pros and cons of Fully furnishing an IP

Hi,

i am all new to having an IP. thinking of providing a Fully furnished IP for rental. can i have some ideas on the pros and cons of Fully furnishing an IP?


I am even thinking of having an old PC, bicycle as part of the fully furnish apart from beds, washing machine, fridge, microwave, etc...

cheers.
Scott
 
There's plenty to consider, but off the top of my head:

Pros:
Higher rent
Can depreciate furnishings

Cons:
Might not suit most tenants (so you'd be dealing with a smaller pool of potential tenants)
Tenants may ruin furnishings

Like the other poster said though, location and type of IP will impact on the pros and cons
 
Definitely not a PC.

What happens if the PC gets a virus or constantly crashes? You've included it as part of your lease, so you become liable to fix it.

If you're going to furnish it, I would look big items like fridges and washing machines. Things that require 3 people to carry.

For fridges, every Christmas Bing Lee offer all Westinghouse fridges an extended 5 year warranty (provided from the manufacturer not 3rd party - i believe its full onsite, but check that first). This way if the items breaks, you can get the tenant to call the manufacturer and organise a time themselves).

The only other item I would provide is a washing machine. Microwaves a pretty cheap and easy to move around, so this may not be such a necessity.
 
Hi,

i am all new to having an IP. thinking of providing a Fully furnished IP for rental. can i have some ideas on the pros and cons of Fully furnishing an IP?


I am even thinking of having an old PC, bicycle as part of the fully furnish apart from beds, washing machine, fridge, microwave, etc...

cheers.
Scott

Try and furnish with reasonable 2nd hand goods. Sites like gumtree.com.au you can pick up modern couches, beds, fridges, washing machines etc at bargain basement prices.
 
Check the local area to ensure there is a demand for a furnished unit and whether it is financially viable (i'e how much more rent will you achieve).

My unit at Elizabeth Bay was furnished when I bought it (it used to be a boutique hotel). The tenant was there for a while (2 years?) when I bought it. I've had it 2 years and never heard a peep from her. I was worried about things breaking down etc but so far so good.
 
We have a furnished unit that has a long term tennant. We actually bought the unit furnished and chose a long term tennant arrangement instead of holiday so we could be sure of income. Our unit is on the Sunshine Coast.
So far no problems, and we have had it just on a year. :)
 
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Are you going to use a property manager?
Ask them about the demand for what you are trying to offer in your area.

Executive type rentals can have some good demand from people you would actually want renting it. If it isn't a flash unit close to big business then I would wonder if the demand for furnished rentals are from people you would actually want to rent it to?
 
Are you going to use a property manager?
Ask them about the demand for what you are trying to offer in your area.

Executive type rentals can have some good demand from people you would actually want renting it. If it isn't a flash unit close to big business then I would wonder if the demand for furnished rentals are from people you would actually want to rent it to?

hi Gools,

i am not using a property manager. i have a friend who may be interested in renting.

What do u mean by a "Flash unit"?

cheers.
 
We have a fully furnished apartment. It has been rented out almost every day for the last 3 years. We have people who have transfers from interstate renting it for 6 - 12 months. It is on a riverfront, with a balcony facing the river. Two bedrooms two bathrooms etc

Pros:
Deductions are excellent
For us, easier to rent out (a biggie as there were many apartments made available at the same time, so we had a difference)
Higher rent
I enjoyed the process of decking it out (weird, I know)

Cons:
Things break down and need replacing
Risk of damage
Initial outlay

I would do it again in an instant.
 
One of our IP's was a furnished 1 bed unit. There was alot of demand from recently separated men... moving out of the family home. also young people moving from the country to start work in city.
Furniture was all old, solid type furniture, so no maintenance required.
Pen
 
We have 11 bachelor suites and a 1 bedroom mobile that are completely furnished.Include dishes, bedding, toaster, microwave etc.

We were fortunate to have all units furnished at the same time.We were able to buy in bulk and negotiate pretty good deals.Looked for sales etc.

In our town we were about the first ones to offer a whole building of furnished accommodation.Extrememly low vacancies.We charge reasonable rates, and base all of our rents on single occupancy and no pets. For an additional person or a cat/dog we charge $100 month extra.

In 3 years we have only replaced a box spring and mattress, microwave, toaster and a set of pots.

Pros:
Turned out to be lots of demand from travellers, moving from other provinces, marital problems, college students, job transfer, training courses and moving out of home for the first time.

Including furniture means less wear and tear on our walls from tenants moving and hitting the walls.

Cons: Larger turnover of tenants. That is not always bad.Able to check unit more often for problems.

Wouldn't think twice aboutdoing it again......actually we are contemplating it again
 
Some of these have been mentioned before but:

Pros:
Great for tax deductions
Higher rent

Cons:
More maintenance
More for tenants to damage
Higher cost to set up
Higher turnover of tenants

I think this is definitely a case of higher risk = higher reward.

Yes tenants could ransack the place and destroy the furniture but 1. You should have insurance in place to cover this & 2. If you choose tenants carefully to start with this shouldn't be a problem.

Someone also mentioned that it might not suit most tenants. I agree but I would count this as a positive, you are providing a niche property to a specific group of people and can therefore charge a premium for it. Also there is a smaller number of furnished properties available so in the end supply and demand is still in your favour.

Keep in mind that the amount of people looking for furnished properties isn't THAT small it includes - international/country students, recent overseas/interstate arrivals & people from relationship break-ups. At the real estate office I work in we've also had a few sports people who have been drafted from interstate apply.

Another thing for people to keep in mind if they are getting a property manager to manage their furnished property is that some can charge per hour to inventory all the furniture etc. So make sure you ask about these costs first & if they do charge consider doing it yourself to save some money. I'd also recommend taking detailed pictures in case of damage or theft.
 
I had a block of 9 1BR units where I renovated and furnished, one by one (the "flock of bats", if you want to search).

It very much suited my area, as it turned out- it served a real niche. High end furnished accomodation in Canberra was readily available- not basic low end. And Canberra is a city where there is a high temporary population.

As well as people being transferred to the city- temporary and permanent- there were also students (usually O/S grad students on scholarship), recently separated people, even people just transferred who were looking for a home, and needing the time to look.

But it is more work for a PM. Bond is higher (typically six weeks rather than four for an unfurnished). More things can get damaged.

And it MUST suit the location. I had the luxury of trying it out for one unit, then when it worked, doing the same for others. I'd be wary of doing it for a first rental.

The furniture was cheap. Around $2000 would set up a 1BR unit from Fantastic furniture, +TV, sound, fridge and small washing machine. That added $40pw to the rent.
 
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