On a regular basis we have condo owners asking us if they should lease out their condo furnished or unfurnished. There are many pros and cons to both, however one needs to decide a few important factors.
1. location – most tenants who are seeking a furnished condo to lease have very specific reasons for this. In general, it’s usually due to a temporary work transfer. If you have a condo that is located in the heart of Toronto, close to the financial district and in walking distance to the subway, then you have a good chance of having it rented quickly.
2. condo rules and regulations of your building – furnished rentals usually have one to two months out of the year of vacancy. The reason for this is there are less tenants seeking furnished rentals versus unfurnished. It’s all about timing. That said, the best way to fill a month of vacancy between tenants is to use short term rental sites such as airBnB, homeaway and VRBO. The most frequent problem we run into is that most condo boards do not allow rental periods of less than 6 months. If your condo building does not allow for short term rentals of 1 week to a month, you will run into problems. Make sure and check the condo documents prior to deciding to lease your condo as a furnished unit.
3. tax write offs – If you have a furnished rentals it is much easier to lower your income tax obligations. Any furniture, decoration, electronic that your purchase for the unit is a tax write off.
4. insurance premiums – when you are operating a furnished condo as a revenue property your insurance premiums will be hefty. You can count on 600.00 to over 1,200 per year in premiums. Insurance companies tend to charge a premium to have the furniture insured due to accidental damage or theft by the tenant.
5. cleaning and housekeeping – unfurnished condos do not require the owner to have it cleaned on a regular basis. Furnished condos, especially short term, will have this extra expense. Depending on the size and amount of bedrooms you have, you can count on a minimum of 100.00 per cleaning.
These are a few items to take into consideration when deciding to lease your condo furnished or unfurnished. At Property Management Toronto we also conduct a condo rental market analysis using the points listed above. If a condo is located in an area where you can charge a premium to offer it furnished, we then calculate the extra operating expenses and compare that with how much the condo would lease out unfurnished.