Are you planning on investing in an apartment and stuck on whether to go for Furnished or Unfurnished? Which is a Better investment ? Well, this article throws light on the pros and cons of both. If you are to decide on one of these, you need to be sure which serves your purpose the best. You need to think from the perspective of increasing your income and returns that the investment is going to bring. The easiest way out is to go for an unfurnished unit since it does not require much maintenance and has minimal chances of incurring losses in case of damage. Here are a few parameters that give you a proper scope of knowledge to choose between the two:
1. Target Renters and leasing term:
If you plan to invest in rental apartments, often the leasing terms are at least a one-year for an unfurnished apartment. The long-term leasing in an unfurnished apartment increases the sense of security for the renters as they don’t need to constantly search for new tenants on a regular basis. In this case, we mostly see tenants who want to establish roots and are planning to settle in that area for a longer tenure. It’s well known to the renters that the people who tend to move more often desire well-furnished or semi-furnished apartments, as they don’t plan on investing in various necessities in an apartment. The furnished apartments ideally should have a month-to-month leasing term along with a reasonable notice period.
2. Time and Money
Without a doubt, furnished rentals yield usually around 15-20 % higher rental rates as compared to unfurnished rentals. People coming to rent a furnished apartment are often willing to pay for a set of furniture, and other necessary utilities for the bedroom, living room, bathroom, and kitchen. They don’t want to invest their time and money on furniture, bedding, washer/dryer sets, and other basic kitchen appliances. This might yet turn out risky since they are the ones who’ll be accountable for the maintenance of your furnishings. Unfurnished apartments do not call for this investment in furniture and their maintenance. This cost is then spread into monthly rents for furnished apartments putting them at a higher price on the market.
3. Security Deposits and Notice Period:
In Furnished units, the apartments include the owner’s property, the tenant has more accountability of the furnishings that the owner has invested in. In which case, the security deposit is higher to leverage in case of potential damage or loss incurred due to normal wear and tear. Although the unfurnished units have a certain amount of security deposits, it is relatively low since the tenants are only accountable for paying the monthly rentals timely. The vacancy in case of such investment is a type of loss incurred by the owner. Hence, it’s up to the owner to decide the notice period he feels fit to fill in the vacancy. Usually, unfurnished apartments have a longer notice period as this gives both the renter and the tenant time to find another tenant and move their furnishings respectively.
4. Rules and Regulations:
In some municipalities, the investors are allowed to split the apartments, to keep more than one tenant in shared spaces. In such cases, furnished units yield better results than unfurnished ones as they give renters a fair sharing experience and avoid dispute. People sharing in an unfurnished apartment, are usually friends or family as that will cause lesser disputes. Also, It is proven that apartments with shared common areas be it the living room, terrace, or balcony turn out to be more profitable.
5. Tenant’s Choice in Home Decor:
There’s a criterion where unfurnished apartments serve a fancy purpose of giving a choice to the tenants to choose a decor of their choice, giving them more control over their lifestyle as compared to a furnished one. Wherein a furnished apartment leaves you no choice but to go with the owner’s choice of furnishings and you are restricted to make any changes. In case your tenant has specific taste they might not want to settle for your choice in home decor and might look for another option that matches their taste. So you can splash your choices in furnishing your unit but in most cases, the renters prefer to have a tinge of their choices in the place they are living in.
As per the above-stated points, it is clear that renting an unfurnished apartment would be beneficial for both renter and tenant, as it opens the room for security, money, and time-saving benefits. An unfurnished apartment in any which manner comes down to be a flexible option for family and friends as it is very convenient to maintain fewer disputes, with a furnished home the liability and the choice to furnish is not always possible.