I am often asked about renting homes furnished or unfurnished and I thought I would share some thoughts on this topic.
What do people mean by 'fully furnished' anyway?
Imagine going on holiday and housesitting a friends house or renting on Air B'n'B. That would be a great way to imagine what 'fully furnished' is generally like.
As the owner, you don't need to leave your best china dinner set, but you should still leave a dinner set! Consider putting away or into storage any personal items. Also, change out items of high actual value or high sentimental value with a 'cheaper' alternative.
Situations where renting out a property furnished can be advantageous to the owner:
- When renting out your own personal home for a known period of time (e.g. job posting, contract work, sabbatical, overseas travel etc.
- When renting out close to amenities, a large workplace or targetting aspects of the student market.
Possible benefits of renting out a property furnished can be:
No need to pay for storing furniture while away from your personal home temporarily, as this can be cost prohibitive or have a major impact on profitability. Leaving your furniture in the home means you don't have this cost.
You can achieve a higher rent. Naturally, a home full of furniture will rent out for more than an unfurnished property. This amount varies but usually amounts to between $30 and $80 per week in extra income.
If the property is targetted at a single person or couples market then the property will attract people who are on temporary contracts (e.g. 1 year), studying, researching, working on 'rotation' in health etc; more than if it was unfurnished.
Possible downsides of renting a home furnished
It's a small market. About 95 to 98 per cent of tenants in this region want to rent an unfurnished home, which means you are limiting the market of potential tenants.
Things may get damaged. Items left in the home are subject to 'reasonable wear and tear' the same way under tenancy law that the house is. This means furnishings, appliances, dinner sets and so forth could receive damage over time.
Things might break down. If an item in the home breaks or breaks down and it cannot be shown it was through an intentional act by the tenant, then the landlord must repair or replace if asked by the tenants. Like-for-like is good enough, so you can replace a broken down TV with a second hand one.
You risk more days per annum of vacancy. There is a risk that with a furnished property tenants will be in a short term situation and as a result, you may have more tenancies over time. At a rent of $420 per week, a single day empty will cost you $60 in lost income between changeovers. That being said in you use fixed-term tenancies you can reduce this risk.
Other solutions for people renting out their personal home:
Some people when renting their personal homes while away store furniture on site. In other words, they may use a garage or bedroom to store their furniture, secure and exclude that area from the tenancy. The rental amount will be less, but not as much as the savings on storage costs.
Make sure you are very transparent to your insurance company so they can advise as to whether this situation is acceptable under your policy - or what they require. Insurance companies may want the items secured and regular inspections of the property for example.
I hope this is of help to you, please comment if you have any questions.
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