4 good reasons to invest in furnished rentals

Thanks to attractive rates and stable prices, real estate still seduces investors as much. The only question is whether to choose unfurnished and furnished rentals to make your investment as profitable as possible.
Beyond the assessment that furnished rentals are more and more popular with tenants, here are the four good reasons that will convince you to choose furnished rentals once and for all.

Higher income

A furnished property can be rented out between 10 to 20% more expensive than an unfurnished rental. Indeed, some extra expenses such as buying furniture and equipment or renovating between two bookings, can be integrated in the rents charges.
The difference can even go up to +30% when the property is located in a touristy area and when it is perfectly equipped and furnished.

Beware once again: even if the furnished rentals often yield higher profits than an unfurnished one, the property management costs are generally more substantial (check-in and check-out, maintenance, etc.) and the occupancy rate can be lower, especially during seasonal furnished rentals.

A lower non-payment risk rate

One of the major advantages of furnished rentals is that non-payment risk is lower than for unfurnished rentals. There are many reasons why:

  • It attracts a well-to-do clientele.
  • It is favored for temporary stays which, by definition, are limited in time (business travel, university curriculum, etc.) and thus, budgeted.
  • Well-established guarantee files: parents are the guarantors of their children studying abroad, companies tend to pay the bookings for their traveling professionals. And when it comes to tourists, they tend to pay their entire stay beforehand, when they book their rental.

A more flexible legal framework

When the furnished rental isn’t the tenant’s main residence, the booking conditions are freely established by the owner (rent, duration, etc.).
If the furnished property represents the tenant’s main residence, some rules similar to unfurnished rentals (after the Alur law), are to be followed concerning the lease agreement, the inventory, the diagnosis etc. However, the owner can get their property faster thanks to a one-year lease tacitly renewable (9 months for students) against 3 years for an unfurnished rental.

A more attractive taxation

Unlike unfurnished rentals that are taxable in the category of propery income, those coming from furnished rentals are assimilated as Industrial and Comercial Incomes (BIC) with a more profitable tax system. Indeed, the owners benefit from, at least, a lump sum allowance of 50% on the rent charged (in the case of a micro BIC tax declaration). On the other hand, if the charges and depreciation linked to the furnished property are superior to these 50%, it is all the more interesting to choose a declaration under the Regime Réel because this option allows to substract the charges, to depreciate the property and the furniture, avoiding the owners to be taxable for dozens of years.
For more information about furnished rentals information, I invite you to go on the website of jedeclaremonmeuble.com (in French).

Commercializing your property as a furnished rental thus presents a certain interest to maximize its profitability, under the condition, however, that it meets the expectancies of a clientele that tends to be quite picky in terms of localization and equipment.

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About me

Maud Velter
Maud Velter
Legal & practical advice for furnished rentals
Associate and Legal Director of Lodgis, furnished rentals and property law specialist

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