Furnished or unfurnished?
Do you lease your investment property out furnished or unfurnished? This is a key question facing investors. Yet, there is no right or wrong answer. It largely depends on your market and current demand.
As an example, take inner city Sydney. There has been growth in the number of investors who choose to furnish their apartments. This is not just for a higher financial return, but also for practical reasons. Many are also choosing to live in the property between tenancies.
Interest lies in unfurnished properties
Overall, there is much more interest in unfurnished properties in this market; around 75 percent of my clients who are looking for a lease property will ask for an unfurnished place that can be fitted out to suit their taste and style. Generally, unfurnished tenancies are longer-term leases with minimal vacancy and wear and tear.
However, good quality unfurnished apartments available for lease in the inner city are getting harder to come by with close to 85% of apartments sold in this market over the past year have been to owner-occupiers.
If you do decide to furnish your property to lease, there are a few key things you will need to consider:
- Furnished properties generally have a shorter lease term – usually between 3-12 months – so you need to factor in a higher turnover of tenancies, which means increased possibility of vacancy and more frequent leasing fees.
- If you are going to furnish your property, you need to do it well. Style your apartment beautifully while making it warm and inviting. Don’t forget to also equip it well. It’s easy to forget the smaller details like kitchen utensils, vacuum cleaners, and linen.
- Monitor all your furnishings and ensure that you maintain your entire inventory. Items should be replaced promptly if they are not working. Most properties need an update of furnishings or restyling every 3–5 years
When furnishing an investment, you need to be aware that although you may receive a premium of between $100-$250 a week for the furniture; once you have factored in the probable vacancy due to the shorter-term leases, the maintenance of inventory items and extra agency fees – you’re likely to achieve a better return on an unfurnished property.
In saying this, if your investment is more of a lifestyle choice and you’re able to use your city pad in between tenancies, then enjoy!