually only appeal to long-term renters, such as families or individuals looking for a permanent residence.
Fewer tax write-offs
Unfurnished rentals have fewer tax write-off opportunities than furnished rentals. This means that you might have to pay more in taxes at the end of year, as you won’t be able to deduct as many expenses related to your rental property.
Key Considerations for Landlords
If you’re still conflicted after weighing the pros and cons of each option, take a moment to reflect on your rental business. Where is your property located? What kinds of renters inhabit that area? How much are you willing to invest in your rental? Answering these questions and considering the factors below will give you a better idea of which furnishing strategy works for you.
Target market and location
When deciding between a furnished or unfurnished rental, consider your property’s location and target market. In vacation destinations, furnished rentals are often more appealing to local renters looking for short-term stays. On the other hand, properties in established urban areas are typically better suited for unfurnished rentals, as they tend to attract tenants seeking long-term housing solutions.
Rental strategy and lease terms
Next, think about your rental strategy. Are you aiming for a short-term lease or a long-term agreement? Perhaps you plan to rent the property seasonally and use it yourself during other times. Or maybe you’re hoping to attract long-term tenants who will stay for years. Defining your desired lease duration will also help you determine whether furnishing the home is the right choice.
Budget and cost-effectiveness
Furnishing a rental property can be a significant upfront expense, so it’s important to carefully budget and consider cost-effectiveness. You may want to purchase quality, durable furniture that will last for years, rather than cheaper options that may need frequent replacing. However, keep in mind that quality pieces will command higher upfront costs. If your budget doesn’t allow for such an investment, it might be more practical to rent the property unfurnished for the time being.
How to Protect Your Investment If You Opt for Furnished
Opting for a furnished rental can be a smart choice, but it does come with additional considerations. With furniture included, your property becomes an even greater investment, making it essential to take the necessary precautions to protect it. Here are some practical steps to ensure your furnished rental remains secure and well-maintained:
Charge a higher security deposit
If you're planning to charge higher rent for your now-furnished unit, you might also consider increasing the security deposit. A higher deposit can encourage tenants to take better care of both the property and its furnishings, such as the couch, beds, tables, and appliances. However, ensure the deposit amount complies with the limits established by your state laws. For more guidance, check out these resources on raising rent and determining the appropriate security deposit.
Thoroughly screen your tenants
Before you approve an application, be sure to thoroughly screen your tenants. If time or resources are limited, consider listing your property on Apartments.com, and let us handle the heavy lifting. Our comprehensive screening reports include detailed credit reports and reliable background checks, giving you the insights needed to assess if an applicant is the perfect match for you and your (furnished) rental property.
Perform rental property inspections
Once a tenant has moved in and their application is approved, it’s important to conduct regular rental property inspections to assess the property's condition and ensure it’s being well-maintained. Routine inspections, typically conducted one to three times per year, help safeguard your investment without overstepping boundaries. These inspections are common during move-in and move-out periods, but, depending on your state’s laws, it’s also reasonable to schedule periodic checks throughout the lease term.
Manage Your Rental with Apartments.com
Furnishing your rental or not can have a significant impact on attracting the right tenants and maximizing your rental's potential. Whether you’re looking to create a cozy, move-in-ready space or give renters the flexibility to make it their own, Apartments.com has you covered. Explore our Landlord Resources for tips and inspiration to make the best decision for your property. And don’t forget to take advantage of our comprehensive Rental Tools, designed to simplify and enhance every step of managing your rental business!
This article was originally published on January 5, 2021, by Megan Bullock.
FAQs
Can I charge more for a furnished rental?
Yes, furnished rentals generally allow you to charge higher rental rates compared to unfurnished properties. Tenants are often willing to pay a premium for the convenience of a move-in-ready space.
Are furnished rentals more difficult to maintain?
Furnished rentals can require more upkeep since you’re responsible for maintaining the furniture and included items. Regular inspections and addressing wear and tear are essential to keep the property in good condition.
Who typically rents furnished properties?
Furnished rentals are popular among short-term renters, traveling professionals, students, and individuals relocating or staying temporarily. These tenants value the convenience of not having to bring or purchase their own furniture.
What should I include in a furnished rental?
A furnished rental should include essential items like beds, seating, tables, and kitchen basics such as cookware, dishes, and utensils. Adding decorative touches like artwork, rugs, and lamps can also enhance the appeal of the space.
