Furnished Rentals:
Not A Smart Choice for Property Owners
Introduction to Furnished and Unfurnished Rentals
When considering leasing options, property owners often face the decision of offering their rental units furnished or unfurnished. While furnished rentals can attract certain renters looking for convenience, unfurnished rentals often present a more advantageous option for owners in terms of flexibility, cost, and management. Below, we explore the reasons why opting for an unfurnished rental might be the smarter choice for property owners.
1. Lower Initial Investment & Maintenance Costs
One of the most significant benefits of unfurnished rentals is the lower upfront investment required. Owners do not need to purchase furniture, which can be costly and require regular updates and replacements. This absence of furnishings also reduces the ongoing maintenance expenses and the hassle associated with wear and tear on provided items.
Owners save on the costs of repairing or replacing furniture, which ultimately enhances the profitability of the rental property.
NOTE: Colorado Law strictly prohibits owners for charging tenants beyond ‘normal wear and tear’ and most damages to furniture would be covered under this provision.
2. Broader Tenant Market
Unfurnished rentals appeal to a wider range of potential tenants, including long-term renters who prefer to bring furniture they already own to create a personalized home while saving money.
This flexibility increases the likelihood of attracting stable, long-term tenants who are looking to make a rental property their home for an extended period.
These tenants are often more committed to maintaining the property well, knowing they will enjoy it for years to come.
3. Reduced Liability and Reduced Management Costs
Managing an unfurnished rental can be significantly less time consuming and the management costs are corresponding.
The property owner is not responsible for the safety, maintenance, and replacement of furnishings, which lowers the potential for disputes over damage and wear and need for frequent inspections. This reduction in liability can lead to fewer tenant issues and less invasive property management which increases tenant retention.
Additionally, at the end of a tenancy, the process of checking and documenting inventory is considerably streamlined, saving time and reducing the potential for conflicts.
4. Longer Tenancy Durations
Tenants who invest in moving their own furniture are more likely to stay longer in order to avoid the hassle and cost of moving frequently. Longer tenancies mean fewer vacancy periods and less turnover, which translates to less wear and tear on the property from moving furniture, more consistent rental income and lower costs associated with finding new tenants.
It’s important to remember that vacancy is the largest controllable expense in the rental property equation.
5. Enhanced Property Protection
When tenants bring their own furniture, they are generally more invested in maintaining the property’s condition to ensure their belongings are also preserved. This sense of ownership often leads to better overall care and maintenance of the rental unit, reducing the need for costly repairs and maintenance between tenancies.
6. Tax Advantages and Easier Depreciation
For property owners, unfurnished rentals may offer certain tax advantages. The depreciation process for the property can be more straightforward since it involves only the building and integral fixtures, not additional contents. This can make financial management and tax filing easier for property owners.
Conclusion
Choosing to offer an unfurnished rental can provide numerous benefits for property owners. From reduced costs and liabilities to attracting long-term, committed tenants, the advantages make a compelling case.
By providing an unfurnished space, owners can enjoy a more straightforward, cost-effective, and profitable approach to property management. With the current rental market and vacancy rate, Pioneer Property Management is not advising clients to offer their properties furnished even if this means moving and storage of furnishings.
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