Question: I’m moving in with my fiancé and don’t need my furniture. Should I rent my apartment furnished, partially furnished, or unfurnished?
I get this question frequently and it’s common for landlords, especially new ones, to struggle with this decision. There’s not one right answer, rather a few good options, each with its own pros and cons, that you should choose from based on your financial goals and what type of landlord you want to be. I’ll go through a few, but you can mix and match strategies to fit your profile. DO NOT furnish anything you want to keep (e.g. family heirlooms).
Option #1 Quick rent, flexibility: Offer unfurnished at market rate and furnished for a 10-25% premium (depending on quality and amount of furnishings). Be willing to negotiate for partially furnished. The value of furnished vs unfurnished depends on the type of tenant likely to move in. For example, a recent college grad will value avoiding the expense of buying/moving furniture, but a young family likely has everything they need and wants to keep most/all of it.
· Pros: largest pool of renters, best chance to rent quickly, more likely to find a long-term tenant (18+ months)
· Cons: high chance of having to quickly sell-off unwanted furniture at a deep discount or pay to store it
Option #2 Top $, unpredictable: Target the corporate rental market by offering short-term (monthly) rentals at a premium (50-100+% above market for comparable unfurnished, 12+ month rentals in your area).
· Pros: great returns when occupied, low probability of late or non-payment, lower risk of excessive wear & tear during occupancy
· Cons: high turnover, unpredictable cash flow, high cost of renting (prepping for new tenant to include cleaning service and possibly handyman), smaller pool of potential renters
Option #3 Daily rental, active management: The extreme version of #2. Use a site like AirBnB or VBRO to capture the massive tourism and business traveler market by turning your apartment into a daily rental. I’ll leave income fluctuation/predictability out of the pro & con list because ratings, pricing, marketing, and experience because they’ll likely start as a negative and develop into a positive, over time. If you aren’t living in the immediate area, this becomes a less appealing option.
· Pros: potential for huge return, opportunity to meet interesting people and be a local tour guide
· Cons: requires constant attention/management, high cost of operation, increased wear & tear, political scrutiny (not you, but the industry)
A few notes to help with your decision:
· Fully Furnished = everything from couches to silverware to a TV
· Property Managers handle things like rent collection, service/handy calls, and the eviction process if necessary. On average, they charge about one month’s rent annually for their services.
· If you choose to list through a Realtor, expect to pay anywhere from 75-100% of one month’s rent, but make sure you’re getting things like a full MLS/MRIS listing with professional photos