Furnished Or Unfurnished Rental Property - Which Should I Offer?

A common topic of conversation with our investors is whether they should offer their property furnished or unfurnished. There are several factors which contribute to determining what is best in each particular instance, as we will cover below. 

​Categories of Furnished Properties

It is important first to consider that there are degrees of furnished properties, it is not simply a matter of furnished or not. The various levels of furnished property typically offered to market are as follows:

• Fully furnished and equipped – all household items are included, covering everything from kitchen cutlery, crockery, pots and pans through to beds, desks and lamps. 
• Fully furnished – all required furniture is provided
• Partly furnished – some furniture is provided such as table/s and chairs, a lounge, etc.
• White goods only – some or all white goods are supplied
• Unfurnished – no furniture or appliances are provided with the property

​When Is A Furnished Property Suitable?

​Fully furnished rental properties are usually most appealing for tenants meeting one or more of the following:

• Tenants who are looking for a short term lease, perhaps due to relocation for a work project 
• Tenants who are transitioning to the area, with belongings either in transit or storage until they find a more permanent property
• Tenants who don't already own furniture and don't have an interest in buying any

​The Benefits Of Offering A Furnished Rental Property

The advantages of offering a furnished rental property can include:

• The ability to charge a higher rent than if the property were unfurnished
• Increased depreciation deductions to assist with tax effectiveness
• Can attract a higher-paid professional / executive tenant

In considering options, it can be helpful also to consider the disadvantages of offering a property furnished.

​The Disadvantages Of Offering A Furnished Rental Property

​While there may seem to be a financial benefit to offering a furnished rather than unfurnished property, investors should consider the following disadvantages also:

• Tenants of furnished properties tend to prefer shorter fixed terms, commonly 6 - 12 months rather than longer
• This can result in a higher tenant turnover rate, accompanied by potential vacancy and associated fees to advertise and re-lease the property
• There can be significant costs to initially furnish and style the property
• The furniture and styling should be updated every 3-5 years to maintain appeal and good working condition
• The landlord is responsible for replacing or fixing items quickly if they are not working
• Insurance of the included items should be considered, an additional expense than if the property was unfurnished

​When Is An Unfurnished Property More Suitable?

​A commonly held opinion is that around 75% of tenants are seeking to sign a long term lease rather than transition to another property within 12 months. 

Longer term tenants, as well as being higher in number, also tend to prefer unfurnished properties as they can settle into the home and "make it their own" with their own styling and furnishings. 

So, while a furnished property may garner higher rent and have less competition than unfurnished properties:

• The number of people seeking furnished properties is significantly lower than unfurnished
• The duration of tenancy is generally shorter for a furnished property
• There are greater ongoing costs to manage a furnished property

For further advice, talk to a property manager about the specifics of your property and whether they believe it would be best to offer the property as furnished, unfurnished, or optionally furnished.