Welcome back to our four-part series on maximizing profits with monthly furnished rentals. Yesterday, we talked about the rise of demand for rentals and how furnished properties help reduce vacancy. We also previewed what this series will cover over the next few days and why this series can help landlords maximize profits. Click here to read Part 1.
Preventing vacancy is key for any landlord, and it’s quick and easy to lease unfurnished properties. But did you know that landlords with furnished properties make 32% more money than those with unfurnished properties? Investing in furnished properties can often result in higher profits, and today we’ll examine why this is the case. We’re going look into the tenants who rely on furnished apartment properties and the costs of furnishing a property. We’ll then explore how rent for furnished properties is calculated, and how furnished properties can help you earn more profits than their unfurnished counterparts.
Who rents furnished properties, anyway?
Pricing is a critical element for anyone looking to maximize profits with furnished rentals. To understand how much you should charge your tenants, it is important to first know who will be staying in your properties. Tenants who utilize monthly rental services such as HomeSuite are often young professionals, business travelers, interns, and traveling nurses among others.
Because these tenants often stay for an extended period of time, they find hotels to be prohibitively expensive and lacking in comfort. Rather than settling for a small hotel room, they often turn to furnished rentals as a larger and more comfortable option for their extended stays. Landlords thus find monthly furnished rentals to be attractive because their tenants are willing to pay a premium for the convenience of having a home away from home.
An excellent example of tenants who rely on monthly furnished rentals is Daniel and Jihee of Future Minimalists. As traveling graphic designers, they look for properties that are convenient and cost-effective. They look to bring as few things with them as possible whenever they move since their jobs require frequent travel. It is thus important to remember that furnished properties should provide the amenities your tenants need to get started. This includes bed linens, silverware, towels, internet, and a TV. Don’t be surprised if a tenant who books a furnished property brings nothing more than his or her laptop, a bag of clothes, and a toothbrush!
How much does it cost to furnish properties?
On paper, furnishing a property seems to have a high upfront cost. Tenants expect to have everything waiting for them upon arrival. As a result, landlords will need to provide the housewares, furniture and other amenities tenants need to settle in.
In a one-bedroom apartment, you can expect the average furnishing cost to be $2,200. For each additional bathroom, expect to pay $700 extra to ensure your property has quality linens and furniture.
Once you divide the annual furnishing cost into monthly installments, however, the cost of furnishing a 1B rental becomes reasonable. The monthly cost of a one bedroom apartment, for example, is a manageable $183. More importantly, however, monthly costs help you establish the premium you can charge tenants for leasing your furnished property.
How much can I earn from furnished properties?
One-bedroom properties on the HomeSuite platform have an average premium of 32%. Since your one-bedroom property is now fully furnished, you can add the monthly furnishing cost to the monthly rent of an unfurnished property. To create the new furnished rent, simply multiply the combined costs by 1.32.
In the example above, a furnished one-bedroom property will rent for $3,919 per month. In comparison, a similar one-bedroom property that is unfurnished goes for $2,775 a month. After monthly furnishing costs, landlords take home an additional $961 of profit per month. In other words, furnishing your one-bedroom apartment can earn you an additional $11,532 per year!
And the more bedrooms your properties have, the more money you will make. The two-bedroom furnished property in the example with a 24% premium would rent for roughly $5,044, meaning you can take home an additional $987 per month. The extra income you’ll receive not only makes offering tenants furnished homes affordable, it’ll also allow you to maximize your profits as a landlord.
Great! So should I lease furnished properties monthly or nightly?
Having covered the financial benefits of furnished properties, we will compare the different models for leasing them on Wednesday. We will look into nightly services like Airbnb, and we will compare the revenues generated from monthly and nightly rentals. We will also look into how our company helps landlords lease monthly furnished rentals.
Looking to offer furnished properties for your future tenants? Visit our landlord website to see how you can get started on our platform. If you're looking for additional ways to boost your income, check out our tips to writing the best property descriptions. You can also find out what tenants want here, and learn more about our landlord rent guarantee here.
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Homesuite is the leading provider of monthly furnished rentals for business travel. We are differentiated by combining the comfort of home with the professionality of a hotel. Our customers include Google, Facebook, Microsoft and thousands of smaller businesses. In addition to our business offering, we also serve individuals traveling for work and personal reasons. Founded in 2014, we operate across the United States with specific focus in large urban markets.