Offering a furnished apartment is a great way to not only increase the marketability of your rental listing but also can put more money in your bank. And who doesn’t like more money in the bank?
The benefits of offering a furnished apartment have been discussed in a previous blog post, Smart Landlord: To Furnish or Not to Furnish, but let’s dig a little deeper at look at the numbers.
After spending a few hours daydreaming on the Ikea website and putting together a list of what would be needed to offer a furnished apartment, I have put together an estimate of what it would cost to furnish a brand new 1 bedroom, 1 bathroom apartment with the basic essentials. When considering the items for the shopping list, the items I chose were not the least expensive, nor the most expensive, but a nice happy medium.
The virtual shopping trip ended up totaling approximately $3000, where roughly $800 was spent in the bedroom, $100 in the bathroom, $900 in the kitchen, and $1200 in the living room. Now $3000 may seem like a large sum to swallow and shelling out the dough may be difficult when you want to add more to your bank account. However, when considering the crunched numbers, it’s easy to see that furnishing your apartment can be a money maker.
A furnished apartment can easily be rented out at a conservative $250.00 a month more then it’s comparable, especially when the furniture is brand new. Over a 12 month lease, this means that the furnished apartment can bring in an additional $3000.00, which pays off the initial investment to furnish the rental. 1 year and the furniture is paid off and ready to increase your cash flow.
$250.00 x 12 Months = $3000.00
After the first year, which has paid off the initial investment and as the furniture is not as new, we can conservatively estimate the additional funds the furnished apartment would be able to bring in over the next 5 years. The table below shows a simple breakdown over a 5 year period with conservative depreciations which show that an additional $7,800.00 dollars can be accumulated by offering a furnished rental.
|Net Gain =||$7,800.00|
Now let’s look at the numbers not so conservatively, with no depreciation over the 5 years.
$250.00 x 12 = $3,000.00 additional funds per year.
The first year pays off the initial investment!
What about over 5 years?
$3,000.00 x 5 = $15,000.00 – $3,000.00 = $12,000.00 net gain in 5 years!
And honestly, who doesn’t want to make $12,000.00?
Check out my shopping list below!