If you’re looking to increase the yield from your rental properties, you might want to consider furnishing your apartments. You’ll find that furnished apartments – no matter what their size – tend to have lower vacancy rates and increase the average rental price by $200 to $400 a month. That can be a significant return on investment for most property owners.
Beyond the increased rental potential that you can expect by furnishing your apartment units, you’ll also want to talk with your accountant about the depreciation claims you can make when tax time rolls around.
Instant Niche
Not only is furnishing your apartments an instant differentiator in the marketplace, you may be able to lower your marketing costs. With a furnished suite you can appeal to the tenants likely to benefit from a furnished property; students, young professionals and new divorcees. These groups are all easily reachable markets through existing channels in most communities.
Location Matters
Before you go on a furniture shopping spree, it’s wise to consider whether the location of your property is suited to the practice. There needs to be a sufficient pool of interested tenants in the market for the idea to bring the returns you desire. Inner city properties and those located in metro fringe suburbs are most likely to deliver the right market mix.
Choose Simple & Solid Furnishings
When choosing furniture for rental properties, you’ll want to turn off your personal taste and focus on seeking simplicity. It’s not necessary to go with high-end selections, but beware of budget brands that won’t stand the test of time. You can’t go wrong with a modern, contemporary look in neutral colors that will appeal to the widest market.
Budget for the Basics & Spare the Decorations
You’ll want to set aside a reasonable budget to cover basic furnishings for your unit. This will include a bed, dresser or wardrobe and night tables for each bedroom, a dining table and chairs for the kitchen and a living room suite and tables. Optional items would include entertainment units, bookcases and lamps.
While a staged décor can do marvels for showings, most tenants would prefer to add their own personal touches to complete the look. This can be especially true with furnished units that are geared to younger tenants.
Only you know your numbers and market well enough to know if furnishing your apartments is the right decision for your investment goals. It’s certainly something to consider if you have properties in areas that attract the population that would want furnished apartments.