Should I furnish my rental property?
Furnishing a rental property can be a great idea, but it’s only likely to add value if you have the right type of property and are targeting a specific type of tenant.
Types of properties most suited to being furnished
Some properties are more suited to being furnished than others. Before making a decision, it’s a good idea to talk to your property manager about the demographics of the people renting in your area and whether furnished properties are sought after.
Generally, furnished properties suit:
- Short term rentals
- Properties that are difficult to access, for example, a flat that's up a flight of stairs
- Tenants who are unlikely to have their own furniture, like students or new immigrants.
The benefits of furnishing a property
If you've got the right type of property, there's plenty of value to be had for landlords who choose to furnish it. It has the ability in some cases to attract higher rents, and can lead to shorter downtimes between tenancies especially apartments.
Top tips for a successfully furnished property
Make sure the furniture is in good condition
Scruffy furniture can make your property less desirable, putting off potential tenants and reducing your chances of attracting the best market rent.
Be clear what furnishings are provided
“Fully furnished” can mean different things to different people. Be clear from the outset what furniture is provided by completing a detailed Inventory as well as taking photographs of the items. The Inventory should form part of the tenancy agreement and be dated and signed by the ingoing tenant.
Arrange contents insurance
You’ll need to get contents insurance, or have a policy that covers a furnished property to protect yourself from damage to the furniture. It is recommended that you store items of sentimental value off-site, rather than in the property.
Factor in the cost of wear and tear
As well as requiring a large up front expense, you’ll be responsible for maintaining or replacing any of the appliances or furniture provided. The tenant is only responsible for repairing any careless or intentional damage to furniture that is caused by them or their guests. It’s a good idea to build this cost into the weekly rent.
Talk to a professional about depreciation
If a property is rented out as fully or partly furnished it’s possible to depreciate the contents. View the IRD depreciation rates or get advice from a professional.
What's the difference between fully furnished and partially furnished?
A fully furnished property usually means the property has everything, including appliances, beds, lounge and dining furniture, as well as all of the kitchen essentials like toasters, pots and pans, and utensils.
A partially furnished property generally has only bulky items such as large appliances, beds, lounge and dining furniture.
Not sure whether to furnish your property?
Your property manager is the best person to advise you on whether your property is suitable to be furnished. They will also help you set the correct market rent and will ensure your furniture is reviewed during routine inspections and when the tenant moves out. For more information contact a property manager.