Many investors who purchase real estate properties through us in the Czech Republic ask us what is preferable. Should the apartment be rented out fully furnished, partially furnished or unfurnished? In this article we will discuss your options and the advantages and disadvantages of east. In conclusion we will tell you what we recommend to our clients.
We will emphasize that all the tips in this article are intended solely for long-term rental properties, as short and medium term rental apartments must be fully furnished.
The advantages of a fully furnished apartment include:
- It is possible to bargain for a slightly higher rent when the apartment is fully or partially furnished.
- Some apartment hunters are only interested in a furnished apartment in order to avoid the hassle of purchasing furniture.
- Accordingly, it is generally faster to rent out furnished apartments, resulting in shorter vacancy periods.
- Entry into these apartments is usually immediate.
The disadvantages of fully furnished apartments:
- The furnishings you supply will suffer wear and tear and hence their value will diminish.
- Families and tenants with furnishings will rule this apartment out, for they will have nowhere to store their own furnishings.
- It is relatively easy to leave these apartments – you just need to pack your bags and skip out.
- The furnishings represent an additional cost.
The advantages of an unfurnished apartment
- The lease rate range for such apartments are longer term due to the difficulty in leaving, transportation costs and the like
- Saving on purchasing furnishings for the apartment
- Less wear and tear on the furnishings and the apartment
- A somewhat better negotiation position for the landlord, given the greater costs the tenant would face from leaving
The downsides of an unfurnished apartment
- A relatively limited pool of potential tenants, such as students, or relocations for individuals seeking a home ready to live in, or else people who just don’t want to purchase furnishings.
- A slightly lower rent from a furnished apartment given the additional costs shifted to the lessee.
- It may take longer to locate a suitable tenant.
These are the primary upsides and downsides you to a furnished versus unfurnished apartment that you as an apartment owner will have to consider when making a decision on how to act in accordance to the strategy best suited for you. When our investors ask us what we recommend they do, and how we prefer to take on the apartment for management, we as an experienced property management company, favor the unfurnished apartment approach, and this is why.
Why do we recommend renting the apartment out unfurnished?
Our opinion, based on the considerable experience we have accumulated over the past decade, is that an apartment with a high tenant turnover inevitably results in longer vacancy periods. When you add arbitrage costs to rent out the property, and the renovation and painting costs in between renting out the apartment to a new tenant you end up with a very hefty expenses total. That is why we undertake the utmost efforts to arrange for the longest possible lease periods, and hence we recommend against furnishing the apartment, to make move outs less convenient for prospective tenants.
There are however several provisions to this recommendation:
- Should the tenant ask or require a single piece of furnishing and this is a high quality tenant, we recommend purchasing it. A washing machine or wall closet suffers from relatively low wear and tear, and hence this investment will likely show a good return.
- Apartments in student or tourism areas. The added value and lease rate increase in these locations for fully furnished apartments is quite high.
- When the furnishings cost you nothing (for example, if you purchase the apartment with its furnishings as a package deal) we recommend leaving the furnishings for the tenant, while emphasizing that we are not responsible for purchasing alternate furnishings in place of the old ones should they wear out or be damaged.
In the event that you are wondering how to handle your property, or if you are experiencing problems with renting and operating the property, you are cordially invited to contact us and receive experience based consultation of hundreds of properties in the Czech Republic and Prague.
