To Furnish or not to Furnish? That is the Question.

How to Furnish a Rental Property: Insights for Landlords

As Build to Rent (BTR) owners and developers contemplate whether to furnish their properties, they’re often met with conflicting advice. Many agents recommend furnishing new BTR developments to expedite the leasing process and potentially increase rent. However, at Fjeld Consulting, we believe it’s crucial to delve into the nuances of this decision. In this comprehensive guide, we’ll explore the intricacies of how to furnish a rental property and the implications it holds for landlord furniture and property value.

The High Cost of Furnishing: A Double-Edged Sword

Furnishing a property might seem like a straightforward way to add value, but it comes with hidden complexities and costs. While owning your furniture allows for a premium rental price in theory, it also introduces a plethora of responsibilities including tracking, storage, maintenance, and eventual replacement. The style, durability, and appeal of the furniture must be continually assessed. Alternatively, leasing furniture might initially seem cost-effective, but it can swiftly become a significant operating expense, undercutting your Net Operating Income (NOI).

Some prospects will not find your units because they will be artificially priced above their search criteria due to the addition of a furniture premium, reducing traffic to your property and ultimately reducing the rent collected.

Some tenants already have furniture and will not lease your units because they don’t want to pay the premium for furniture they don’t need. And some prospects simply will not share your taste in furniture.

Over time your property rent will drop to match other properties without furniture.  Are you sure that furnished “Premium” still be there a few years down the line? The expense is bound to be.

Understanding tenant demographics and preferences is pivotal in the debate on whether to furnish your BTR properties. Data, such as insights from Homelet’s 2017 Tenant Survey, indicate a diverse tenant base with varying expectations and needs. The challenge lies in accommodating these diverse tastes and lifestyles – from families expecting a child to young professionals envisioning a spare bedroom as a workspace or creative area.

The shift in recreational preferences, especially among younger tenants, further complicates this decision. The trend towards portable devices over traditional TV setups calls for a re-evaluation of what constitutes essential furnishings.

Catering to the Need for Flexibility: The Rise of Furniture Rental Services

For the segment of tenants, particularly younger independents, who require furnished properties, landlords face the dilemma of adding a premium cost that might deter these very renters. The solution might lie in leveraging Centralised Purchasing agreements with specialist furniture rental companies. This approach not only provides tenants with customizable furniture options but also introduces potential ancillary income for landlords through exclusive referral agreements.

Such collaborations can offer tenants budget-friendly, style-specific furniture packages with the added benefit of decreasing costs over time. This not only caters to the tenant’s immediate needs but also provides an incentive for long-term tenancy, fostering a stable rental income stream for landlords.

The decision to furnish a rental property should not be taken lightly. It involves a careful analysis of market dynamics, tenant preferences, and the long-term financial implications. While furnishing could potentially add value to a property, it also introduces significant costs, management challenges and reduces the number of potential rents.

At Fjeld Consulting, we’re committed to helping you navigate these complex decisions. Whether it’s managing furniture logistics or securing income-producing deals, we’re here to support you in optimising your property investments while ensuring tenant satisfaction.

If you’re pondering how to furnish a rental property or seeking strategic advice on landlord furniture, don’t hesitate to reach out to us. Let’s work together to make informed decisions that enhance your property’s value and your tenants’ living experience.

About the Author: Dustin Fjeld

Dustin Fjeld
As founder member of Fjeld Consulting, Dustin has helped save clients thousands across a range of BTR, PBSA, PRS and Co-living portfolios.

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