Renting Your Furnished Condo

It sounds like a great idea!

Kill two birds with one stone: get more money for renting the property furnished, and save money by not having to move and/or store the furniture.

In practice, however, there are drawbacks, headaches, losses, and of course – the idea of somebody else sleeping in your bed…

FurnishedRental

When I went to McMaster University in the late-1990’s, I lived in a small, 1-bedroom apartment above a shoe store.  It was an amazing “first place,” but at 18-years-old, I wasn’t exactly a real estate aficionado, and I wasn’t able to grasp the difference between an 8-month lease and a 12-month lease.

All through Westdale (the area of Hamilton that doesn’t feel like Hamilton…), where the University campus is located, landlords demanded 12-month leases, even though the school year was only 8-months long.

It wasn’t collusion, but it was just about iron-clad.

The landlords put the onus on the tenants to sublet the space for the four summer months if they wanted to recover their rent, and as I learned that first year, it was easier said than done.

Everybody looking for a summer sublet seemed to “know” that there were discounts readily available, and on my $525/month apartment, people were calling me and offering $200.

For $200 per month, I almost figured, “What’s the point?”

Eventually, I found a guy at the golf shop who was looking for a place for the summer.  He was from Florida, and came to Hamilton for the summer every year to sell golf equipment, and give lessons.  He was an older gentleman, and I thought that I had hit the jackpot: I was getting the full $525 per month, AND I was getting somebody who would respect my place, and not trash it like a 19-year-old would.

I rented my apartment fully furnished, and thus I didn’t need to take anything back to Toronto with me for the summer, save for my computer (remember how big the monitors were back then??), and my clothing.

At the end of the summer, the old guy left the keys in the mailbox, and I came back on September 1st.

The apartment was located up above a shoe store, and there were five units – mine was at the end of the hall.  As soon as I came into the building, I could smell smoke.  But not that luscious smell of a smoked ham, oscillating on a spit, or the smell of smoke from a campfire.

“Smoker” smoke.

It was putrid.  And as I walked down the hall, the smell got stronger and stronger.  It never occurred to me to think, “which unit is that coming from?” until I approached my front door.

I turned the door handle, and as I pushed the door open, it hit me like a punch in the face!

The old guy was a smoker, and my cute little apartment smelled like a 1930’s jazz club.

I opened the windows, and left them open through the weekend when I went back to Toronto.  I sprayed about eight cans of Febreze (or whatever the equivalent was back then) over every single surface in the apartment, but when I came back 48 hours later, it still stunk.

My mattress smelled like smoke.  My MATTRESS!  That’s where I sleep!  Did the old guy smoke in bed?!?!?

Suddenly, I could feel this old guy in my condo.

Sitting on my couch, smoking.

Making food in the kitchen, with my dishes, smoking.

Watching my TV, smoking.

Using my bathroom!  Smoking…

I left every single item behind for the summer, and I couldn’t look at a fork without picturing it sliding into the old guy’s mouth.  That’s right – the old guy ate off my plates, drank from my glasses, and licked the back of my spoons!

It took a month for me to get over it, and for the smell to dissipate.  But the next summer, I rented to a young, single girl, for $275/month, and without sounding creepy (impossible, given what I’m about to say…), I got extra close to her when we met to discuss the apartment so I could smell her and decide if it was a scent I could deal with after she left.  Yes, I smelled her.  Up, down, and sideways.

That is my story about “renting your furnished condo.”

In my line of work today, I deal with this subject all the time.

My clients always want to know if there’s an advantage to renting your condo furnished, and while there are certainly pros, I have to think the cons outweigh them.

Let’s quickly summarize:

PROS:
1) More money for the unit furnished than unfurnished.  Who doesn’t love money?
2) Saving money on moving/storage fees

CONS:
1) Possible damage to furniture.
2) Possible old guy licking the back of all your spoons…

That’s about it, to be perfectly honest.

And when you elaborate on these four bullet points, you start to see the risk/reward proposition.

First and foremost, consider that the “furnished rental market” is a niche market, and not everybody out there looking for a rental property wants to use the furniture you’ve left behind, let alone pay for it.

Consider today’s young, first-time downtown-dweller, who doesn’t have the money to buy, but elects to rent instead.  If it’s a young man, he goes out and buys his flat-screen TV, his entertainment console, and the cheap coffee table where he eats his dinner every night.  If it’s a girl, she goes out and buys her white microfibre couch, her dining room table for martinis with the girls, and a lot of odds and ends from Homesense and Urban Barn.

These folks don’t want your furniture, and wouldn’t want it even if it were free.

So the idea of “making more money” from a furnished rental works in theory, but the target market is small.  If you decided to rent your condo only as a furnished property, you’d risk pushing away about 90% of the renter pool, in search of an extra $200 per month.

If you’re keeping the property to come back to in a year, or two, then perhaps it makes sense to leave your furniture behind, and save money on a storage unit as well as the cost of moving it twice.  But perhaps that’s better than carrying an unoccupied unit for three months and losing rent as you try to find somebody to take it furnished.

If you are able to find somebody to rent the place furnished, then you have to worry about how they’ll treat your property.

It’s one thing to have an old guy smoking in your bed, but what about just general wear and tear?  What’s “normal” wear and tear for a one year or two year lease?  What if there’s a dog or cat who scratches the heck out of the couch?  What if there’s a gouge in the dining room table?  How do you account for this, and how much is the tenant to pay?  Do you ask for a deposit?  Do you do an inspection of your property before you take the keys back?

And what about things you won’t notice until you move back in?  Or things you’ll never notice if you just pack everything up after you decide you don’t want to move back in?  How many wine glasses were there?  Eight?  There’s only five now.  Did they break them?  Were they dollar store, or Reidel?

Do you really want to do an inventory of every last corkscrew in the kitchen, and hand-towel in the bathroom?

Hand towel?  But you use that on your face too right?  What if the tenant used it for…………something else?  You are going to throw those towels out, right?

It’s like running a hotel, I swear.

Personally, I don’t see the appeal to renting out a furnished unit, unless you own a multiplex and your entire business is renting out furnished units, which is a whole different business model!

There’s just so much to worry about when you leave everything behind, and then, what if…….what if you left too much behind?

Case in point, a colleague of mine had a furnished rental two years ago, and a certain Toronto Maple Leaf and/or Toronto Marlies goalie took the unit, since he had no roots in Toronto, and needed a furnished rental, right down to the knives and forks.

The day after closing, the owner/landlord called my colleague in a panic.  “You have to run over there and do something for me!” she said, even though the keys had been handed over, and the young athlete was about to move in.  “Call me when you get there,” she said.

My colleague went to the unit, and called her client.  The girl then sent my colleague on a treasure hunt of sorts.  “Go into the bedroom,” she said.  “And in the nightstand, there’s something I need you to get rid of.”

I think you all know where this is going.  And no, I’m not going to elaborate.  You all know what it is.

This is true, and I couldn’t make something like this up.  I would never even think to make this up.

My colleague opened the nightstand drawer, and there “it” was.  She told me after that day, she felt as though she really did become a “full service” Realtor, who goes above and beyond the call of duty.  She wrapped paper towel around her hand, reached in and grabbed the item, and put it in a garbage bag.

This is where it gets nuts though.

Five minutes later, as my colleague was locking up, the girl called back and said, “Wait…..there’s one more.  It’s under my kitchen sink, to the right, in a tupperware.”

Seriously?

Who keeps “that” under the kitchen sink?

And two of them?  Is one a backup?  I really need to get out more, seriously…

I often wonder what would have happened if that young goalie went to unpack his book collection and opened the nightstand drawer, or God forbid went searching under the sink for some cleaning products.  He sure would have got his money’s worth with this “fully” furnished rental.

In the end, it’s up to the unit owner to weigh the pros and cons of leasing out his or her unit fully furnished, but in my experience, it’s not worth it.

In a related story, what the hell happened to the Toronto rental market?  I have NEVER seen it this slow!  I guess with 2.79%, five-year, fixed-rate mortgages, everybody and their mother is buying?

Maybe it’s a great time to get a deal on a rental.  Maybe furnished.  Maybe with “extras”….

Have a great weekend, everybody!

14 Comments

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  1. furnished says:

    Welcome to the world of corporate housing, a comfortable and cost effective temporary living arrangement for relocating employees and other travelers. Transition is challenging whether a move is national or global, professional or personal, alone or with accompanying family members. While a hotel may suffice for a few days, furnished apartments are well-equipped to fill the entire gap between arrival in the destination and moving into a permanent home. !rent furnished apartments nyc

  2. Annie says:

    Hi David,

    I have been thinking should I do furnished short term rental or not ? I mean with the higher vacancy rate and expense, I may break even….
    Here you said ” I don’t see the appeal to renting out a furnished unit, unless you own a multiplex and your entire business is renting out furnished units, which is a whole different business model!”==> I am only interested in renting out my 5 plexes, not doing a business at this moment.

    I need your 2 cents!

  3. Steve says:

    “….. what the hell happened to the Toronto rental market? I have NEVER seen it this slow! ”

    Uh oh …. this is not a good sign. Especially if you’re a buyer to let. Maybe we’ve reached a saturation point?

  4. Appraiser says:

    I studied at Western (back when dinosaurs roamed the earth), and landlords in London had their own method of dealing with student renters. They would take the monthly rent multiply it by 12 and divide by 8. That figure was your monthly rental payment during the 8 months of the school year – take it or leave it.

    Oh, and I hate to be a stickler for facts, but I just ran the month-to-date leased numbers on TREB, and MLS rental transactions are actually up 8% for January.

  5. Daniel says:

    Clearly an s – e – x toy!

    I thought it was fairly well spelled out, although maybe David could have referred to it as “her ‘friend’ in the top drawer of the night stand.” Then again, she had a second ‘friend’ under the sink??? Maybe that’s were it got a bit confusing.

    1. navyliz says:

      birth control device?

  6. Den says:

    We “know” what it was? Cocaine?

    1. Kyle says:

      No, i think it’s something that takes batteries

  7. IanC says:

    Wow! Where should I start?

    You only have two feet, so why do you need more than one pair of shoes?

    Well, they make more than one type of footwear. Some shoes are itty bitty but sometimes you need your big winter boots.

    And there’s another answer I have that I can’t repeat on the internet ! But let’s say people win awards for it.

    1. Den says:

      Heh. Like women. Why have one? when there are so many choices. 😉

  8. Paully says:

    I was hoping that you might weigh in on the two pre-construction condo projects that were being turned into rentals and refunding original purchaser deposits. You generally, and correctly, don’t miss an opportunity to slag pre-construction condos!

    http://www.thestar.com/business/real_estate/2015/01/27/builder-quietly-cancels-condo-complex.html

    I find it extra interesting now, based on your comment above about the Toronto rental market. They couldn’t sell enough units to secure financing as condos, but now they are converting into a stalling rental market too?

    1. GinaTO says:

      I was going to ask the same thing! Very curious to know David’s take on it (and from other commenters with insights, too).

      1. Kyle says:

        Yes i’m curious too. 2014 apparently saw 15% more condos rented out than the year before through mls. Seems weird that it would suddenly stop.

        http://www.urbanation.ca/news/70-toronto-condo-rentals-increase-15-2014

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