select
|

Rental Property: To furnish or not to furnish?

In an effort to secure a greater return on a rental property, many investors turn to furnishing a rental property in the hope to achieve a higher rental - especially with the massive buzz surrounding entities like AirBnB. 

Grant Rea, Certified Residential Rental Specialist with RE/MAX Living in Cape Town, says that the decision to furnish a rental property is sometimes a costly error on the landlord’s part.  He notes that the assumption that a furnished property will bring a higher rental return is a common misconception, and that offering the same property as an unfurnished option, opens the property up to a surprisingly larger potential pool of tenants.

According to Rea, most local tenants in Cape Town have at least the basic number of items required to be able to furnish a property on their own, and there is a massive local market. “Too many landlords get caught up with the hype of foreign tenants and corporate tenants, assuming they will pay significantly more than market-related prices for furnished properties. However, regardless of whether the unit is furnished or not, it is imperative that rental properties are competitively priced,” advises Rea. 

He adds that with winter just arriving in Cape Town, short-term furnished lets are struggling to remain booked and many landlords are feeling the pinch. “The demand for rentals in Cape Town is naturally a bit lower during the rainy season. As a result, landlords face significant, unnecessary losses with furnished holiday rental units standing vacant during the winter months,” says Rea.

He notes that numerous landlords approach him after facing too many periods of vacancy for short-term lettings, having grown weary of the time consuming aspects of managing such a property.  “Invariably these landlords then opt to offer their units as long-term rental properties. Even though the daily rental on short-term lets is much higher, countless investors state that the returns even out between short- and long-term rentals, purely because of vacancy. If a landlord is prepared to spend a significant portion of their time and resources on marketing their furnished daily rental, it can be a lucrative endeavour. However, many landlords underestimate the immense drain of time, energy and cost to manage this kind of letting option,” says Rea. “With an expert rental agent working for you and exposing your rental to a wide online audience, there is no reason why a rental property should be vacant in Cape Town.”

According to Rea, being flexible as a landlord is vital to ensure you minimise your vacancy rate. “Be willing to offer items included or be willing to remove them. Even a single month’s vacancy can create major cash flow implications,” advises Rea.

He suggests that landlords keep their options open by getting quotes for storage or moving the furnishings back to their primary residence if possible. “Many Landlords I have advised have simply offered their older furnishings up for sale to numerous companies and stores that will purchase the lot,” says Rea. “Having said this, offering the option of the larger appliances as part of the property may be the prudent move to attract the largest pool of potential tenants to the property.”

A further aspect to consider is that furnishings offered in a unit are often not cared for as well by tenants as the landlord would like. Additionally there is the added cost of having to insure the items. The onus will be on the landlord to make good repairs based on wear and tear of these items. “All this hassle is simply eliminated by offering the same property ‘unfurnished’, at not much less of a rental to large number of ever growing tenants seeking long term rentals in the City Bowl, Atlantic Seaboard and surrounds,” Rea concludes. 


  Comment on this Article

  Please login to post comments

Post to my facebook wall
  
2000
Characters remaining


    Latest Property News
    • 19 Feb 2018
      While most homes in cluster complexes, estates and other gated communities come with at least one garage or carport, residents would often like additional permanent parking or storage areas for things like trailers, bikes, boats and caravans.
    • 16 Feb 2018
      Whether you own a property in a sectional title complex or are looking to invest in one, the financial standing of the body corporate is the single most important thing that can affect your investment or your buying decision.
    • 15 Feb 2018
      One positive consequence of the financial crash in 2008 was the rise in consumerism, especially in the property market, where buyers have steadily become more knowledgeable and more value conscious.
    • 15 Feb 2018
      While most homeowners will take the agent’s commission into consideration when they are trying to determine what the will get out from the sale of their property, many often forget to factor in the other costs involved in a home sale, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 14 Feb 2018
      The forecast for the national rental market in 2018 remains a mixed bag of good news and bad news. Although rentals are expected to rise slowly as the challenges of home affordability and tighter lending criteria tighten their grip, it’s a double-edged sword as the market also will come under increasing pressure from factors like declining disposable income levels.
    • 14 Feb 2018
      While you may not have intended to place your home on the market, what do you do if you receive an unexpected offer on your home? In areas where demand outweighs the current supply of homes available to buyers, it is not unheard of to have buyers make offers on homes that aren’t on the market, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
    • 14 Feb 2018
      If you are looking to sell your home this year, Debbie Justus-Ferns, divisional manager of Renprop Residential Sales, says that there are five crucial things to do before the ‘for sale’ sign goes up.
    • 01 Feb 2018
      February is the month of love and to celebrate we will be posting about all the things we love this month. Follow the #MyPropertyLoves hashtag to keep up with our favourite things.
        
    X
    Subscribe to the MyProperty Newsletter

    Name  
    Last Name  
    Email Address  
    Email Frequency
    select
    X
    Share this Page

       
    For Sale Property
    Rental Property
    More Options
    About
    Connect with us
    FEEDBACK