Multi Family Residential Rental Property...
Increasing The Cash Flow (And Perhaps Value) By Offering Furnished Suites
I have never offered a furnished apartment suite for rent in a multi family residential rental property that I have owned. So the information and "advice" I offer here is not first hand per se. However, it is not hypothetical in nature either. I personally know several real estate investors who have had success offering furnished suites for rent.
It makes sense that furnished apartments would rent for more money than unfurnished suites, however, there are other things to consider.
First, you will have to determine how much it would cost you to purchase the furniture. Then you would need to determine the premium you would be able to charge for offering a furnished suite in a multi family residential rental property. From there you can determine how long it would take you to recoup your investment. Also make sure to consider the wear and tear factor on the furniture and realize that you will likely have to replace it fairly regularly.
Second, you must determine if there is actually a market demand for furnished suites of the type you will be offering. You may want to run some classified ads and judge the response.
Caveats to offering furnished suites in a multi family residential rental property
An obvious caveat is the type of tenant you might attract. As I mentioned, I do not have any first hand experience in this area but on the surface I would guess that the type of tenant you would attract may only stay for a short term.
Furnished apartments may not be as suitable in your particular market. I used to own several buildings in a resource town with a population of around 20,000. I knew several other apartment building owners in that town that offered furnished suites, and did quite well. This was likely due to the fact that much of the workforce came in from other areas of the country. They (the workers) weren't sure how long they would be staying and therefore didn't want to buy new furniture or move their own at great expense. A furnished apartment was exactly what they were looking for.
My final thought on this subject is this. If your multi family residential rental property is suffering from above average vacancies, then offering a few furnished apartment suites might help you reduce your vacancies. Otherwise, you are likely better off sticking with unfurnished suites as the actual value that any extra income adds to your real estate investment is questionable at best. In other words, it may work for short-term cash flow purposes but likely adds nothing to the value of the investment property in the eyes of a potential purchaser.
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