If you are looking to set your property up as an investment, one important factor to consider is whether to list it as furnished or unfurnished. The main draw card for a furnished property is the ability to charge a higher rental price and make a more substantial profit over the long term. Several factors may sway your decision on the matter, so it’s important to consider them all before you start shopping for a lounge suit and whitegoods.
Location/Audience
Location is the most important factor to consider when furnishing a property. Consider the people coming to the area and their purpose for being there. Having a furnished apartment limits your appeal to tenants who don’t have furniture already. Because of this, furnished apartments succeed in areas where people are typically staying for shorter periods of time (up to one or two years). Properties located near universities or medical precincts, close to the CBD, around coastal areas and holiday destinations or even mining towns can have great appeal if furnished.
Considerations:
Type of furniture
The type of furniture you choose for your property will have an effect on both the amount of rental return you can achieve and how many people you will attract to your apartment. When choosing which sort of furniture for your investment property, you need to consider your audience. There is no point spending $3000 on a leather couch if you are aiming at a student market, likewise, people looking for luxury holiday accommodation may not be attracted by IKEA furniture.
Considerations:
Upfront/ongoing costs
The biggest reason investors furnish their property is the attraction of a higher rental return. People are willing to pay more for the convenience of renting an apartment that is already furnished, and year on year this can amount to significant profits over and above a standard rental property
Considerations:
Short term leases
As most furnished properties thrive in the short-term rental market, investors need to consider if they want the added work of managing such a property. Short lease terms mean you have the added flexibility of using the space yourself during periods of the year, or even keeping the property vacant if the need arises, but this also means periods of no rental income.
Considerations:
Damage
Damage to your property is an important consideration, whenever you have tenants in your property, you run the risk of housing someone who has less
respect for your things as they do their own.
Considerations:
Tax
Another appeal to furnished apartments is the ability to depreciate items purchased for the apartment over time, with some items able to be claimed straight away.
Considerations:
Before making a final decision, we recommend you get in contact with a local real estate agent who knows the area your property is located within. They should have a strong knowledge of past performances of furnished apartments and whether your particular apartment will succeed in this area.
With a four-office network in the Melbourne CBD, Melcorp Real Estate specialise in inner city apartment living. If you have an investment in Melbourne and are considering renting it out, contact us first to determine the best course of action.