One of the most time-consuming elements of property management is making sure your building is in good working order. After all, your tenants are counting on you for a safe, comfortable home and you’re required by law to ensure the property meets certain standards.
When you own the major appliances that your tenants rely on, you may have added responsibility – but there are also significant benefits. These are a few of the points to consider when deciding whether or not you will furnish appliances in your rental properties:
What is standard in your market?
If other rental units at the same price point come furnished with appliances, you may struggle to rent your property if you fail to offer the same equipment. There are several ways to determine what is standard in your area:
- Visit classified sites like Craigslist and note the rental price for units that are the same size as yours in similar neighborhoods.
- Contact local realtors, property management companies, and/or professional organizations to learn more about the units available for rent in your area.
- Take note of “For Rent” signs in the same neighborhood as your rental property, and then call the number provided to ask what is furnished with the unit.
There is no need to collect data for dozens of units. With the first ten calls, you will get a clear picture of the standard for your area.
What is the cost of installing or replacing the appliances?
Ultimately, your goal is to realize a return on your investment, so it is important to weigh the cost of adding or replacing appliances against the difference in rent. For example, simply adding a washer and dryer to existing hookups can be relatively inexpensive, while installing the appropriate washer and dryer hookups can be costly.
The additional investment makes sense in a hot or high-priced market – but it could lead to a bigger financial loss in an area where most residents use the local laundromat. Use the techniques listed above to gather additional information on the types of appliances offered in similar units.
Do you typically have short-term or long-term tenants?
If your property is favored by short-term residents (aka people plan to stay less than a year) you will find it difficult to rent the unit without basic appliances. These individuals are often professionals who are in the process of relocating, students and professors who are relocating temporarily, and individuals who need to fill a gap between selling their primary residences and purchasing new homes.
They will almost invariably choose a property that has appliances, as it simply doesn’t make sense for them to invest in large equipment that they only need for a limited period.
How carefully do you screen your tenants?
Individuals with solid rental histories are more likely to care for the appliances you supply. By checking references and screening tenants, you can minimize the likelihood of losing the funds you invested in appliances to misuse.
Maximizing the Value of Your Property
The best way to maximize the value of your property while minimizing your liability is to include a clause in the lease that gives you some flexibility. Begin by listing the specific items covered by the clause. For example, the refrigerator, stove, washer and dryer are appliances for the purpose of the lease, while the toilet, water heater, and garbage disposal are not. Generally, the following language is acceptable:
The property contains the following items that residents may use: refrigerator, microwave, dishwasher, and oven/range. If residents choose to use these appliances, residents are responsible for maintenance and repairs.
This language shifts all responsibility for the appliances to your tenants, but it also limits your ability to hold residents responsible for damage due to misuse. You may prefer to take a centered approach, indicating that residents are responsible for using appliances according to the instruction manual, and that you will cover the cost of repairs over a certain amount. Common figures are between $75 – $150. Of course, this language doesn’t guarantee that you will be free from all appliance-related responsibility, but it does offer some measure of protection.
Furnishing appliances makes it easier to rent your property, and you can charge a bit more for units that come with the basics pre-installed. However, there is a greater expense associated with purchasing and installing appliances, and you may be responsible for maintenance and repairs. You can mitigate these risks by clearly articulating your responsibilities versus your tenants’ responsibilities in the lease or rental agreement.