Can’t decide if renting out a fully furnished condo unit, instead of a bare or semi-furnished unit, is best for you?
A bare or unfurnished unit has the necessities for a tenantable space including wood or tiled flooring, painted walls and ceiling, kitchen sink, overhead cabinets and countertop, bathroom fixtures, internal doors, and electrical wirings and outlets. This is the condition in which DMCI Homes turned over your condo unit to you.
A semi-furnished condo unit has all the basic fixtures plus essential furniture such as a sofa, dining table and chairs, and a bed frame and mattress. Typically, this unit also includes a refrigerator, air conditioner, and a TV.
On the other end of the spectrum, a fully furnished unit has everything a tenant would need in a home - basic fixtures and furniture, plus appliances, and personal home items. This includes cooking utensils and cutlery, beddings, blankets and pillows, curtains, rugs, etc.
A fully furnished unit has all the comforts of a home. Your tenants may move in even with only their clothes and other personal belongings. This is why a fully furnished unit is a preferred accommodation for a short-term lease or those on a vacation. It’s like bringing your home with you during your short stay in a different city.
But is renting out a fully furnished condo property best for you in terms of the target market, income, and maintenance? Look at these points that can help you decide.
Pros and cons of renting out a fully furnished unit
A fully furnished condo has many benefits for both the landlord and tenant/s. Look at these points that can help you decide to deck your unit before renting it out.
1-bedroom condo unit
How can you maximize the earning potential of your 1-bedroom condo property? Consider furnishing it for your tenants.
1. You can charge higher
You can charge a higher rent with a fully furnished condo for rent than a bare unit. An article by Landlordology says that landlords who rent out furnished rentals can charge 15% to 20%more than a bare or an unfurnished unit for long-term leasing.
A 1-bedroom fully furnished apartment is ideal for professionals on a short-term work assignment in a different city. Since they will only stay for a few months, it’s more practical to rent a fully furnished accommodation than to book a hotel room. This also applies to vacationers on a budget - a condo for rent saves more than a hotel stay.
Even if the rent in a fully furnished unit costs more than in a bare or semi-furnished unit, it’s still a money-saving option for many tenants.
2. Easier move in for your tenants
Since your condo unit already has furniture, tenants can simply bring their personal belongings when they move in. No need to bring in large appliances and boxes filled with their things, which they will eventually have to remove when they leave as the rent contract expires.
Due to the pandemic, many companies have started adopting a hybrid working arrangement that blends in-office and remote work. People who report to the office for only several days in a week or in a month prefer a fully-furnished home. This allows them to travel to their home province or anywhere else while maintaining a home near their office whenever they need to be onsite.
A 1-bedroom fully furnished condo home is ideal for single or a couple of working employees on a hybrid working set up. Your tenants can simply bring their clothes and laptop when moving in. No hassles.
3. Better for staycations and short-term rent
A fully furnished condo for short-term rent is perfect for staycations and quick getaways. Tenants can use the appliances and the condo’s amenities to relax. Usually, condos that are available for short-term lease similar to AirBnB are more affordable than hotels and can be rented out more frequently, thus making it a lucrative investment for landlords.
A 1-bedroom condo unit is an accommodation of choice for business travelers, reviewers, and visiting OFWs since it is more affordable than a hotel room. Tenants needing a place to stay for several days or weeks pay less for the comforts of a home. They can cook their food, do their laundry and even host a couple of friends without extra charge.
2- or 3-bedroom condo unit
If you own a 2- or 3-bedroom condo property in DMCI, you may opt to rent it out in a fully furnished condition. Here are compelling reasons you should know:
1. You can charge higher rent
As mentioned above, a fully furnished home charges a higher rent because of the included furniture, appliances and other home essentials. The higher rent accounts for the lease of the space and your investment on the add-ons. With higher rent, you are likely to get your ROI early.
You may rent out your fully furnished 2- or 3-bedroom condo unit to a small group of young professionals or a starting family. These potential tenants may opt for a long-term lease, ensuring a steady stream of income for you. You may also lease your unit to transient tenants staying for several days to a couple of weeks.
2. Decorate to your liking
Is your unit located in Makati, Mandaluyong, or Baguio? Since the unit is still technically yours, you can decorate it to your liking or according to where it is located. A condo unit within the metro would look nice with a minimalist look. While a cozy earthly theme would fit well for a unit in Baguio. You can even use the theme to market your unit to get tenants.
If you’re renting out your 2- or 3-bedroom unit to vacationers, consider hiring an interior designer to decorate your home. This will make the space more inviting to people looking for staycation spots.
3. No need to remove previous fixtures
When a tenant moves out, chances are there could be furniture, appliances or personal belongings that they might want to leave for whatever reason it may be. This means you’ll have to deal with whatever is left behind. You could either sell it for extra money or store it in a storage locker.
In a fully furnished 2- or 3-bedroom unit, you don’t have to worry about that. You own the fixtures, furniture and appliances. No need to call the movers to bring items left behind to a storage unit or expend extra effort to sell it.
To properly weigh down your options, know the other side of renting out a fully furnished condo property. Here are the disadvantages of a fully furnished rental.
1-bedroom condo unit
1. Things can be stolen
You’re leaving a fully furnished apartment to strangers. Let that sink in. People can get tempted to steal — especially if they see expensive items such as the TV, rare paintings, and even cutlery. Good thing, DMCI Homes condos have strict security personnel and systems in place that will try to prevent such things from happening. In addition, you can refer to a CCTV system to monitor “public” areas in your condo or avoid placing fragile items such as vases and glasses in areas that children can reach. Alternatively, you can use alarm systems connected to expensive furniture to alert security personnel.
2. More things to think about
Unlike bare units, renting out a fully-furnished unit may require more tasks like checks and inspections before, during, and after the rental period. These tasks include inspection of the unit, cleaning, and repairs (if needed). You may also need to replace furniture and appliances no longer useful due to wear and tear.
Good thing you can always call for professional cleaners, carpenters, and other people who can help you keep your condo in good shape.
3. The moving-out process could take longer
The moving out process could take longer because of the many items that you need to check in a fully furnished condo unit. And landlords need to make sure everything is okay before signing off the papers to let the tenant move out.
Before you rent your apartment out, make sure to take pictures of every area before the tenant moves in. Make a condo turnover checklist of all the things that you need to inspect. If things get chippy, you can show the pictures as proof of its previous state.
If your tenants are vacationers or those mobile employees, they may need to get things done right away. A long moving-out process might turn them off.
2- or 3-bedroom condo unit
1. More maintenance is needed
You never know how your tenants will use your appliances, furniture, and fixtures. People may put their dirty feet on the couch; children can jump on the bed, etc. Everything in your condo will experience wear and tear, which means more maintenance may be needed than usual.
You can set rental house rules for tenants in the contract or a clause that will put the responsibility of taking care of things on them. And in case something breaks due to their negligence, they will have to pay for it or forfeit the security deposit.
2. Depreciation of furniture/fixtures
As with many material things, your furniture and fixtures can depreciate. But the difference is that the items in your rental tend to wear down faster due to the usage of the many tenants over time. If you’re renting out a 2- or 3-bedroom condo unit for a long-term lease, the chances of furniture and appliances getting damaged or worn out are pretty high.
Replacing fixtures and other add-ons in the unit is costly. Hold garage sales or post your old but still usable furniture online. Use the funds you get from the items to purchase new ones.
People have specific tastes
Be it rented or not, some people would want to have the freedom to decorate their own space. And fully-furnished units don’t give them that. Moreover, furnished spaces can be more expensive than bare units, which is more enticing to people who need to rent.
The interior design you chose for your 2- or 3-bedroom condo unit might not match the taste of potential renters. If they are renting under a long-term lease, they will likely choose a home that they could decorate based on their own style.
There are plenty of pros and cons of renting a fully-furnished condo unit. It’s a matter of deciding if the advantages outweigh the disadvantages. In deciding, keep in mind these points:
- While you can charge a higher rent for a fully furnished unit, you should also consider the financial capacity of your target market. If you charge too high to recoup your investment, you might have a hard time getting tenants.
- You run the risk of some home items getting stolen, whether you’re renting to vacationers or long-term tenants. Make sure that you account for every fixture, furniture, appliance, and personal item during the move-in and move-out process.
- Consider enrolling your unit under a leasing service. They’ll do the hard work for you. All you need to do is to wait for your check.
Contact DMCI Homes Leasing Services to know your options in renting out your condo unit today!