The pros and cons of furnishing a rental
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Should I rent out a property furnished or not?
This is a common question asked by landlords when deciding to rent out their property. Some landlords might think that they will get a better rental return if their property is furnished or they might be moving and need a place to home their furniture or surplus furniture without the costs of removal or storage.
It seems like an attractive option but is it?
Sure you may be able to ask for more rent, sure you can store your furniture and sure you can receive tax depreciation benefits on any furniture you provide but the down-sides may outweigh these positives.
It is clear that the market for furnished properties is significantly smaller than for unfurnished proper-ties. The market for furnished properties is limited usually to students or tenants seeking short-term tenancies (particularly those on job transfers from interstate) and is usually focused around the CBD. So make sure you know your target market before you make any decision.Even if you do wish to go ahead with a fully or partly furnished rental property, there are other factors to consider. Your taste and style may be quite different from the aesthetic of the target market you need to capture. Again, you may be limiting your pool of ten-ants if the furnishings are not to their taste.
You will need to complete a detailed inventory of all furniture before the tenant moves in and when they move out. You will have to closely monitor the disappearance of any items.
You have an obligation under tenancies law to keep not only the property in a reasonable state of repair through-out the tenancy—but also the ancillary property which includes furniture. If a piece of furniture (or appliance) breaks down and it is not due to the negligence of the tenant, then you are responsible to repair or replace it. Be prepared for an in-crease in maintenance calls.
You will need to take out insurance on the furniture - just in case. Whatever insurance you have - make sure it covers the contents that you provide for any tenant’s use.It is up to you to decide whether you want to furnish your rental property. But don’t be surprised if the benefits that you thought you would reap do not materialise either in the short or long term.
Source: THE ADVERTISER REAL ESTATE, Saturday, April 1, 2017
This article provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such as it does not take into account your personal circumstances or needs. Professional advice should be sought prior to any action being taken in reliance on any of the information.