FURNISHED OR UNFURNISHED LETTING?

More and more landlords are offering furnished accommodation only, as this allows them to charge higher rent prices. Here the rent control law is ineffective. The rent control law is supposed ensure that the rent price of a new contract lies at maximum ten percent higher than comparable rent prices in that area.

Since furnished apartments do not appear on the rent index at all, the price control becomes practically void. Those who rent out a furnished property can charge a premium for the furniture. In addition, furnished apartments are highly sought after amongst international and national commuters in built-up areas because the rental prices are still lower than hotel prices. The level of rent is always dependent on the facilities in the apartment and the present value of the furnishings. The rent prices for furnished apartments in big cities are 60 to 80 percent higher than empty apartments. However, despite all the advantages that come with furnished lets, higher maintenance costs are also in store for the landlord. Most rental contracts end at the end of the month and begin at the beginning of the month. With that comes not only the handover of those moving in and out but also the task of advertising to find new tenants. This usually then leaves only a few hours to prepare the apartment for the next tenant, often at the expense of free time with the family.

When it comes to problems during the tenants’ stay, more is required of the landlord than in an unfurnished apartment. This occurs simply because there is more to be broken in a furnished property. In order to avoid conflict, landlords should always insist on a furniture list. The property owners must keep the furnishings and electronic devices that they install in good condition themselves. If a tenant is guilty of damaging electronic devices through incorrect use because he has not read the instruction manual beforehand, for example, the cost of repair or replacement falls on his head. Tenants often contact their landlords about service problems with the inventory, who must then react quickly (for instance changing the lightbulbs). Here is where WHITE APARTMENTS comes in, as we take all the challenges of a furnished rental off your shoulders. You have the higher rental income without the drawbacks. 

The advantages and risks of a furnished letting listed on the right only represent a selection. Naturally, there are even more possible disadvantages and risks that can arise even with normal apartment rentals.

Price per sqm unfurnished 18 Euros and furnished 25 Euros in Berlin

ADVANTAGES OF FURNISHED FOR LANDLORDS

  • Removal of rent price control
  • No termination- or tenant protection rights
  • Higher rent income
  • Possible to sell the property earlier

DISADVANTAGES OF FURNISHED FOR LANDLORDS

  • Maintenance of the apartment comes from the landlord
  • Private items in the apartment should be removed
  • Inventory list
  • Letting isn’t as smooth (frequent tenant changes)
  • Landlords must solve tenants’ problems quickly
  • Handover and cleaning on weekends/public holidays

EXAMPLE ACCOUNT COMPARISON

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Basic criteria:

  • 60 square metres in Berlin
  • Price per sqm unfurnished: 18 Euros
  • Price per sqm furnished: 25 Euros

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Rental FURNISHED with (WA) WHITE APARTMENTS BASIS and management costs of 10% of monthly rent

Income per month          1,500 Euros

Management costs WA -300* Euros

NET monthly income      1,200 Euros

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NET annual income      16,200 Euros

*Additionally, you could be eligible for a tax reduction of 300 Euros per month.

 

Letting an unfurnished property WITHOUT WHITE APARTMENTS

Monthly income              1,080 Euros

Net monthly income       1,080 Euros

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Yearly income                12,960 Euros

Management costs          -648 Euros

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NET Income                    12,312 Euros

 

White Apartments offers professional apartment management

A PARTNER FOR EVERY ISSUE REGARDING YOUR PROPERTY INVESTMENT: Our ultimate goal is to make the rental process easier for both parties, landlords and tenants. To do that, WHITE APARTMENTS offers a unique range of services through personal contact & friendly, professional service for you and your tenants, so that you can receive a worry-free investment.

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