Is it worth furnishing your investment property? Whether for rent, or for sale, or simply having it dressed temporarily, it is the hundreds of thousands of pesos question (not so eloquent, but you get the point).
Furnishing your property can cost that much, and that is not a small investment. A lot of us here at Li & Hungerford have wondered ourselves whether it was worth it. So, you know what? We decided to do a little split test ourselves to see.
Take two reasonably identical studio condominiums in a prime area, say IT Park (this is a real example, by the way, but for the sake of privacy, we’re not going to disclose exactly where they are), one was furnished for a cost of roughly P200,000 (which is relatively high end) and the other is not. When rented the furnished one was able to be rented for 25% more than the unfurnished one! Now assuming standard capitalization rates, this becomes an even more stark difference. Taking into account the cost of furnishing, whereas the unfurnished unit was considered 75% above market value, the furnished unit was 4% below market value.
Of course, it could take years to recoup the cost of furnishing just from rent, however, at sale, according to our modeling, you are likely to recover that cost and more. After three years, even taking into account depreciation, you’re still ahead by 35%.
And while temporarily dressing your property for sale may not increase the perceived value of your property by as much, it still provides an exponential effect, and, for a fraction of the cost of actually buying, you can provide a real picture of what your space could be at it’s best. A massive positive spin for those who are buying to live, which is much more of an emotional investment than a financial.
So is it worth furnishing your place? It’s a huge yes.