Compared to unfurnished apartments, furnished apartments, Dubai investors ought to know, provide a few distinct advantages including better ROI and better tenants.
But before you decide if a furnished apartment is the best investment decision to make, you have to be attuned to your target market, the demand for this type of rental apartment, as well as the location of your property.
Generally speaking, furnished apartments attract professionals who work on a contractual basis and families going on a vacation. It is important to underscore that location plays a critical role in your long-term success.
Another key thing to consider is the size of your property. If you are planning on attracting workers with contracts, you should have a smaller property. Conversely, families going on vacation prefer multi-storey properties.
What are the distinct advantages of furnished apartments over their unfurnished counterparts?
Furnished properties offer higher yields compared to unfurnished properties. The main reason behind this is that tenants are more than willing to pay more in exchange for convenience. Furthermore, short-term leases are (more often than not) not covered by traditional leases and regulations which apply to longer leases.
Rental contract flexibility
Furnished apartments are often leased for shorter periods. As a landlord, this gives you ample flexibility — a definite advantage if you are keen on using your apartment for vacations or other purposes.
Furnished apartments also tend to attract better tenants. This is highly likely if you own a property in a city centre and acquire professionals as tenants. These tenants are less likely to damage your property.
Less property damage
Because your tenants do not need to furnish the property and bring in big furniture, they are less likely to damage the walls of your property.
But along with the advantages, prospective investors should also know what the disadvantages of furnished apartments are.
Furnishing an apartment means that you will need to invest a sizeable amount of money from the onset. And that investment will not be a one-time thing. Over time, you may need to replace a few pieces inside the apartment.
Furnished apartments have a higher turnover rate influenced by different market forces including the weather and season, the holidays, currency exchange rates and others. That means that you will have your hands full looking for new tenants.
Fewer potential tenants
Not every tenant is on the hunt for furnished properties as many have possessions that they wish to bring with them. Be aware that your target market with a furnished space may be considerably smaller.