If there is one thing millennial renters want, it is convenience. Furnished rentals fulfill this need by providing tenants with everything they need for a simple lifestyle.
These rental properties come with coffee tables, lamps, ironing board, iron, pillow, sheets, blankets, refrigerator, coffee maker, sofa, TV, among other things. If you are planning to invest in furnished short term rentals, this blog post will go over what you need to know.
An Overview of Furnished Rentals
As we mentioned above, furnished rentals are the preferred option for people who prioritize convenience. They are especially suitable for vacationers, relocating employees, and first-time renters. People who relocate temporarily may decide to forego buying and moving furniture for a furnished rental or daily apartment rental. Furnished rentals are warm and inviting whereas empty and unfurnished rentals can feel quite impersonal. It’s worth noting that the “necessities”’ included in a furnished rental can range from the essential to the most luxurious.
There has been a steady increase in demand in the furnished rental market in recent years. This has been due to a countercultural shift in the ideal of the home. Today, an increasing number of people prefer to rent a house than to own one. Additionally, rising interest rates are forcing millennial buyers to postpone taking out mortgages.
Rates for furnished rentals are usually determined by the amount of furnishings provided. For instance, more furniture will, more often than not, allow you to charge higher rates.
Short term furnished rentals are even more suited for targeted markets. If you own a summer apartment or rental property near a university or a company requiring employees to relocate a lot, you can turn a sizable profit as people around you make “furnished rentals near me” and “weekly rental” searches.
Why should You Invest in Furnished Rentals
- More profit: Furnished rentals are priced at higher rates than vacant spaces, giving you a higher gross yield. Generally, you can charge 5-30% higher rent than unfurnished rentals. You can raise the rent depending on the amount of furniture in the property.
- Market advantage: Furnished rentals give you a competitive advantage in your market strategy. Many tenants (students, temporary workers) are looking for already furnished apartments. By targeting this market segment, you have the opportunity to carve out a profitable niche in a competitive market.
- Flexibility: Another reason to consider short-term rental is flexibility. You get to vary your rates based on the season. In most locales, where summer rates are usually higher-priced, you can double or triple your rental income. Additionally, you get to choose when and for how long your property is available for rent.
Related: Should Your Next Real Estate Investment Be in Furnished Apartments for Rent
Furnished short term rentals vs Monthly Furnished rentals
There are certain differences between short-term furnished rentals and monthly furnished rentals.
- Time: Short-term furnished rentals are generally booked for a short period of time, ranging from a few days to a few months. Monthly furnished rentals are rented on a month-to-month basis with a short term lease agreement.
- Price: Short-term rentals are generally more pricey than monthly apartment rentals. And these prices can further skyrocket in the right season. Events and conventions in the neighborhood can provide enough incentive for added pricing.
- Maintenance: Short-term rentals are also harder to maintain, especially in high-end locations e.g. San Francisco or Manhattan rentals. A lot of resources, time and money, are consumed in prepping up the rental, purchasing furniture, and cleaning up after guests. Monthly rentals usually require less time for upkeep and maintenance.
- Laws : Regulations on short-term furnished rentals are quite restrictive in some areas, especially for less than 30-days stays. Make sure that you’re aware of the laws in your area before diving in.
- Promotion: Promoting short-term furnished rentals is considerably easier since there is already a well-established market and available avenues for exposure. The only possible problem you might encounter is the competitiveness of the market. It takes considerably more effort to promote a monthly furnished rental since there is a much smaller market.
- Disputes : Since short-term rentals are for a shorter time, you get to deal with much fewer rent disputes.
How to Make Profit with Furnished Rentals
- Know the type of tenants you want to attract. Understanding your prospective tenants’ tastes and dispositions will enable you to better furnish the room, apartment, or condo to their liking.
- Know how much you are willing to stake. A short term rental can be expensive to decorate and manage. You might even need to retain the services of a professional property management company to manage the property. Also, you need to set a certain amount to regularly renovate and maintain your rental. The actual amount you need for furniture depends on your tenant profile.
- Location is critical. As with long-term rentals, the location of your property plays an important role in determining the fees you can charge. You need to make sure the location fits your tenant profile i.e. who wants to rent a place for the short term in that location?
- A flexible rate is key. The beauty of short-term furnished rentals is in the flexibility. You can decide to vary your rates based on market activity.
- Keep it in good shape. An expensive piece of furniture is of no use if it is broken. Replace what must be replaced and repair what needs repairing.
Related: How Much Profit Should You Make on a Rental Property
Where Should You List Your Property?
Prospective renters are always looking for cheap monthly rentals and sublet apartments. The platforms below will help you put your property in front of them.
Airbnb is popular as a hotel alternative, but it also provides a list of properties that can be rented on a short-term basis. These short term rentals are fully furnished with the necessary amenities for a comfortable stay. Move-in and move-out dates are chosen by the tenant (ranging from a few days to over a month).
Short Term Housing
Short Term Housing is dedicated to providing, just what it says, short term housing. The website is intuitive and easy to use. Apart from the wide range of listings, the homepage allows tenants to send in a request to get a personalized response that provides them with rentals that align with their needs and budget.
VRBO (Vacation Rental by Owner)
Specializing in full-home rentals, VRBO provides great options for vacation space and short-term renting. This is a great option for people who are looking for a fully furnished house.
Apartment Guide is another great site where you can list short stay apartments. Platform users can easily filter their search by the period of lease as well as location.
Related: Airbnb vs Vrbo: Where Should You List Your Rental Property?
The Bottom Line
If you want a lucrative way to invest in real estate, and you don’t mind putting in some sweat equity, short term apartment rentals could be a great option for you. However, you need to be able to analyze location and comps. Mashvisor’s property marketplace helps you find the right property in the best location. Click here to try it out.