Furnished vs unfurnished rentals: which is best for investors?

Furnished rental property

Once you decide to rent out your Perth investment property, there are several additional choices you will need to make as a property investor. How much rent will you charge? Will you self-manage or hire a property management agency? And should you opt for a furnished or unfurnished rental? There is no wrong answer to these questions, and your decision will come down to personal preference, budget and the current market. However, here are a few things you should consider before making your choice.

Benefits of furnished rental properties

  • Higher rental returns – If you are opting for a furnished investment property, you may be able to charge higher rental rates and increase your rental returns. This will depend, in part, on the state of the market, but tenants may be willing to pay more for the additional features of a furnished rental.
  • Short-term leases – Although furnished rental properties often have shorter leases, this may suit property investors looking to rent out their Perth rental part-time or on a short-term basis. Furnished rental properties hold appeal for certain tenants, and may suit renters relocating on a short-term business contract, families on holidays, or students looking for an interim rental solution. As a property investor, this means you will need to account for a higher turnover in tenancies and the potential for vacancy periods.
  • Depreciation – Property investors are entitled to certain tax deductions on their Perth rental properties and the items within them. If your investment property is furnished, you may be able to claim depreciation on items such as freestanding furniture, electrical appliances, linen and more.

Disadvantages of furnished rental properties

  • Fewer potential tenants – Whilst furnished rentals may better suit certain tenants, the majority of renters still have a preference for unfurnished rentals. Many couples and families already have their own furniture from previous rentals, and some tenants simply prefer to style out the property themselves. If you are planning to furnish your property, make sure you style it in a way that will appeal to the majority of tenants.
  • Maintenance – If you opt to furnish your rental property, you will be responsible for the maintenance and replacement of any damaged furniture. Generally, furniture will require replacing or repairing every 3-5 years. You will also need to ensure your rental property is fully fitted out before tenants move in.

Unfurnished rentals properties

In addition to less maintenance, unfurnished investment properties can offer a number of benefits to investors looking for long-term tenants.

  • Larger tenant pool – Unfurnished rental properties generally appeal to a larger pool of tenants. Although furnished rentals don’t come with the hassle of choosing furniture, most tenants prefer to furnish their rental properties to their own tastes.
  • Longer leases – Unfurnished rental properties tend to go hand-in-hand with long-term leases. This could benefit Perth investors in high vacancy rate markets such as today’s by reducing tenancy turnovers and minimising vacancy rates.

Expert advice from the property managers at Rentwest

Whether you’re opting for a furnished or unfurnished investment property, you will need to make informed decisions based on the desires and requirements of tenants in the current rental market. From setting the right rental rates to increasing the appeal of your rental properties, the Perth property management team at Rentwest can help you make the right decisions for you and your Perth rentals.

For more information about our property management solutions, or for advice relating to your managed property, get in touch with the team at Rentwest on 9314 9888 or email us at rentals@rentwest.com.au