Should You Invest in Furnished Apartments in 2022?

Property investments are not restricted to the standard buy-to-let design, and some may ask if furnished apartments are suitable for investors.

Table of Contents 

1. What Are Furnished Apartments?
2. Are Furnished Apartments in High Demand?
3. The Advantages of Investing in Furnished Apartments
4. How to Start Your Furnished Apartment Rental Business
5. Conclusion

The furnished apartments for rent strategy is relatively new and may appeal to certain investors due to its high rental returns. If you’ve recently purchased or are in the middle of buying a house in a good location for furnished renting, it may be a plan worth considering.

In this article, you can find everything you need to know about investing in furnished accommodations.

What Are Furnished Apartments?

A furnished apartment includes all of the furnishings you’ll need to live in the area, such as a sofa, beds, and essential gadgets. The three categories of furnished apartments are:

• Completely furnished (or turnkey)
• Semi-furnished
• Furnished

When looking for furnished apartments, remember that such phrases are vaguely defined. There are no specific rules about what should or should not be provided.

A sofa, coffee and side tables, a dining room table and chairs, mattresses, and essential kitchen equipment are standard in most furnished flats. Some (but not all) may contain additional items, such as floor or table lights, a toaster, a microwave, and basic kitchenware.

Fully furnished apartments, also referred to as turnkey, go above and beyond the necessities by including items such as towels, bedding, dishes, cookware, and utensils. There will most likely be paintings and other decorations on the walls. A washer and dryer may be provided. Turnkey means that you can turn the key, go in, and have all you need to live comfortably.

Semi-furnished apartment rentals are less expensive than completely furnished or equipped apartments. They include only the essential furniture and amenities, such as a sofa, beds, tables, a fridge, and a stove.

Suppose you’re considering investing in furnished apartments. In such a case, you might want to know what’s normally included, why you should select a furnished apartment over an unfurnished one, and how to discover one that matches your style. Let’s take a closer look at furnished flats.

Are Furnished Apartments in High Demand?

The market for furnished short-term apartments is expanding. Furnished accommodations are primarily aimed at business executives or individuals in transition. However, this is changing.

The rental generation includes Gen Z, Millennials, and Baby Boomers opting for a new renting lifestyle. These three groups are letting go of, or not collecting, possessions and obligations to enjoy a “hands-free” lifestyle of freedom and travel.

Gen Zers are more optimistic than the somewhat older Millennial generation regarding housing.

According to Arbor, in small multifamily rentals, Gen Z accounts for 8% of all adolescent renters, 6% in big multifamily rentals, and 9% in single-family rentals. As the multifamily business undergoes an intergenerational change, Gen Z will be the primary market force in the future. Here are five major trends in how Gen Zers view the apt for rent concept:

1. Most willing to pay for design changes
2. Have choices for smart-home amenities based on convenience
3. Paying more for smart-lock lockers
4. Desire to have an equipped gym in the flat
5. Most excited about holiday activities and parties

Overall, Gen Z values individualized and one-of-a-kind experiences. Their apartment living choices reflect their preference for a convenient, relaxing, socially involved, and ecologically conscious lifestyle.

Related: 20 Most Popular Cities for Gen Z Renters 

What Is the Appeal of a Furnished Apartment?

Furnished flats are critical to the mobility desired by many generations. Multifamily neighborhoods are under pressure to add furnished units to their portfolios or risk becoming outdated. Here are four reasons why renters choose furnished flats.

1. Flexibility

One of the reasons furnished apartments are so appealing is that it allows visitors to operate on their own schedules. They may cook whenever they want, work, or even hold a conference or entertain visitors in a private place at a time that suits everyone.

Furnished studio apartments will include separate bedrooms and bathrooms, allowing coworkers or groups traveling together to have some privacy and come and go as they choose. In addition to corporate visitors, families frequently find that serviced apartments meet their demands.

Whether it’s with small children who may require naps or meals made outside of regular mealtimes or the flexibility to have the kids in their own bedroom as they would at home, furnished flats are an excellent choice.

2. Space

Furnished flats are becoming a more credible and budget-friendly alternative to hotels. They’re ideal for extended stay and when it’s more acceptable to enjoy all of the amenities of a home and live more like locals.

Furnished apartments provide a home away from home that a hotel cannot offer, but most significantly, it will be much larger. According to a case study, a furnished apartment will give 30% more room than a hotel. Guests like the opportunity to work, rest, cook, and sleep in their own room throughout their stay.

3. Value

Guests frequently realize the value in fully furnished apartments for rent. Rates are typically 20% cheaper than a comparable hotel stay, according to the latest national rent data. Furthermore, there are usually no hidden expenses, like a minibar or room service, added to the price at the end of a visit.

Another significant advantage is that the VAT rate drops to 4% after 28 nights, allowing guests who stay for an extended period to make the most of the available discounts.

4. Security and Privacy

Generally, owning a self-contained apartment allows visitors to experience privacy that they would not be able to enjoy in a hotel. Guests are frequently drawn to the chance to make themselves feel at home during the stay, and with limited housekeeping service, they are barely interrupted.

In addition to privacy, such housing frequently provides a high level of security to visitors since they are private, self-contained properties. Secure access, CCTV, a porter, and 24-hour security are all options in modern structures, such as apartment buildings for sale.

Related: 7 Tips to Keep Your Rental Property Safe and Increase Security

The Advantages of Investing in Furnished Apartments

Studio apartments furnished can provide a variety of advantages that distinguish them from more traditional rental units.

1. Target Market Is Predictable

Because furnished units are more expensive, landlords naturally attract renters who can afford them. Frequently, they include young professionals, young families, or students who are still acquiring their belongings.

Suppose the rental property is in a college town or a more metropolitan region. In such a case, there are likely to be many possible renters seeking such a rental, and a landlord may gain from targeting such a market.

2. They Offer Potential for High Profit

Furnished rentals are more expensive than vacant spaces, resulting in a greater gross yield. In general, you may charge 5%-30% more than unfurnished leases. The rent might be increased based on the amount of furnishings in the home.

In addition, you can adjust your charges according to the season. You may double or triple your rental revenue in most areas where summer rates are higher. You may also specify when and how long your home is available for rent.

3. Increased Security Deposit

For fully furnished flats, landlords might require a higher deposit. In certain states, landlords can only demand a set maximum deposit for unfurnished apartments but a greater maximum deposit for furnished flats. It is to safeguard the landlord from shouldering the cost of replacing or repairing damaged furniture.

How to Start Your Furnished Apartment Rental Business

We’re here to help you through the beginning stages of what may very well be your retirement plan to guarantee that your investment property strategy pays off. Here is a step-by-step guide on investing in furnished condos:

1. Determine Your Business Strategy

Before interviewing renters and negotiating leases, decide on the rental property you want to invest in. Are you looking for a long-term renting agreement? Will you focus on shorter stays, such as extended stays and weekly stays, or will you entertain longer ones?

Each type comes with its own advantages and disadvantages, and it’s crucial to weigh them all before determining which one is best for you.

Understanding what business strategy you want to pursue allows you to design everything else around it. For example, it will decide your target audience and the repairs you must prioritize. The rental property business is long-term, and adopting a strategy makes it simpler to recover your original investment.

2. Know Your Market

Millennials are a large portion of renters due to their shift from college to the job. From fresh graduates seeking internships and cheap apartments for rent to workers relocating closer to work, it’s worth your effort to appeal to their requirements to keep your space dynamic and current.

Your location may also include professionals or visitors. If people only stay for weeks, you should concentrate on weekly stays and market the region. Concentrate on the market’s wants and execute.

3. Pick the Right Location

The location of your property is half of its allure for potential tenants. Some regions are more desirable than others for a variety of reasons. Such areas may see increases in business, population, or cost. Several factors decide whether it is a good location for long-term leases or weekly stays.

If this is your first time investing in rental property, you should keep your costs as low as possible. In its early phases, the rental property generates passive revenue. Whether you invest in significant real estate or something more cost-effective, it will take several years for the money to start flowing in large numbers.

If you want to gain an advantage while looking for the ideal investment property, you can try online real estate platforms like Mashvisor. You can search for different types of residences on the platform and do a complete neighborhood and property analysis.

4. Evaluate Your Neighborhood

Once you’ve picked a location, examine the area. Tenants consider different factors depending on one‘s stay’s nature and duration.

For example, monthly renters may work nearby, and their main concerns are transportation and utilities. On the other hand, tourists staying a week may prefer landmarks or business districts. Always be aware of what your property offers and how to manage its limitations.

Related: Real Estate Investing for Beginners: A Guide to Neighborhood Analysis 

5. Examine the Apartment

After choosing the ideal apartment, you might want to go on an in-person walkthrough. Throughout the tour, sit on the sofa to ensure it is comfortable, sit at the dining room table to ensure it is not shaky, and stroll around to examine traffic flow and furniture arrangement. After all, you want the renters to feel comfortable and at peace when opting for your studio apartment for rent.

6. Know Your Fixtures

Fixtures are anything regarded as “permanently,” materially part of the rental property. They are a type of middle ground between utility and furnishings. They include bookcases, cabinets, lights, plumbing, and more.

According to property rules, fixtures are a component of what you’re renting to the tenant. In contrast, moveable or detachable elements are considered personal property.

Fixtures are a common source of worry in long-term agreements. When tenants bring their personal items and connect them to the leased property, problems might emerge. Fixtures will likely require only minor repairs and maintenance throughout lengthy and weekly stays.

7. Organize the Furniture

Finally, we get to the center of the furnished rental property: the furnishing. The subject of whether or not to fully equip your property is frequently raised. It will help if you think about such aspects from the tenant’s point of view.

A furnished room may be more appealing for weekly stays due to its convenience. You can choose to give simply the essentials for long-term arrangements. After all, your renters may bring in their furnishings or ideas about arranging the area. Still, renting a fully furnished apartment may be the best option for individuals wishing to migrate to a new place.

Conclusion

Whether you want to establish a long-term deal or set up a destination for weekly stays, the rental property industry is a matter of patience. Remember never to invest more than you need to and keep your expenses under control. Your investment in furnished apartments will be well worth it within a few years.

To sum it up, short-term apartment rentals might be an excellent option if you’re looking for a profitable method to invest in real estate and don’t mind putting in some work. Mashvisor helps investors find successful investment properties. We assist rental property investors in identifying opportunities that meet their requirements.

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