Furnished

Fully furnished or turnkey houses are becoming more popular by the day, but should you rent your property furnished? What's the true return on your investment and what drawbacks are there? We're going to talk about the pros and cons of renting a furnished house, how much you can charge, additional things to consider if you're considering it, how to protect your investment if you decide to furnish, and more. But let'start with what's How much more can you charge if you fully furnish a property? A furnished rental is one which comes with an assortment of furniture and or appliances such as a bed, table and chairs, couch, fridge, microwave, and more. A fully furnished rental may also include items such as kitchenware, silverware, towels, and blankets. It's not uncommon for a rental to be furnished with one or more appliances. However, fully furnishing a rental can be costly. So how much more can you charge with a fully furnished rental? Typically, landlords charge anywhere from 10 to 20% more per month for a fully furnished rental on a long-term, generally annual lease. It's worth noting short-term rentals as well, which can demand as much as 40 to 50% more. However, with short-term rentals, these renters typically expect the property to be fully furnished so it's not the same. Let's look at a quick example. If you have a three-bedroom property that is minimally furnished, you might rent it for $1,400 or $16,800 annually. That same property fully furnished at a 20% increase would come in at $1,680 or $20,160 annually. When we look at it that way, you could expect to net $3,360 more per year from the rental. Because fully furnishing that property will Now that you've seen it can be worth it to rent fully furnished, you may be wondering about the other benefits and drawbacks. Let's go over those now so you're fully informed of everything that renting a furnished house entails so you have all the information you need to decide whether it's right for you. Here are the major pros and cons of renting a fully furnished house. N While the rent rate for a fully furnished space is higher, the draw of a fully furnished rental is big, especially in a busy market with high demand. With a fully furnished space, you're able to attract more and potentially higher quality tenants as well given the price point and responsibility involved. N Typically, that's anywhere from 10 to 20% higher on annual leases, though it will depend on where your property is located. N Another big benefit is that you can charge a higher security deposit with a fully furnished rental. You can't charge a general statement either, but actually written into most state laws. For example, in California, you're allowed to collect a security deposit worth two months rent for an unfurnished space. However, for a fully furnished space, you're able to charge three times the tenant's monthly rate. N A final benefit we can't forget is the potential for tax deductions. Furniture purchased for the purpose of furnishing a rental property can in most cases be deducted on your taxes. Because the furniture is being used for business purposes and has physical value, you can claim depreciation deductions on a portion of the value every year for between five to seven years depending on the type of furniture. For more information on how depreciation in rental furnishings work and what you can claim depreciation on, click on the link in the description below. Next, let's look at the cons of renting a furnished house. N This one is obvious but also necessary to mention. Furniture and appliances aren't cheap and when you add up the cost to fully furnish a single property, it can easily reach into the thousands or far more depending on what you include. This needs to be paid for upfront before you can begin charging the higher rental rate so you'll need the funds to invest in the furnishings in advance. N This is both a con and not really a con but it's important to mention. It could be seen as a con because the furnishings you just spent thousands of dollars on becoming damaged means you'll need to replace them. You can deduct from that security deposit to pay for the damages, recouping your loss without it coming out of your pocket. Now let's ass How do you protect your investment? We've established that furnishing even a single property can reach well into the thousands so it's important to have the right structures in place to make sure that investment nets a return. So let's pull everything we've talked about so far together into one succinct set of tips to make the most of furnishing your rentals. First increase your rent by 10-20%. Exactly how much should be based on a combination of how much it costs to furnish that property, how much you expect to pay annually for wear and tear, and how much you can claim in depreciation annually. Having a better idea of each of these items will help you figure out how much more you should charge. Second, you can up your security deposit. You can charge new tenants a higher security deposit for a fully furnished rental so why not? It covers you more in the event of damages and if you don't need it, it simply goes back to your tenant at the end of the lease. In return, you get more insurance, your investment will be covered for anything. Third, perform regular inspections. Don't just inspect your units at the end of the lease. Instead, do an inspection at least midway through a one-year lease if not quarterly to ensure your property and furnishings are being taken care of. Knowing they will be inspected regularly also encourages your tenants to take care of the property and its furnishings. Fourth, properly screen applicants. This is vital for a n For much the same reasons, when it comes to taking care of your furnished property, it's about finding tenants who display responsibility and respect in their relationships and behaviors. Make sure you're checking a variety of things such as background and criminal record, credit including bankruptcies, rental history if the service you're using offers it, and references. So let's wrap this up. Is furnishing a rental property worth it? Well, ultimately, it's up to you to weigh the pros and cons of furnishing your rental property or not. However, we hope this guide helped inform you of whether it's a good fit for you and your property to furnish and how much or not. So weigh your expenses, consider the upfront investment, and chart out the projected gains while considering the other factors such as your area, target renter, and more to figure out what the right move is. That's it for this video. If you want more real estate content for your business, make sure you check out our YouTube channel for more door loop videos such as issuing a notice to tenants to remove pets and everything you need to know about a certificate of title. Remember to