4 good reasons to invest in furnished rentals

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

Higher income

A furnished property can be rented out for 10 to 20% more than an unfurnished property. Also, extra expenses such as buying furniture, appliances or renovations carried out between two bookings can be integrated in the charges that make up the rent.
The difference can be up to 30% more if the property is located in an area popular with tourists and when it is perfectly equipped and furnished.

Be careful though: although furnished rentals often yield higher profits than unfurnished ones, the property management costs are generally higher (entry and departure inspections, maintenance, etc.) and the occupancy rate can be lower, especially for seasonal furnished rentals.

A lower risk of non-payment

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

  • It attracts clients who are more financially secure
  • It is popular for temporary stays which are shorter (business travel, university curriculum, etc.) and budgeted
  • Well-established guarantee files: parents are the guarantors for their children studying abroad, companies tend to pay for their employees traveling abroad, while tourists tend to pay for 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 established by the owner (rent, duration, etc.).
If the furnished property is the tenant’s main residence, certain rules similar to those for unfurnished rentals (following the Alur law) should be followed, concerning the lease, inspections, the assessments etc. However, the owner can get their property back faster thanks to a tacitly renewable one-year lease (9 months for students) in comparison with 3 years for an unfurnished rental.

More attractive tax rates

Unlike unfurnished rentals that are taxable as real estate income , income from furnished rentals is categorized as Industrial and Commercial Incomes (BIC) with a more profitable tax system. Owners benefit from a lump-sum allowance of at least 50% of the rent collected (in the case of a micro BIC tax declaration). On the other hand, if the charges and depreciation linked to the furnished property are above this 50%, it is preferable to choose a declaration under the current regime because this option means you can deduct the charges to amortise the property and the furniture, allowing the landlords to avoid being taxed for decades.

For more information about tax and furnished rentals, visit the jedeclaremonmeuble.com website.

Marketing your property as a furnished rental allows you to maximise its profitability as long as it meets the expectations of clients who are often very picky in terms of location and facilities.

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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