Investors in real estate are contemplating fully furnished homes as tenants of the millennial generation are accustomed to convenience and will spend the money. As previously mentioned, furnished apartments are the top choice for renters who value convenience.
In today's article, we'll take a look at the advantages of fully furnished apartments, the advantages of investing in one, and how you can go about doing it without falling for common traps.
What Are Fully Furnished Apartments?
An apartment that is furnished comes with furniture that a tenant will need to live on the property. There are three basic types of furnished apartments available:
Semi-furnished Apartments: This kind of home comes with basic furnishings and appliances, including fans, lights, wardrobes, and kitchen cabinets. Some landlords add additional features such as a microwave table lamp, a microwave, and a toaster.
Fully Furnished Apartments: These are often referred to as turnkey homes because they are ready to be occupied. All tenants need to take is clothing, toiletries, and food items.
Why Should You Invest in Fully Furnished Apartments?
Typically, furnished apartments require an investment of more and frequent changes in the tenants.
Better Profits: Compared to other rental properties of similar size and design, furnished rental properties can provide a greater return. Be aware that you can raise or decrease the rent based on the available type of furniture.
Security deposit higher: Landlords require an additional security deposit is fully furnished apartments. A security deposit equal to two months' rent is perfect for furnished apartments.
A wider range of possibilities - Renting an apartment lets you experiment with the traditional rental and shorter-term strategies. You could target this particular market and make a space for yourself within the rental market.
Tax advantages: Having fully furnished rental apartments could provide tax benefits. This could be a major relief for landlords when you consider the tax they must pay.
What Are the Downsides of Investing in Fully Furnished Apartments?
Many investments that are lucrative homes that are furnished fully have the potential for negatives and risks. Here are some you must take note of
Maintenance costs: After you have furnished your rental property, you must be prepared to pay more for maintenance. Your rental income needs to be more than cover the cost of maintenance.
A higher turnover of tenants: Most homeowners who own furnished rentals prefer to lease their properties for short-term rental. Additionally, it adds greater responsibility on your shoulders as you are required to promote the property and clean it before a new tenant arrives.
Furniture that is damaged: Purchasing furniture for your rental property will increase the chance of them being damaged by tenants. You could decide to do it yourself or work with professional property management or management company.
How to Invest In Fully Furnished Apartments
Once we've covered all the essentials, you may consider investing in an apartment with furniture.
Let's go over some suggestions about what you need to do to ensure that your furnished apartment will pay off on the market for homes in 2022.
Choose the Right Location
As with other investments in real estate, you must make sure you are investing in the right place. These elements also determine whether the location is ideal for Airbnb or rental property in the long run.
Suppose you are making your first furnished apartment. Take note of the costs for local transportation. This is essential because tenants will also consider the local area when searching for a furnished apartment.
For example, suppose an employee who is moving or a temporary worker is seeking furnished apartments in a particular area. This can help you tailor your furnished apartments for rent to meet the requirements of those who live there.
Many employees now work from home. Here are some differences to help you choose:
Rental income: Short-term Rentals are more likely to generate a higher rent than traditional rental properties. You may also profit from other events and conventions in your local area to increase your earnings.
Maintenance: Short-term rental properties generally require more care than long-term rental homes. If you're located in a highly sought-after region, be aware that you'll need lots of time, cash and resources to set up the property, furnish it, and clean it after the booking. Traditional rentals need less maintenance because the tenants are responsible for cleaning duties during their stay.
Regulations and laws: Certain states have strict laws regarding short-term rental. Make sure you are aware of local rules to avoid getting into trouble later.
How to Protect Your Fully Furnished Apartment
Knowing that fully furnished apartments are not without risk, how do you safeguard your investment? This is an essential step considering that you've put in enormous cash and effort to make the home look and feel more appealing to market requirements.
There are plenty of ways to limit the risk of financial loss from owning fully furnished rental units. Here are some helpful tips:
Charge a Higher Security Deposit
We've seen some benefits of having a furnished apartment: you can set a higher security deposit. The tenant will also be required to take on more responsibility for the furniture, so they don't risk losing the cash.
Screen Your Tenants Thoroughly
An extensive screening process for tenants is required regardless of whether your rental home includes furnishings. In general, inspections are conducted between tenancies. However, you should regularly inspect your rental properties that are fully furnished, provided you comply with the laws of your state.
Maintain Proper Documentation
A furnished apartment that you rent must include a list of all furnishings and items in your lease contract. The greatest benefit of renting these properties is their flexibility, as they can be leased for long-term leases and Airbnb rentals.
Final Thoughts
Fully furnished apartments can be an excellent way to invest in real property. If you're not afraid to spend enormous money to buy furniture and other things you want to purchase, jump into the deep end. The most appealing aspect of renting rentals is their flexibility because you can lease them for long-term leases and Airbnb rentals. This can increase your rental income potential.
But, it would be best if you kept an eye on the high cost of maintenance as well as the high turnover of tenants and the risk of furniture damage. You can mitigate the risks you face by making sure you choose the correct location, knowing the market you want to target, and then deciding on your rent strategy. If you can do this, then you'll be on the way to making huge profits.
If you’d like to talk more about property management, or you need help with Everest Property Management, please contact us at Everest Realty.
As a top producing Realtor and Property Manager; Terry specializes in sales, extensive construction homes, rentals, REO’s, short sales, and all aspects of Real Estate. After graduating the University of Michigan with a master in MBA, Terry continued his endeavor and now has over 15+ years of experience in the Real Estate world. If there is anything that has to do with Real Estate and sales, you can always be sure of Terry to provide important, specialized knowledge.
