Anyone setting out in property investment will face the question of whether to furnish their properties or keep them empty.
A furnished apartment can fetch $50-$100 more a week in rent than its unfurnished counterpart, depending on the location and quality of furnishings. This might seem like quite a good deal for landlords, but some experts are saying the exact opposite: it’s just not worth the effort and expense.
There are record numbers of new apartments hitting the market in southeast Queensland at the moment, and an unusually high number of these are being offered to potential tenants as fully furnished.
But can the extra income from a furnished apartment really make up for the reduced tenant demand, likelihood of high turnover, and additional wear and tear? Hot Property Management’s Maddyson Solano doesn’t think so.
“Furnished properties can often be more of a headache on many different levels,” she says.
“Your rental market is reduced due to most people having their own furniture, which can mean longer vacancy. The type of tenant you attract often leads to higher turnover as they’re often looking for shorter-term leases. [They] can often cause higher wear and tear to your property, which means more maintenance costs.”
Bees Nees City Realty new business manager Nathaniel Smith says there is great variation in demand for furnished properties from one location to another, and in Brisbane it tends to drop off once you’re outside of walking distance to the CBD.
“The furnished market is very location-sensitive. Furnished properties located in the middle of the CBD, with fashionable and quality furnishings, are far more popular than those in the suburbs and can go quite quickly,” he says.
“Many professionals flying between cities for work, rent units on the long-term scale due to it being more feasible than staying three nights a week in a hotel. These tenants are ideal and we are seeing more and more choosing the long-term rentals.”
But Smith warns against furnishing your apartment with cookie-cutter furniture packages which can make an apartment feel less unique, thereby reducing its appeal.
It’s also important to remember that property owners are responsible for keeping the furnishings in good condition. This could be anything from a washing machine repair to new upholstery on the sofa, and it all has to be accounted for in the budgets to ensure a property stays profitable.
As furnished apartments typically stay vacant for longer and have shorter lease periods, the additional marketing and re-letting fees also need to be budgeted for, says Solano. “In our experience, most properties are actually harder to lease with furniture, which can mean prolonged vacancy and dropping the rent to meet the market,” she says.
“We strongly recommend our clients reconsider it. It’s an overrated concept that can potentially cost you big time.”
If this is a conundrum you’re currently facing, make sure you carefully research the market to get an idea of current supply and demand so you can see what will work best for your property.