It used to be that the only way to rent a house was empty and unfurnished. Nowadays, more and more houses are available for rent fully furnished. However, renting a furnished house comes with it’s own set of considerations. Of course, the ways you attract and screen a tenant are the same, but that’s where the similarity ends. Some things to keep in mind when you’re considering getting into furnished rentals are as follows:
1. Although furnished rental properties command a higher rental rate, they cost you more too. Typically fully furnished rentals will go for 25% – 50% higher than market rent. That is a big advantage in a market like Vancouver where it’s very difficult to make a place cashflow with regular rent rates. BUT – furnished rentals have a lot more costs. Besides just the cost of furnishing the property (which you probably can expect to spend around $10,000 doing), you are responsible for paying all of the regular utilities, as well as telephone, cable, internet, and if applicable, security. Many rentals also come with regular cleaning services.
2. What does “fully furnished” mean? Well, it means a person only has to bring their clothes and personal possessions to the house, since you are providing everything else like:
– dishes, utensils and cookware,
– appliances like blenders, coffee makers, food processors,
– sheets and towels,
– brooms, dust pans, vacuums and other cleaning supplies,
– amenities like television (with cable service) and wireless internet are pretty standard. Basically if a hotel suite would have it, your rental unit should too!
3. Remember that different people have different needs. Oftentimes, you’ll need to provide things you hadn’t anticipated, such as a crib, highchair, or a special computer desk. Desks are especially important since more and more people are working from home these days. Keep in mind that you could rent the extra items from furniture rental companies rather than buying them.
4. Once the new tenants move in, remember that it’s not your home anymore. If you were living in the property before you decided to rent it out, remove anything personal. The new occupants don’t really want to see the painting of your family on the wall, nor will you want anything to happen to your prized possessions.
5. Prepare a detailed inventory list of everything in the rental unit and the condition that it was in before the tenant moves in. During the initial walk through with the tenant, go over this list together and have the tenant sign off to verify that they acknowledge that everything on that list belongs to the rental unit, and if anything is damaged or stolen it will need to be replaced using their security deposit. When the tenant moves out, you will want to use this inventory list again to see whether everything that was originally in the unit is still there and is in the same condition (more or less).
6. Buy extra boxes of breakable items. i.e. an extra box of plates, an extra box of mugs and glasses. If it can break easily, be prepared to replace it easily!! It’s a good idea to furnish your unit with items from stores that are inexpensive and will always have a large inventory of the same pattern i.e. Ikea, so that you can ensure that you will always have matching sets.
With the Vancouver Winter Olympics coming up, many people in the Greater Vancouver Area are considering turning their temporarily vacant homes or their unfurnished rental units into furnished rentals. If you are thinking of doing this, please keep in mind my lessons learned. Furnished rentals are a great way to make a property cash flow, but will mean some extra work (and extra expenses) before the unit is ready for rental.
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