Should You Furnish Your Rental Apartment Units?

By Alicia Geigel on November 8, 2023

As a landlord or property manager, you are likely always looking for new ways to transform your apartment units and make your places more attractive to potential tenants. A large factor that tenants often consider when apartment hunting is whether or not an apartment is furnished. With furnished apartments, you can often make your units more appealing, raise the rent, and deduct the costs off of your income tax when you file in April. There are several factors to consider before you plunge into the decision, so if you need some help figuring out what steps to take, keep reading!

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What is a Furnished Apartment?

There are two types of furnished apartments: fully furnished and semi-furnished. “A fully furnished rental means that in each respective room, the appropriate furniture will make the renter’s experience essentially turn-key,” according to Apartments.com. This essentially means that the necessary furniture like seating, bed frames and mattresses, tables, lamps, and more are included in the apartment. Semi-furnished, on the other hand, isn’t filled with as much furniture as a fully-furnished apartment, however, it will typically include some things like curtain rods, blinds, lighting, and appliances to make it inhabitable but essentially bare.  

Should You Furnish Your Rental Apartment Units?

If you are trying to determine whether to furnish your apartment or not, there are a few things to consider, such as upfront costs and long-term profit. Read over these points to help you understand what this decision entails.

First:

Determine Your Upfront Costs: Furnishing an apartment unfortunately does not come without spending some money. Before you do anything, determine the approximate upfront costs of adding furniture to your apartment rental unit, and how much furniture you want to add to the unit. Couches and chairs, bed frames and mattresses, dressers, coffee tables, lighting (including lamps), dining ware, and more are all things that should be considered as you think the decision over. Then, once you understand what you want, establish a loose budget of the costs, and imagine where you would source your furniture from. If you’re mostly sourcing from retail stores, there’s a chance that your costs will run higher. If you opt for shopping at thrift stores for certain pieces like lighting or tables (beds not recommended), then you can expect to save on your upfront costs. It all boils down to what you can afford!

Evaluate if the Decision Will Be Profitable: When furnishing an apartment, it is also important to evaluate whether or not the decision will be profitable. Subtract the upfront costs, and figure in the likelihood that items will need to be replaced, and how much you will increase the rent to get a better idea of your net profit. If you are only breaking even and not making a profit due to rent control limitations or replacement costs, then it may be better to opt for a semi-furnished or a non-furnished rental for now.

Then, If You Move Forward:

Ok, you think the idea of furnishing your apartment is worthwhile. But what next? Here are the next steps to take in the process.

Adjust the Rent Price Accordingly: The biggest advantage you can benefit from when furnishing a rental unit is raising the rent price to cover the cost of your furnishings and adjusting for the higher valuation of your property. Lucy Zhen of Zumper notes, “Security deposit and rent will often be higher for furnished apartments as there is additional upkeep and maintenance needed to keep the furnishings in quality condition.” Once you add your furniture and get your apartment unit ready to rent again, be sure to raise the rent accordingly and add plenty of attractive pictures in your listing to show prospective tenants why they should be paying more for your property.

Deduct Furniture Costs on Taxes: Another great benefit that you can take advantage of when furnishing your apartment unit is deducting the cost of the furniture from your taxes. According to the American Apartment Owners Association, maintenance, repairs, and cleaning can be deducted from your taxes, which would apply in the case that you need to replace any furnishings. Additionally, the cost of the furniture itself, as it is a general expense, can be deducted, which lowers the overall cost of what you pay in taxes (and potentially contributes to a hefty return).

Watch as Units Fill Faster: There is always some anxiety when you are waiting for your units to fill. Furnished apartments, however, are likely to fill faster than unfurnished apartments, as tenants typically love the idea of moving in without the hassle of having to either move their own furniture or buy new items. Once you have everything in order, sit back and watch your listings gain more traction, and your apartments fill faster than they ever did!

Making the decision to furnish your apartment unit does not come overnight, as there are a few different factors to weigh in the process. Take your time, evaluate the pros and cons, and do what is best for you and your business!

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