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what is the trend for the current rental market: furnished vs unfurnished

Discussion in 'Property Management' started by paper, 7th Jul, 2015.

  1. paper

    paper Well-Known Member

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    Recall many years ago (10yrs), it seemed to be very popular to have a furnished IP to rent out as tenants did not need to buy anything.

    Now it appears to be the opposite story. Many vendors only prefer to have unfurnished IPs for rent.

    The reasons could be various: like tenants damage the furniture...

    Then someone will choose the partial furnished to providing basic furniture, like the bed, desk. wardrobe.

    Which way is better?

    As the current rental market is very poor in Perth, tenants demand more apart from the rent cut.

    My question is if you do not know who will be your next tenants, whether they have their own furniture or want vendors to add furniture in... how can you prepare for this unsure situation?

    On one hand, you will love to recruit tenants asap then you will full fill them request; on the other hand, you are not sure how much rent to be added as they want more furniture for the full place.

    Apart from the rental fee will be up if they demand more furniture, what else you can do?

    Please advice and share your experience.
     
    Last edited: 7th Jul, 2015
  2. Excalibur1

    Excalibur1 Well-Known Member

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    I suppose it depends who your target market is. My property in the Sydney CBD (1 bedroom) was much easier rented furnished (basic furnishings, but looks stylish). However in the suburbs where there are houses people tend to have their own furniture they want. So unfurnished is favored.

    Are your places pet friendly? This could be additional bonus as people are willing to pay more if you allow pets.

    The best thing is to see what your target market is and then go from there.

    Good luck!
     
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  3. paper

    paper Well-Known Member

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    Hi Excalibur1:
    Could you provide a little details in basic furniture? Do you supply a single bed or double bed or queen size bed?

    Do you supply TV/fridge/washing machine/Air conditioner as well?
     
  4. Excalibur1

    Excalibur1 Well-Known Member

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    For our unit we told them we would be flexible. Tenants said they liked that and I think that was the reason why they were willing to pay more than what other units were getting.

    1. The washing machine was simple fisher and paykel (we got this one from a garage sale gave it a nice clean and it looked like new.)
    2. The dryer was already pre-installed we got it with the unit. It is over 12 years old and still works
    3. TV we bought from Kogan ($400 , 40inch. It looked impressive)
    4. We supplied the queen mattress ($120 from a local bed shop. It was the cheapest they had. I was worried tenants might not like it as it was hard, but it turns out that's what they were after and they liked it was brand new)
    5. The TV unit we bought from IKEA $700. This was a big unit with a lot of extra storage space. This TV unit nearly cost me my marriage. They should put warning on the furniture not to assemble it with your wife as an argument is guaranteed! I think whoever puts IKEA furniture together with their partner and they are still together, it is very likely they will grow old together too.
    6. Table and chairs I got from my parents as they no longer needed it. It was a simple wooden table with simple wooden chairs.

    Some of the above items were deductible.

    I think all together it cost us around $1600 not including time to source all those things. But I enjoyed doing it. All this allowed us to rent our unit for $150 more than the same comparable unit unfurnished. Comparable rents are 500-600 and our unit was renting for $690. A year later it was renting for $740.

    Overall I think its all in the presentation. We left some photo frames with pictures and books around the unit. strategically placed paintings and mirrors to make the unit appear bigger. As the table looked older we placed a nice table cloth over it.

    When our tenant left after a year and new one came we increased rent by $50. We included a lil gift basket with chocolates and champagne and body shop creams (wife's suggestion) to welcome new tenant. It cost us around $100. This seemed to have worked.

    I think using a bit of imagination and knowing your target market you can always end up on top :)
     
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  5. drg86

    drg86 Well-Known Member

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    I have both furnished and unfurnished properties. The furnished one is a 1br unit and was previously a holiday rental so it has absolutely everything included. I don't get much more per week but it's extra items on the depreciation schedule so that is in my favour.
     
  6. paper

    paper Well-Known Member

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    Thanks a lot.
    Your set up is so cheap. I have to rethink if I need to add some furniture to attract some tenants.
    My agent told me not to do so unless the potential tenants want it.
     
  7. balwoges

    balwoges Well-Known Member

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    Furnished apartments are a pain, especially if they are supplied with cooking implements and cutlery. Checkout is a nightmare.
     
  8. Excalibur1

    Excalibur1 Well-Known Member

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    I never thought that kitchen utensils should be included in there. I thought only bulk items should be included. Make the place clean and presentable and it will rent. I would see cost vs benefit before doing anything. My wife is the creative one and I’m the numbers person. Even though sometimes her decorative ideas are great they don’t always translate to great return in dollar terms.
     
  9. Burnhi

    Burnhi Member

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    I guess this is a question I have also. Does furnished mean putting in utensils? Or is it generally accepted that it stops at bulk goods?
     
  10. sanj

    sanj Well-Known Member

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    Furnished and equipped includes all the extras like utensils, plates, towels etc.

    Simply furnished is just furniture and appliances
     
  11. Lu Bracher

    Lu Bracher Active Member

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    Consider your target market. If in the CBD and access is a pain, then furnished - however, you should do this tastefully - don't think that mismatched furniture will appeal- they don't. I have heard various comments on owners tastes and sometimes I don't pass those comments on because I find it rude so I just soften it for the owners.

    Minimises wear and tear on property. Moving furniture in and out has proven to be the one thing that causes damage most on rental properties. Especially in hard to access areas compared to size of items being moved.

    Fully itemised lists for tenants as well as condition.

    Downside, anything you put in there will get used and wear and tear is imminent. If there is any damage to furniture, you must repair or replace - can't just say don't worry wait until tenancy ends...so more items means more chance of maintenance. Sometimes items like washing machines only comes down to tenants not knowing how to operate- so for every item, laminate a sheet with step by step on how to use.

    Where it comes to beds - one of the worst things is bed bugs. If you get this, you'll need to remove the bed ASAP before it infests of thet items. Make sure that tenants have a clause to cover you for this, as this is an introduced big (mostly from travelling and hostels etc)

    End of tenancy carpet and pest should include mattress clean. The only challenge is that the RTA in QLD after a recent (2015) challenge to this clause - clearly dose not permit the Lessor/Agent to request tenants to use a paid service. If you have a property in the city, chances are you have tenants that are more educated and you will not be able to enforce this end of tenancy clean...
    So, in saying this, you do need more rent to cover the extra cleaning costs.

    Bedding - I always recommend owners to get new sheets for new tenants...unless the tenancy was so short that you don't notice the wear and tear on sheets...just the thought of sleeping on poor quality used sheets (no thanks). So this is an extra cost.

    Furnished properties attract a more transient tenancy base so your turnover could be higher in these areas, but if you choose to invest along this path, just consider what your final target market is that you want and furnish accordingly.

    Utensils - yes if you are fully furnishing - add everything. I had one tenant requesting me for reimbursement because the unit didn't have a grater and cheese slicer. There was also no colander and she wanted to buy one so I said - nope, I have a spare I'll bring it over. Seriously??!! That's fully furnished for you.
     
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  12. bob shovel

    bob shovel Well-Known Member

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    I think the agent has taken an easy way out. if tenants are looking for furnsihed they'll search "furnished", its unlikely theyll ring up say they want your unit but furnished. we have looked for furnished and some ads we have seen say in the title "furnished/unfurnished", from what i made out the owners lived nearby or had storage of some kind to swap things around as needed.
    from when we have been looking its around $100 extra/wk furnshed. so after 6 months probably paid for itself.

    If you have the option to keep furniture ready to go it could be worth while. actually we'll be moving out around Oct we can do you a deal as we had to furnish a place! but ikea is the go and gumtree, there are bargains out there!
     
  13. Esh

    Esh Well-Known Member

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    got to say lol!

    But I think your property would go well if you furnished it. I would assume there would be alot of international students and expats who would be attracted to it?
     
  14. Excalibur1

    Excalibur1 Well-Known Member

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    I think IKEA has only one thing that is good and that's their knives... Those things last ages without sharpening!

    We did have international students attracted to it. As it was new and renovated. We didn't want them as we thought they wouldn't look after the place, even though they were offering $20-$50 more. We settled on a couple from Saudi Arabia (wife is a Doctor and husband accountant). They are tenants any landlord would only dream of having. I guess we were lucky.

    Our target was expats, age 35-55. I know it was very specific. But being in the CBD you get a choice of who you want.