Furnished vs unfurnished – what landlords need to know!

Furnished vs unfurnished? One of the most common questions I get when meeting with clients who are looking to list their properties for rent with me is the question of furnishing or unfurnishing their property. Quite often they will tell me that they heard that furnished might yield them a better rent.

This can be true but like most things in life there are important caveats for the prospective landlord to understand about furnished versus unfurnished rentals. To begin, Let’s address the initial question. Will my furnished property yield a higher rent than an unfurnished set up? The answer is yes. What the potential landlord needs to understand however is that this answer requires more context.

Firstly, a property will likely yield a higher rent furnished because there is the added benefit to the tenant of having furniture in the property. This means if the property is not currently furnished the landlord will need to expend capital to adequately furnish the property. Because the furnished rental market in Vancouver is so competitive, this means furnishing the property in a manner that is in line with what one might expect at a hotel. That is to say you have a neutral aesthetic which Is appealing to the majority of potential tenants, you likely do not have personalized items within the property and that it is typically fully furnished meaning things like utensils and cutlery are also included.

In order to adequately furnish your property it is important to understand that the items listed above are costs that should be tabulated in your rental calculation when trying to ascertain which way is best to be renting in order to maximize the landlords rate of return. Once the furniture is paid for and placed within the property, it is also important for the landlord to recognize that the furniture will have a life expectancy typically 3 to 5 years depending on specific furniture items. This is a kind of depreciated capital cost which will also need to be added to the rental calculation.

When I market furnished rentals, I often find that potential tenants are likely looking for a shorter term accommodation, usually ranging anywhere between three and nine months. This is due to the fact that most tenants looking for furniture accommodation are either being corporately relocated temporarily, here to work in a specific industry such as film or a part of an insurance claim requiring temporary accommodation longer than that of what a hotel would be feasible for.
This is important to keep in mind because this means that you as a landlord will likely require to have the property re-rented within the same calendar year. This means there may be additional costs the landlord should be made aware of due to this such as the potential for vacancy between tenancies as well as re-leasing costs.

Furnished rentals are also a much more elastic market. As the season changes so do the demand for furnished rentals within the Vancouver rental market. Spring and summer time are high season for furnished rentals with the majority of potential tenants looking for accommodation during that time frame. These typically will yield landlords higher summertime rates for their furnished rental property. However because the furnished rental market is more elastic in nature than the unfurnished market, the furnished market is much more impacted by the slower time of the year seen in the late fall and winter. Resulting in reduced rental rates during those times as well as increased likelihood of vacancy.

Lastly, potential tenants looking for furnished accommodation in Vancouver are expecting that utilities are being provided by the landlord. This means an additional cost to the landlord when calculating the rental totals for the rental property.

As a rental/leasing specialist who has more than seven years of luxury rental experience. It is often that I suggest clients opt to not furnish their properties if not already furnished. This is due to The fact that the furnished rental rates throughout the market are not as large as they once were. Simply put the delta between typical furnished rental rates and unfurnished rental rates is much smaller than in previous years.

This is the result of several factors currently at play in Vancouver’s rental market. Vancouver’s empty homes taxation policy has resulted in additional inventory coming online that previously wasn’t present. Additionally, many properties that were bought in past years have been used as Airbnb or VRBO rentals. These have now been converted to mid or longer term furnished rentals as strata restrictions have increased dramatically.

This is essentially rental product that furnished rental landlords did not have to compete with in previous years which they are now having to reconcile with. This means their units must be furnished very well into a high degree as well as a reduction in their asking rental rates.

While the above seems to paint a bleak picture there are circumstances where furnished rentals are certainly a more advantageous option. However to provide further context I would highly recommend calling me directly at 604-209-0081 or emailing me at baxter@vancouverluxuryrealty.com where I can provide a greater understanding for clients who might be interested.

For landlords who might be considering renting their property unfurnished this typically is a less costly option. This is also my recommended method of renting your property out especially for owners who might have just completed and taken possession of a new construction property for example. This is due to the market reality that unfurnished rentals are the vast majority of overall rental demand in Vancouver.

The benefits of renting unfurnished for a landlord are primarily focused on the longer-term nature of the tenancy. That is to say tenants who are looking unfurnished are typically looking at a minimum term length of no less than 12 months with many tenants opting to sign longer-term Tenancies. The landlord can benefit from this greatly by not having to experience any disruption to monthly rent by not incurring any vacancy.

Tenants who are looking for unfurnished typically are moving in on their own furniture and treating the unit like it’s their home. They typically plan on being there for an extended period of time and we typically see a reduced amount of wear and tear. Not having several different tenants in within one year cycle can help reduce the amount of wear the property endures. The renters in this case also are responsible for utilities which is one less costs that a landlord would need to incur. This helps the bottom line and prevents any additional unforeseen costs with utility over usage.

Hopefully this can help bring more clarity to this common rental question!

As always, for more details or to offer further context I would highly recommend calling me directly at 604-209-0081 or emailing me at baxter@vancouverluxuryrealty.com where I can provide a greater understanding for clients who might be interested in learning more.

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