If you're a landlord or property investor navigating the Clackamas rental market, renting a furnished house might be the investment card you've been considering.
But before you move, you must lay all your options on the table.
To help you make informed decisions, let's break down the pros and cons of renting furnished and unfurnished rentals and see which one aligns better with your goals.
What Exactly Is a Furnished Rental?
A furnished rental goes beyond the bare walls of an unfurnished property. This type of property, equipped with living room furniture, kitchen appliances, beds, and other essential items, allows tenants to move in with just their personal belongings.
Some properties, known as semi-furnished apartments, offer only select pieces, such as a couch or bed frame, but omit smaller items.
Fully furnished rentals, however, are turn-key solutions designed for flexibility. They cater to short-term rental markets, business travelers, and tenants who want to avoid the hassle of purchasing furniture and the logistical headache of moving furniture.
These homes are often marketed as fully furnished apartments. But is renting a furnished property the right call for you as a landlord? Will it help you maximize your profits?
The Pros of Renting Fully Furnished in Clackamas
1. Attract Business Travelers and Short-Term Tenants
A fully furnished property can be a magnet for short-term tenants like business travelers or students. The convenient solution of providing basic furniture makes these rentals attractive for potential tenants who are moving to the area and don't want to transport furniture across county or state lines.
Clackamas, with its proximity to Portland and universities, is a hotspot for this demographic.
2. Higher Rent and Flexible Lease Terms
Here's a perk to savor: landlords charge higher rent for furnished properties. Since you're offering tenants a fully equipped space, they'll expect and pay for that added convenience.
Additionally, renting fully furnished often allows for more short-term leases, giving you flexibility to pivot with market demand.
3. Tax Deductions and Cost Savings for Property Owners
Investing in furniture and appliances for your furnished rental might seem like an upfront cost, but here's the good news: you can deduct these expenses when filing taxes.
Talk about turning a liability into an asset. Furnished rentals often require lower capital outlay than renovating an unfurnished property.
4. Ease for Tenants Equals Reliable Income
Furnished rentals offer convenience to tenants, and an easy move often translates into happy, long-term tenants. Happy tenants are less likely to churn, ensuring you have a stable rental income.
While furnished rentals are generally associated with short-term leases, a positive experience can help attract long-term tenants, ensuring consistent rental income for you.
The Cons of Renting a Furnished House in Clackamas
1. Higher Security Deposit Requirements
Here's where things get tricky. While furnished rentals offer opportunities for a higher rent, you'll need to account for the risk of wear and tear. Furniture and appliances depreciate over time, and replacing them can be costly.
Landlords typically charge higher security deposits to mitigate this, which may deter some tenants.
2. Damage Risks With Furniture and Appliances
Living room furniture, kitchen appliances, and even basic necessities like curtains are all exposed to normal wear. But what happens if a tenant's negligence leads to damage?
Items like a coffee-stained couch or a cracked stove may push your maintenance budget.
3. Short-Term Tenants = Less Stability
Short-term leases often mean a higher tenant turnover. High turnover can lead to gaps in occupancy, resulting in additional expenses for cleaning, repairs, and marketing your property for incoming tenants.
If attracting business travelers or occasional tenants isn't your focus, this could prove a headache.
4. Restrictions for Tenants Who Want to Personalize
Restrictions on moving or replacing your property's furnishings can be a significant drawback for tenants looking to bring their belongings or furniture.
Some tenants who own furniture and want to keep it may skip your listing and opt for an unfurnished rental.
Tips for Renting a Furnished Property in Clackamas
1. Evaluate Your Target Market
Understanding Clackamas’s rental demographics is key. Is there a demand for furnished apartments from business travelers or short-term tenants?
By pinpointing your ideal half of the furnished versus unfurnished rentals market, you’ll better align your strategy to prospective tenants’ needs.
2. Invest in Quality but Practical Furnishings
Investing in durable yet affordable furniture is a smart move. Look for pieces that meet necessities without breaking the bank.
Consider furniture with neutral designs to appeal to a broader audience and anticipate normal wear with quality materials.
3. Inspect and Maintain Regularly
Regularly inspect your furnished property’s condition to ensure furniture quality and appliances are in working order. This practice not only protects your investment but also fosters positive tenant reviews.
4. Work With Property Management Experts
A skilled property manager can streamline tasks such as screening potential tenants, managing maintenance, and even line renting strategies to comply with local regulations.
They also ensure that short-term rental agreements meet state laws.
This partnership reduces your workload and protects your rental home from unnecessary risks.
5. Budget Wisely for Initial Investment and Ongoing Costs
Factor in upfront costs for furnishing and reserves for replacements or repairs. You may charge higher rent, but unexpected maintenance can quickly affect your profits if you aren’t prepared.
A Quick Word on Furnished Versus Unfurnished Rentals
Choosing between a furnished and unfurnished property depends on your goals as a landlord.
Unfurnished rental properties provide less maintenance but appeal to long-term rental tenants who bring personal belongings and prefer a blank slate to furnish themselves.
Furnished rentals, meanwhile, attract short-term tenants, offer the potential for higher rent, and keep prospective tenants flexible.
We at Kerr Properties offer expert property management services, including tenant screening and tailored guidance, to help you choose the best strategy for your rental portfolios.
FAQs
1. What type of insurance do I need for a furnished rental property?
Insurance for a furnished rental should cover the property as well as the furnishings inside. Look for landlord insurance policies that cover furniture and appliances against damage caused by tenants or natural disasters.
2. How can I avoid high tenant turnover with a furnished rental?
One way is to target long-term tenants by offering incentives like slightly lower rent for extended leases or customizing furniture options to their needs. Keeping furniture in excellent condition and promptly responding to maintenance issues can also build tenant loyalty.
3. Are furnished rentals ideal for Airbnb use in Clackamas?
Furnished rentals are excellent for Airbnb, particularly for short-term stays. However, before moving forward, make sure you comply with local and state short-term rental regulations and laws.
Renting a furnished house in Clackamas offers plenty of opportunities but comes with its challenges. By carefully weighing the pros and cons and taking a strategic approach, you can enhance your rental property’s appeal while maximizing your investment.
Other Resources:
How to Show a Rental Property Open House Success for Landlords in Gresham
The Benefits of Hiring a Property Manager That's Local to Clackamas, Oregon
