Should your investment property be furnished or not? This is a question many Sydney investors will ask at some point.
When it comes to the Sydney rental market, there are pros and cons to both furnished and unfurnished properties. Essentially, though, an investment property is an asset. As such, you should only furnish it if it will lead to greater long term financial gains.
But how do you know?
It depends on the property and its location, and as agents we are often asked this question by our clients. But it always comes down to the individual property.
The pros and cons of a furnished investment property
There is one main advantage to furnishing your property, and that is a higher rental income.
An inner-city furnished apartment will appeal to tenants who are only in Sydney for a set period of time. Perhaps they are here for a work contract, and want to move into a place that requires no outlay. This can mean supplying furniture, but can extend all the way to cutlery, sheets and bath towels, so it’s almost a serviced apartment.
The extra rental income will be around $100 a week on average. Of course this depends very much on the property itself and the quality of the furnishings.
Such properties will attract a higher rental income for their added convenience, particularly if you agree to short-term rentals. Or you may get lucky and find a company to rent it for an entire year, and make it available to various staff over that time.
But of course it will cost you money to furnish your apartment appropriately. Plus, you generally need to supply furniture and fittings of a high standard to appeal to the best tenants. You’ll also need to account for wear and tear, and replace things over time. Having said this, these items will be tax deductible. Here’s our blog on the tax benefits of an investment property.
You may also find it harder to attract a steady tenant, as those looking for a long-term home will be more likely to have their own furniture. If a great potential tenant comes along and loves the apartment but doesn’t want the furniture, you’re left in the position of having to either turn them down, get rid of everything, or put it into storage.
The pros and cons of an unfurnished apartment
One advantage of renting out your property unfurnished is that you are more likely to get a longer-term tenant, as they don’t want to move all their belongings again in six months, and will ‘make it their own’. Although such tenants don’t tend to pay the high rents of a furnished property, having someone in for a long time gives you peace of mind and a regular income.
Secondly, there’s less wear and tear to worry about. You won’t have a tenant suddenly demanding a new chair because the old one has broken, or asking you for a new mattress. An unfurnished property is a more straightforward rental, which some investors prefer.
Having said that, providing some basic furnishings—such as a fridge and washing machine, can be a good way of making your property appeal to a wider market and attract good rent, without too much outlay. Plus, you can buy appliances that you choose and instal yourself, reducing the risk of damage to your property. As these items are tax deductible, part-furnished is a good compromise for many investors.
Talk to us
Depending on your particular property and your own preferences, there are arguments for both unfurnished and furnished investment properties. We run a thriving property management service alongside our real estate services, and can give you tailored advice about your particular investment property. Please feel free to give us a call today!