Leasing your investment property fully furnished can allow you to benefit from the growing number of tenants seeking ‘hassle free’ accommodation.International students and working professionals in particular are attracted to ‘fully furnished’ and ‘all utilities included’ rental offerings as they offer unprecedented flexibility and reduce the large costs associated with moving, such as purchasing furniture. This trend is set to continue as South East Queensland experiences a sharp increase in interstate migration by professionals attracted to the region by the lifestyle and job opportunities. The Department of Education has also reported International students enrolments are on the rise with a 12% total increase from 2017- 2018.
There are several benefits for investors who opt to lease their investment properties fully furnished. There include additional tax depreciation benefits & on average higher rental rates due to tenants being willing to pay more for the additional features of a furnished rental. All property investors are entitled to certain tax deductions on their rental properties and the items within them. As seen in the table below, investors of fully furnished properties are likely to benefit financially from the ability to claim depreciation on items not possible in an unfurnished property.
Source: BMT Tax Depreciation, 2018
While the benefits to investors are clear, there are also some disadvantages to this rental model. While it is true fully furnished rentals strongly appeal to certain tenants they can also be restrictive as it is unlikely to suit those who have their own furniture. If you do opt to rent your property furnished, you will also be responsible for the ongoing maintenance and replacement of furniture items.
Although problematic, the downside risks to investors who decide to rent their properties furnished can be mitigated with the right property management & advice. For example, if you are planning to furnish your property, ensure you seek advice to select furniture that will wear well over time and reducing the total ongoing maintenance costs ie. ensemble beds rarely require any maintenance compared to timber/steel framed beds. Adequate advice will also ensure your property is styled in a way that will appeal to the majority of tenants and maximise the marketability of your property.
As leasing your property fully furnished inherently involves more ‘moving parts’ compared to unfurnished rental offerings, it is important your property is managed by specialists who are familiar with the unique management requirements that comes with fully furnished rentals. Hive Property are experienced in the management of this rental product and are able to leverage this knowledge to achieve the best returns for our clients. For more information about the services offered by Hive please contact us at today on 1300 882 326.