Furnished vs. Unfurnished Rental Properties

Everyone always asks me: Furnished vs. Unfurnished, which way is better to go? I think that people that have furnished properties work in a certain area, a certain rental market such as vacation homes and other things, which to me that would be a no-brainer. When you’re living in a city like Houston there are some pluses and there are some minuses, potentially only one percent of the rental market is actually looking for a furnished property. So, if you are looking to use that and use a furnished property ninety-nine percent of the other people out there you are discarding. One of the things you’re going to think about too is, your taste may not be the same taste or design that other people like.

So when you have a property that you think is furnished and looks good, other people may not like it. You’re going to have to deal with the fact that people may come in and they may want some things changed or another fabric put on certain couches once you’re providing that.

Also, I think your maintenance cost is going to go up dramatically when you are supplying all the furnished equipment, because there are more chances for things to break. When you own it and it breaks, the tenants are going to feel you are responsible to fix it whether it is the T.V., whether it is the broken couch, whatever it is they are going to feel you are responsible for it.

A lot of times people feel that if it is going to be a corporate re-location you are going to be able to rent it quicker or for more money with corporate re-locations. What you want to think about is if it is a corporate re-location company, the only people that are going to utilize a furnished property is if it is a short term rental. And, if it is a short term rental that means when it is turned over and a new person comes in you are probably going to have higher cost for doing more maintenance and getting the property ready to rent. And you are going to have increasing expenses to re-lease the property. So, a short term rental in my opinion from what the standard is, is probably not the best way to go. The other thing you are going to have to think about is, at least here in Houston, the majority of the people that re-locate with big businesses will pay to have their belongings shipped. So, they are going to come with their own stuff. And a lot of owners say, "Can’t we show it with the stuff and if they want it we can keep it, and if they don’t we can take it out?" The problem with doing that is people like to imagine their own stuff in the property. They cannot imagine their couch sitting somewhere when your couch is sitting there also. So, you want to remember that when you’re showing a property you want it to be clean, free of clutter, and free of debris. And, you never know what this person thinks is clean except for the fact that you might have a hard time renting it.

So, in my opinion I would say it is always better to go with having unfurnished. You are going to have a lot less cost. You are going to be able to target a higher market and you are going to have less maintenance calls. Last thing I’ll say is that there are a lot of condominium associations, town home and HOA Associations that do not like rental properties, and they do restrict some of the rental properties that are allowed in an area.

So, again just something to think about. Obviously certain rental markets warrant having rental re-location companies and this is just something to think about if you are deciding on which way to go. I would maybe do some do-diligence and I would see what is out there for furnished properties and what is not. If there are not many furnished properties being listed on the market, then there may be a reason. They can't be leased every time.