As a landlord, you may have often wondered what it would be like to rent out a room that is fully furnished, but you weren’t sure whether it was the right way to go. Honestly, there are upsides and downsides to the situation, and if you take some time to consider some questions, we’re sure you’ll figure out what to do.
So, think about whether it’s more critical for you to earn a higher rental income or reduce the possibility of property destruction caused by a tenant. In the end, you need to fall back on your experience, needs, and target customers to decide the right course of action. If you’re caught between a rock and a hard place, we’d suggest you have a look at the following list of 10 pros and cons to make an informed decision about renting out a furnished room.
Charge more rent
Technically, if you furnish your rental, you have the right to charge a higher rent. In fact, prospective tenants will be more than happy to pay more rent for a furnished room for rent. Based on the location of your property and the quality of furnishings and appliances you’ve set up in your rental, you can charge up to 40 percent higher rent than an unfurnished rental.
Also, you can expect tenants to understand that the rent includes the price of the space as well as the furnishings and appliances that you’ve included as amenities.
Charge higher security deposit
The appliances and furniture in your rental automatically increase its value. So, you’re entitled to charge a higher security deposit for your rental over and above the rent.
Charging a higher security deposit has another benefit. In situations where the tenant causes damage to the rental beyond the ‘normal wear and tear,’ a higher security deposit enables you to deduct a larger amount from the sum to repair the damage caused to your rental or to the amenities you’ve provided.
Have more potential tenants
While furnished rentals are more expensive than unfurnished ones, tenants often look for and prefer furnished rental rooms because it’s an easier option than having to lug around furniture or install appliances. Let’s face it; it’s a lot more work.
Furnished rooms for rent also help draw tenants who’re renting a room for the first time or professionals who’re constantly on the move and don’t want any additional baggage. Even people, students or professionals, moving in from one end of the country to another, may not like the added burden of bringing their own furniture and appliances. So, as a landlord, you get to include a few more tenant groups, which increases your customer base, and that’s great for your business!
Market your rental better
While posting an ad for their rental room on a rental website or app, landlords take photos of their home with whatever furniture the current tenant has brought with them or post pictures of empty rooms and shared spaces. This is because they don’t have much choice when it comes to staging their rental. But to attract potential tenants, it’s a given that you need to market your rental better.
So, it’s a great idea to add some simple and not-too-expensive furniture to your rental and spruce it up a bit to make it look comfortable and homey. That way, tenants can actually see themselves living in the furnished room for rent and fight for your rental!
Reduced maintenance costs
While it may not seem like there’s any damage to your rental, moving pieces of furniture, especially large ones, can cause dents in walls, carpets to tear, and tiles to get ruined. Arranging the furniture that tenants bring with them can also substantial damage. You can take it out of their security deposits, but you still have to fix the damage.
On the other hand, furnishing your rental saves you the time and money to get things in your rental repaired or replaced until several years have gone by. So, the maintenance needs of your property go down and so do your costs, allowing you to breathe easy.
Involves risk and costs
Considering that there’s a flip side to everything, a furnished rental has its share of cons. Setting up your rental with furnishings and appliances involves money, not to mention time and effort.
Based on the size of your rental, you might end up spending at least $10,000 to furnish it. That’s a lot of money! Unfortunately, the money that you spend doesn’t guarantee the durability and longevity of your furniture and other amenities. Since the furnishings and appliances don’t belong to the tenant, it’s likely they may not use it with care or look after it properly. There’s always a considerable risk involved with a furnished rental, so be sure to protect yourself with the help of the security deposit, rent, and specific property-destruction clauses in the lease agreement.
Spend more time cleaning the rental
Before you take on a tenant, you need to get your rental scrubbed and cleaned well. In other words, you need to deep clean the rental to ensure that it’s in a livable condition. The chairs and tables need to be wiped, and the sofas need to be steam-cleaned, among a host of other things.
So, you need to walk through every room of the rental and check what you’ll continue to keep, what you’ll remove or replace, and what you’ll clean. Given that the responsibility is enormous, most landlords are unwilling to go through with it.
Short-term tenants live in your rental
Many times, you have to deal with short-term tenants for your furnished rental. They come and go, leaving you with vacancies that may take longer to fill. Vacancies and a high turnover rate may not be good for your business because they lead to a loss in rental income and fewer potential tenants showing interest in your rental.
Since tenants move out now and then, the frequency of cleaning, repairing and maintaining the property goes up, forcing you to dish out more money. Finally, you also end up spending more money advertising your rental to draw prospective tenants once the older ones leave.
Spend more on storage expenses
You may find that, in certain situations, unfurnished rentals are lapped up more quickly than furnished rentals. As a landlord, why would you want to lose out on potential tenants? So, you’re forced to store your furniture and appliances elsewhere. At other times, you may have to replace the carpets or paint the entire rental and will need to move all the furniture out of there.
So, you’ll have to look for warehouses and storage facilities to store the stuff, and that’s an added expense. Moving the furniture from one place to another is an equally annoying and tedious task.
Tenants prefer own furniture
There may be times when a tenant may want to use their own furniture and appliances, or may not find the ones you’ve provided to their taste. They may find it easier to look after their stuff than take up the responsibility of looking after yours.
If you’re very clear that your furniture and appliances are part of a package deal with the rental, you may end up losing out on prospective tenants.
So, are you ready to try out a furnished rental and see how it goes? If you’re still undecided, you might want to start with a few basic furniture pieces like a sofa or a table and a few chairs, and one or two appliances. That way, you can charge a higher rent and make the tenant partially responsible for maintaining the amenities. In the end, this arrangement will also give your tenant some freedom to decorate the space the way they see fit and feel more at home.