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Should You Rent Out a Furnished Property?
Offering a furnished rental is definitely not the same as offering a regular rental property. The general principals of attracting and screening good tenants are the same, but there are some important things you should know if you're interested in turning your home into a furnished rental or buying a property to become a furnished rental:
1. On average, a furnished rental can be rented for 25 to 50% more than an unfurnished one. In a market such as Vancouver, where making positive income from rental properties can be a challenge, this can be a huge advantage. However, the cost of furnishing a rental (usually about $10,000) is just the start of the additional costs involved with a furnished rental. All of the monthly utilities such as water, hydro, gas, telephone, cable, internet and so on are your responsibility, not your tenant's. Security deposits also tend to be higher since there are more things in the unit that could end up being damaged. These days, regular cleaning services also come with many furnished rentals, which would also be paid for by the landlord.
2. A fully furnished property means someone only needs to bring themselves and a few personal items. You are providing everything else, such as:
- dishes, cutlery and cookware,
- small appliances i.e. blenders, toasters, coffee makers and food processors,
- towels and bed linens,
- cleaning supplies such as vacuums, brooms, and even shovels (if required),
- 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. Expect a variety of needs. This could include a crib or high chair or additional desks for people who work at home. There are places where you can rent furniture, so you would have to find one to rent the extra pieces your tenant would require.
4. Remember that although you own the property, it is not your home. It's not the place for your family heirlooms or pictures of your family. If you have any of these in the house, remove them before the new tenants arrive.
5. Create a detailed checklist of what is in the property in preparation for the tenant walk through. Go from room to room, ensuring you note ALL details. In the kitchen, record all appliances and count the number of glasses, plates, mugs etc. that you are providing for the new tenants. Record the number of towels, pieces of furniture and paintings and their condition. If something is broken or stolen you will need a record of what was there in order to use their deposit to buy a replacement. You'll want your tenant to sign this when they move in, and then you'll want to do a detailed inventory of everything again when they move out.
6. Always have replacements on hand. It happens to everyone- glasses, plates and cups get broken, or utensils get misplaced very easily. If it's easily broken or lost, then it needs to be easily replaced. Sets that don't match are ugly, so it's always smart to start out with sets from stores where you can buy a lot of the same pattern relatively cheaply and don't have to worry about the pattern being discontinued. Did I mention this is not the place for your mother's fine china?
I wanted to share these lessons learned with you in case you are thinking of renting a furnished property as a way to bring in more cash from your rental. It is definitely a great way to make some extra cash off your home if you'll be away for awhile, or to capitalize on the upcoming Vancouver Winter Olympics. Just remember that it's not without some challenges.
About the Author Learn How to Retire a rich real estate investor with Julie's free Real Estate Investing Starter Tips Guide. Learn how to create financial freedom, passive income and massive wealth with tips like: How to turn your home into a furnished rental unit, finding and keeping great tenants, and easy ways to make rental unit recordkeeping simple and more profitable.
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