There’s nothing I love more than increasing rental income (or decreasing expenses) in my apartment buildings and rental properties. One of the methods I’ve used to profit the most from increasing rental income is by furnishing apartments and renting them as short term vacation rentals or monthly furnished rentals. This has turned out to be so successful for my company that we now have over 30 furnished suites (out of about 400) and I’ve created a separate website to market my vacation rentals and furnished suites. Furnished apartments aren’t right for all properties, and there are some important factors that you should consider. In this post I will tell you everything that I’ve learned about furnishing apartments to increase rental income.
Benefits of Furnishing a Rental
-You can charge much higher rent! Typically 30% extra per suite for longer term stays and up to 400% more for short term stays.
-Furnished rentals tend to get much less wear and tear then un-furnished rentals. I have furnished suites that have been going over 3 years without a smidgeon of maintenance. This is because tenants aren’t hauling large pieces of furniture in and out when they move. They also hang less pictures and art work on the walls because the artwork is already there.
-Small or oddly laid out un-furnished apartments are usually hard to rent out because most peoples furniture won’t fit properly. This same type of unit can be furnished in a way that looks and functions very well if you hand pick furniture specifically for that space.
-Adding furnished apartments in your buildings diversifies your inventory. If you have five 1-bedrooms to rent out, it might be a challenge to rent them all. But if two of those apartments were furnished, you would have a larger selection which would attract a wider range of people.
-People moving from out of town often rent furnished apartments site un-seen, based only on pictures that are posted online, which means less work doing showings.
What Kind of People Are Looking For Furnished Rentals?
Well, there are all types of people looking for furnished rentals, but I’ve noticed three main types which I’ve narrowed down; people just moving into town that are beginning to look for a property to purchase, professionals on temporary work contracts and university students from out of town. Of these three, I’ve found that overall, students are usually my favorite. This is because their school year runs at least 8 months or longer, which is a pretty good term for a furnished rental and out of town students tend to come from good, financially stable families that often pay the rent for them. For short term rentals it's usually tourists and corporate renters.
Location
A good location is crucial. If you’re thinking about furnishing a rental next in a sketchy neighborhood, well, it probably won’t work out too well. Neither would a rental that’s in the middle of nowhere. The main factor when it comes to the location of your furnished rental is that it should be in an area that would be convenient for someone that just moved into town and doesn’t know the city very well. Close to Downtown is ideal. Near public transportation and walking distance to shopping is perfect.
Choosing Furniture
Your furnished suites should have a “high end” look, with nice, clean furniture. Sorry, but nobody wants a suite with grandma’s old rocking chair or some floral sofa set you bought of craigslist (although I’ve purchased some great pieces on craigslist in the past!). I’ve found that furnished suites with a simple, modern style and neutral colors (I like beige tones) tend to appeal to people the most. Some staple pieces I often use are; sectional sofas (if there’s room), computer desk (everyone needs a place to use their laptop), plasma TV (this is a must), DVD player and nice artwork on the walls. I also make sure to color coordinate everything to match nicely. It’s very important that the suite is fully furnished, not partially furnished. You can’t half do it…. I spend about $4,000 to furnish an apartment which includes all furniture and small items such as kitchenware, bedding, towels, etc.
The Bottom Line
So it costs about $4000 to furnish an apartment nicely. Turnover is generally more than it would be for an un-furnished rental. Is it really worth the cost and effort? YES!!! Well at least it is for me. I usually charge $300 - $500 extra per month for a long term furnished rental and thousands more per month for short term vacation rentals in the spring and summer months. Right now my company has about 40 furnished rentals in our inventory. This adds up to well into the six figures of extra revenue per year just from the extra income from our furnished suites!
Do you think furnishing rentals is a good way to make more money?
12 Comments
Martin,
Great article! I've been doing furnished rentals for years and it's worked out really well for me. I also started doing short terms vacation rentals recently, which has been even more profitable. At the beginning it was a lot of work and a bit of a learning curve. At first I had constant problems with cleaners coming on schedule, guests getting their keys from the lock box, small but important items go missing, etc. I quickly made a system which managed all these problems and it's been smooth sailing ever since.
Hey Brad,
thanks for your comment! I started doing vacation rentals in some of my smaller buildings also and it's working out really well.
Hey Brad,
Thanks for generously sharing your furnished housing info. Let me add that I've also had some success doing corporate housing, but I couldn't keep the momentum due to the location of my rental. However, one thing I studied was converting one of the apartments in my building into a short-stay / hotel room using Airbnb.com. I use the service quite a bit while traveling for work.
Regular people do as you suggest, provide a furnished place for out of town guest, however they try to compete with hotels.
Anyway, if you get stuck with high vacancies on a furnished unit, give one of the short stay websites listings a try.
Hi Martin,
Thanks for the great advice. May I ask how you manage to furnish an apartment for $4000? I'm in the process of furnishing a 2 bedroom apartment, but it seems main furniture with a “high end” look cost at least $2000 each room. So with living room, dining room, and 2 bedroom, it will cost $8000. Plus accessories and small items, it can get close to $10,000.
I am offering furnished apartments on rent but I was unaware from these points which you are saying in your post. I am really inspired from your post because I have learned a lot of useful information which are beneficial for my apartments. I will try your tips practically.
These are some great tips! I have thought about furnishing my apartment for quite some time but I'm afraid of picking the furniture myself. I'm not an interior designer and I fear I'd pick an awful color scheme. Is there anyone that decorates apartments and furnishes them as a profession? I think it would be extremely useful to have someone design it for you. Thanks for sharing your expertise with us! http://www.rentmanorhouseapartments.com
I have been debating on whether or not I should furnish the apartment I have been renting, and if it would be worth it. With 30% higher rent, I think it would definitely be worth going out of my way to furnish the place. The only problem I've been thinking about is how often I would have to replace the furniture, and how much it would cost. I don't really want that hassle, but if I make more money in the long run, it is worth it.
Great post - lots of good info! 1 question: do you always remove carpeting and install laminate in your rentals?
I have been contemplating furnished or unfurnished. You have made a great point about the extra wear and tear on a home from moving furniture in and out. Thank you for helping me with my decision.
James
Great Article Martin. I will share it with other owners I collaborate with. Do you mind if I refer to this article on my blog?
Interesting post Martin,
I have tried a bit of the furnished apartments also. It CAN bring you more rent per month but your monthly costs are quite a bit higher since you need to include all the utilities, Wifi, cleaning, and the costs of replacing the furniture as well as the initial costs. As with any rental situation you MUST be able to keep your vacancy to a minimum or the added income can quickly not be worth the extra expense.
Very Well Written!!
Renovating any home or Furnishing an apartment is not that difficult, but sometimes it can become pretty messy.
I am also offering furnished apartments on rent in New York and looking for tips to increase rental income. Before reading these tips, Rentals can be very tough to decorate and furnish.
It became more expensive to complete properly and I think that this post shows that it’s not always as expensive as people make it look. I will try to follow these tips.
Thanks for posting this.