Should you furnish your investment property?
It sounds like a simple enough question – but in today’s current market how can you be assured that furnishing your investment property will bring all the benefits you predict. Whilst the opportunity to gain higher rents and some extra depreciation allowances may seem too tempting to resist, the downfalls of furnishing your property can by far outweigh these advantages.
The case for “NO”
Generally speaking, transient Tenants are the ones renting most furnished properties. The cost of these transient Tenants can be quite high compared to Tenants of unfurnished properties. As you are probably well aware, every time there is a tenancy turnover in your property there are additional costs, possible vacancy and let fees. Investors will also be required to replace the furniture on a regular basis to ensure it is clean, fresh, in good condition and adds value to the Property. There is also the problem of ensuring the furniture suits a wide range of personal tastes which can be difficult. Prospective Tenants may reject a property if the furnishings are not to their liking, despite the premises itself being ideal.
The case for “YES”
There are some benefits for furnishing your property. It’s important to market a furnished property to the right target audience. Furnished properties are wildly popular with short term lets and tertiary students for example. Property Managers can keep a check on the furniture and its condition during the tenancy and especially in detail at the end of each tenancy where furnishings are to be cleaned and in the same condition as at the start of the tenancy, with allowance for ‘fair wear and tear’ which can be high. This is usually factored into furniture selection to ensure items are able to withstand general tenancy use every day.
Deciding on whether to furnish your investment property or not can be an important decision and one that should not be taken lightly. Consider your options carefully in consultation with your Property Manager and Accountant for depreciation and taxation advice.