To furnish or not to furnish?

Our culture of making our clients happy, has allowed the addition of services that is not included in my job description. In the long run, this business is created to forge meaningful business relationships. Property acquisition is one of the biggest decisions in the life of our clients. They rely on us for advice.

 

Leasing their units involves one of the biggest questions as a landlord….. the question is…

To furnish or not to furnish?

Majority of our clients are investors. This just means that they bought the property, thinking that it would appreciate in value or will be profitable on their end. Rentals make it a passive investment. But sometimes, they are in a dilemma whether they would furnish the unit or not.

What is a furnished unit?

A furnished unit usually has a aircon, shower heater , bed, refrigerator, dining table, washing machine, induction and rangehood. These furnitures and equipments are the standard inclusions of a furnished unit. Adding some more furnitures to complement your prospective renter would give more value to the unit. But the next question is:

at what cost?

 

Cost vs. Profit

Since we try to provide our clients the best value for their money, we make sure that cost is minimized in ratio to the profit. We make sure that our investors get a healthy return on their investment. That’s why, before we rent out the unit, we give them a projection of their cost versus the revenues that they would receive.

Here is a comparison from one of our units in Makati.

In this photo, an unfurnished unit, rents out at P 18,000.00 / month.

In this one, is a furnished 1 bedroom unit. It rents out

at P 25,000.00 to P30,000.00 / month.

Here is the list of expenses for each furniture/ equipment.

lsit of applicances

All in all, the cost to furnish this unit is P159,000.00. For this price, a ballpark figure of 25 to 40% was added from the cost of rent compared to the unfurnished unit. It might be a small sum versus the cost to furnish it, but from our experience, the furnished unit rents out earlier than the unfurnished ones and haggling is minimized.

Here is an actual comparison of the rental income of a unfurnished versus the furnished unit.

Untitled

So what is our conclusion?

The example that we presented is a part of a small sample size. A property located in Makati, and with the philosophy of getting furnitures that are practical. Notice the increase of rental income to 30% when we furnished the unit. In 2 years, our landlord will get their gross returns from the cost.

So for us, we think that getting the most affordable resources for equipments and furnitures are very important if you are going to use the unit for rental purposes. In this way, we do not get frustrated if our tenant breaks off some of the things ( which could probably happen ). In my experience, if the unit owner designs the unit and includes their choice of expensive furnitures in the unit, they always have a hard time of letting it go  because…

  1. It’s expensive.
  2. It’s sentimental

We usually advice our clients to detach their emotions if they are going to rent this out. Furnish your unit to your own liking if you are going to stay on it for the long term.

If you are having it rented out, we can give you some more of our best picks, ideal for rental properties.

Arah Dayao

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