FURNISHED APARTMENTS
What is the business model for a landlord here?
Are they assuming market demand for people to want to live in a place that is furnished? I personally wouldn't want to live in a place where previous people have used the furnishings. Companies like Related are jumping in the space etc.
Is moving into an apartment that has everything set-up for you (internet, cable, furniture, utilities) the future of multi-family for the next generation? thoughts on this investment thesis?
I don't have an investment thesis for you, but I do have a customer thesis for you.
Moving fucking sucks. A lot. It's expensive if you use movers, and a huge pain in the dick if you don't. Being able to move all your shit in a sedan is a huge value prop to renters, even if someone has maybe fucked on the couch before you moved in (I'd assume these companies are deep cleaning furniture, if not it gets a little sketch).
You can probably charge a few hundred more a month, so there's the investment thesis I guess.
There is a small - but growing - market for this. Travel nurses, tech workers, remote workers (which we will probably see more of), interns, medical residency, temporary teaching assignments. People that want to live in a city temporarily.
^This.
Any one who is familiar with coastal markets has seen this in one way or another. Summer time comes, and the Airbnb / Short Term Rental market takes off. During the year, from say Sept to May, these are sometimes put on 6-8 month leases to students, traveling nurses, etc. Those "off months" usually charge a rent slightly less than 12 month leases in the same area, but are furnished and tenants are booted so that they can go back to short term rentals during peak season.
I've also worked with a few investors who do 3-6 month furnished rentals as a full time strategy, which I think is more along the lines of what the OP is talking about. It can be a great business model if you have contacts within traveling nurses, military, or other groups with similar situations. There are some rental listing websites and property managers who specialize or frequently work with these types of tenants. It seems pretty labor intensive though, and I don't see it taking off with long term tenants that intend on staying in an area more than say 6 months. Personally I'm not going to pay much more than normal rent even if it's furnished, if I plan on staying in that area for at least a year.
TLDR ; I think this strategy is tailored to a particular sub market of renters and for that reason doubt it will ever take up a substantial portion of rental marketshare, but it definitely does have its place with groups whose occupation allows for or even encourages relocating often
There are also companies who will rent furnished apartments long-term as short-term housing for rotating employees. I have a building who is in talks with a company to lease six units that they will use as temporary housing and cycle whoever they want in those units. So not quite sub one year leases, but still falls under the furnished apartment model.
Sounds like a thing called a "hotel".
Really - if you had a 12 month contract assignment in a new city, you'd rent a hotel for the full 12 months?
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Absolutely. They also like it because moving home for summer or to a new place is way easier. Parents prefer to pay another $100-200/mo to avoid the trips to target and bed bath & beyond. Idk if you've been in a college town during move ins but it's absolute chaos
One problem with furnished student housing is the places usually get destroyed, so it's best implemented in larger communities where they can use the same furnishings across various floorplans and replace things easier. In my experience as a student, a lot of these properties are located right next to campus, have a higher mix of larger units and charge premium rents.
I imagine running that type of property is a total different animal than a standard Class A or B apartment building. I think I've seen @CRE talk about having experience with student housing in the past
thanks! I was referring to a more standard one year lease multi family furnished though because that is where I have been seeing it. the model definitely makes sense for student housing though.
People have covered the user POV, but to explain the owner POV - you're just taking a bit of extra yield (likely way higher than the property itself) on all the furniture/services you offer. Plus you segment yourself from the rest of the market a bit.
I absolutely do not think it's the "future of multi-family", it's just another product niche.
Right. The main issue here seems like it would Be in the logistics of storing the furniture. Headache
Just store them in the actual unit :)
Not co living. Just furnished.
Will be interesting how COVID takes a turn on furnished vs. unfurnished apts.
I assume standard procedures for PM's will be santisizing the majority of pre-fursnished spaces, or at least quoting they do.
More CA spaces will definitely have to change how they sanitize or rotate furnishings for the next 12 months.
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Furnished apartments have existed forever. Executives rent them. Student rent them. Retirees rent them.
Furnished rent is very lucrative from an investor perspective since the investment of simple but durable furniture is earned back in two years.
~ 200 (per month) x 24 = 4.800
Tip to all single guys out there, if you don't own it don't furnish it. Your GF is going to throw all you stuff away once you move in together. Save yourself the hassle and upfront expense and rent furnished.
Bigger picture I think this is going to become more common as younger people have less interest in owning things, seem to move around more and will pay for convenience. If I was landlord I would offer the option on any vacant unit.
you can search for furnished rentals by city, state or property location. Enter your arrival and departure dates to find available short term corporate apartments, condos and homes. With thousands of furnished housing options all over the world, you will definitely find the perfect furnished rentals for your needs wherever you are traveling.
Big multifamily shop here. Furnished apartments aren't meant for analysts with 5 years of experience. They're generally corporate units that are leased to companies to house their executives whom may be living in another city and commuting weekly or what not.
It's also not as profitable as market rate units, when we do the math and take into account difficulty to lease and short term lease contracts...
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