There are many factors to take into account when purchasing a buy to let property, almost all of which directly relate to the NET income you will receive when it’s up and running. From location to decorative choices and even mobile coverage, each small factor can end up either costing or making you money somewhere down the line.
One such choice is whether or not to buy a furnished property, undertake furnishing it yourself or advertising an unfurnished property that tenants can put their own stamp on. Whilst this might seem like an unimportant factor in a property purchase, it is important to remember that tenants may well see it as a make or break feature. For tenants who are moving straight from university, to a new city or are looking for a first home, a furnished property may well be the only option; and on the flipside tenants who have already accumulated their own furniture may be unable to take a furnished property for lack of storage.
So what is the best route for buy to let property investors and which avenue is likely to yield a higher return?
New research has shown that there is actually a notable difference in value between furnished and unfurnished properties to rent, with a study pointing out that a two bedroom apartment which is furnished can cost up to 21% more than a comparable unfurnished apartment.
The research calculated the cost of furnishing a two bedroom flat with the basic necessities – a sofa, coffee table, bookcase, TV, table, chairs, two double bed frames, two mattresses, a desk and an office chair – with the total coming out at approximately £1,800.
The study revealed that according to portal results, renting a two bedroom furnished flat in Sheffield would cost on average £726 compared to £598 for an unfurnished flat of the same size, equating to a 21% increase in value. There was a similar story around the country, with furnished flats in Manchester commanding a £101 (15%) higher asking price than an unfurnished flat, and London saw a 9% difference in prices.
Helen Whiteley, commercial director at OnTheMarket, comments on the research: ‘Ultimately this research suggests it’s worth calculating the cost of furniture to decide whether the initial financial outlay can be off-set over time during the rental period.’
‘Spread throughout a 12 month tenancy, these costs become around £150 per month meaning it is worth prospective tenants giving serious consideration to whether or not they are embarking on a long term let. That said, there are clear benefits and a level of convenience of walking into a ready-to-live-in property when weighed against the alternative of buying everything yourself.’
Here at yieldit we want to make your buying choice as simple as it can be, with a yield driven financial breakdown for every property we sell, this can help you accurately work out what your bottom line will be and whether or not it’s worth buying furnished or not. Click here to view our latest opportunities!
