WA - Furnished or Unfurnished?

[Ergophobia]

WA Rental Property - Furnished or Unfurnished?

I'm in the process of preping a 2x1 IP in Hamilton Hill, Perth for renting.

I'm hoping to attract a corporate or professional tennant and looking at the rental market there is nothing furnished in the area.

I have a bunch of near new furniture in storage that doesnt fit in our current place and am thinking to advertise the place as furnished.

Hard furnishing only + whitegoods only, no electronics like TV or stereo etc

Id like to think this will boost rental by about $100/week and make the place CF+

What are peoples thoughts on this idea?

 

[Ed Barton]

I'm in the process of preping a 2x1 IP in Hamilton Hill, Perth for renting.

I'm hoping to attract a corporate or professional tennant and looking at the rental market there is nothing furnished in the area.

I have a bunch of near new furniture in storage that doesnt fit in our current place and am thinking to advertise the place as furnished.

Hard furnishing only + whitegoods only, no electronics like TV or stereo etc

Id like to think this will boost rental by about $100/week and make the place CF+

What are peoples thoughts on this idea?

if i was renting fully furnished i would expect a TV and basic stereo.

are you considering no electronics because you don't have them lying around? perhaps an opportunity to upgrade your own stuff and put the older stuff in the IP?

i don't know Perth real well but is Hamilton Hill really the place for corporate clients? maybe why there are no furnished in the area.

how much would it rent for unfurnished?

 

[Ergophobia]

if i was renting fully furnished i would expect a TV and basic stereo.

are you considering no electronics because you don't have them lying around? perhaps an opportunity to upgrade your own stuff and put the older stuff in the IP?

i don't know Perth real well but is Hamilton Hill really the place for corporate clients? maybe why there are no furnished in the area.

how much would it rent for unfurnished?

Im thinking no electronics because I think they are easy to break and arent difficult or expensive to buy/move when compared to whitegoods... and im quite attached to my home theatre setup

I know a few professionals working in the Freo area that would jump at a furnished place in Hami Hill, these people are usually eastern states based and fifo/temp relocate to Perth on long term contracts.

Current rental appraisal is 300-310/week, property value is 325k, so ~$410/week is breakeven

 

[Ergophobia]

at the moment im weighing up the following options to boost the CF

A - Cheap reno to add a bedroom, making it a 3x1 and look for a family tennant

II - Leave as 2x1 and put more of the reno budget into modernising the kitchen and bathroom and look for a corporate/professional tennant

 

[Ed Barton]

Im thinking no electronics because I think they are easy to break

i would think a TV is quite difficult to break.

and arent difficult or expensive to buy/move when compared to whitegoods... and im quite attached to my home theatre setup

i would simply expect them to be included. fully furnished to me means the tenant supplies what can fit in their suitcase and what they can get to set the place up for less than $200.

I know a few professionals working in the Freo area that would jump at a furnished place in Hami Hill, these people are usually eastern states based and fifo/temp relocate to Perth on long term contracts.

fair enough HH must have shaken it's working class / welfare image. i knew freo had, but didn't realise HH had.

Current rental appraisal is 300-310/week, property value is 325k, so ~$410/week is breakeven

a one third premium for a FF place without a TV seems quite high. without a TV you are obviously not pitching at tenants very short term.

I'm far from a Perth expert, just expressing my views. so maybe some Perth people can drop by and post their views.

 

[Ergophobia]

fair enough HH must have shaken it's working class / welfare image. i knew freo had, but didn't realise HH had.

West of Carrington Street is considered East Fremantle these days

 

[Kent Cliffe]

Hi Ergo,

Our internal research does not show their is a fully furnished market in Hamilton Hill. This may be mirrored in the lack of comparable rentals.

The demographic for the area is predominantly young families. You may currently get a transient tenant as the rental market right now is quite hot, but long term this is not your ideal target market.

The furnished market around that area would be closer to Murdoch uni and you would be pitching to students rather than professionals.

Without seeing the property I couldn't tell you if it would be worth adding the extra bedroom. Is it part of a strata complex?

I personally would complete a light cosmetic reno and wait for the areas demographics to improve over time.

Organic rent growth is looking to be good again this year in WA so you may even find it close to that $410 by simply just waiting for the rents to be bid up.

 

[Ergophobia]

Thanks Kent

The property is a 2x1 60s house on a 700m² block, so no strata and lots of room to extend.

I think you are probably right about targeting a family tennant rather than corporate/professional.

There really is nothing in the area furnished for a comparison, so I was thinking of advertising now saying its coming available at the end of April so I can gauge interest.

 

[needtolearn]

Kent, can I ask for your assessment on Bentley? for a 3x2 IP , if it is going to be available for rent during March-July this year, which is the better for rental income and quality tenants:
1. fully furnished aimed at foreign students market, or
2. unfurnished aimed at professional couples .

the property is 16 years old, no dishwasher, with new rangehoods, cooktop and oven of middle brand names, the kitchen and bathroom are still of decent /good condition but not of the high quality end. We are planning to install an Panasonic 3.5 kw inverter in the kitchen/family room area.

Any helpful advice/info/answers would be greatly appreciated.

 

[Kent Cliffe]

Hi Need,

You could possibly target a student demographic, but they are fairly transient.

My rule of thumb is, if you can get a IRR of 70%+ on the furniture than it is worth the investment. How do you work out the IRR...

Firstly start off by working out the rent you would get without any furnishings. Then look for similar properties to yours with furniture and check what they lease for. Then get a quote for a company to either lease furniture of buy furniture (personally I recommend buying).

Also, fully furnished means full furnished, cups, forks, linen and absolutely everything you think you would need to live.

Then work out the IRR by:

([Rent per week furnished] - [Rent per week unfurnished]) * 52 / cost of furniture * 100 = IRR

 

[kathryn d]

Add TV etc.
The money you are saving on storage costs will pay for it.

people want everything provided, if it marketed as fully furnished..including dishes, and bedding...new pillows

 

[stevo_c]

Hello Kent, or anyone else above grade 6 maths, I'm having trouble applying your IRR to my scenario.

I have furniture worth $ 10,000, however it's resale value would only be approx $6500. The unfurnished IP rents for $400p/w the furnished property should rent for approx $485 p/w Based on these numbers the IRR is 68...or is it 165? Not sure what the 70%+ applies to either...help!!