Rent furnished or empty

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Renting furnished or empty: what you need to know

I am Manuel Ravier, founder of the website and expert in student housing. I'm going to give you some basics to help you decide whether you are going to invest in a furnished rental or an empty rental. Each of these solutions can present interesting opportunities depending on the region you are in, the neighborhood, the type of property, the nature of the residence or, why not, the house.

Each of these options may have advantages in terms of lease term, price or tax benefits. You will therefore have to bring your personal case to these more general proposals to find out what seems best for you.<br />As professionals, we can advise you, support you and direct you towards THE most appropriate solution.

Furnished rental: a more attractive tax system

Location meublée une fiscalité plus attractive

The big difference between the taxation of an empty rental and a furnished rental is essentially in the way you show your income on your tax form. This, of course, will also have consequences on the way you calculate what you will have to pay to the administration, in the end.

Minimal risk of non-payment, substantial income, flexible legal regulations, attractive taxation: furnished rentals are not lacking in assets. as quoted in an article in the 2017 Income .

Empty rental: less frequent rental vacations

Empty rental: less frequent rental vacations

Rented empty or rented furnished, you hesitate? Here's what I have to say on the subject: a furnished apartment is very practical for tenants since they don't need to make any investment in terms of furnishings and will take care of very few personal belongings to move in.
The other side of the coin for the landlord is precisely this advantage of furnishing for the tenant. With a notice period of 1 month instead of 3, also the tenant has more freedom to move out quickly, which leaves the landlord very little time to replace him without there being a vacancy period.

What's more, without furniture, moving is so much easier, that a tenant is much less hesitant about leaving the dwelling when he needs it. For this reason, rental vacations are much more frequent in furnished rentals than in empty rentals.
The margin of uncertainty is higher for a landlord when he has a furnished dwelling, since, in an empty rental, his tenants are usually settled for several years, which greatly limits the administrative procedures for changing tenants.
The landlord can therefore expect to have to carry out an empty lease much less regularly than a furnished lease.

If the owner of a furnished dwelling goes through a real estate agency to rent out his property, this will represent an additional cost for each new tenant, a cost that could chill some, especially for a short-term dwelling.
Students, who are particularly fond of furnished accommodation, tend, for example, to return their accommodation during the summer holidays. In contrast to empty accommodation, where tenants will prefer to avoid paying agency fees again and move out for just two or three months

For furnished rentals, the owner-lessor will have to declare his business activity in certain cases, as I mentioned above. He will then have a SIRET number. The advantage for the tenant but also for the landlord is that there will be no agency fees, which generally makes it easier to attract potential tenants.

To rent empty or furnished: what rental profitability?

To rent empty or furnished: what rental profitability?

Between empty or furnished, one of the first questions that will also arise and which I will try to answer is which of the options will offer the best rental return.
If we consider the gross yield, it is the furnished rental that will come out on top due to higher rents. In fact, offering accommodation that is already well equipped in terms of amenities allows you to make more gross profits since it is a complementary service that is offered in addition to the rental of the accommodation itself. An empty dwelling will generally be rented between 5 to 30% cheaper than a furnished dwelling.
On the other hand, it should be noted that an empty dwelling will be more profitable in the sense that, in fact, it attracts tenants who tend to move in on a medium to long term basis. Turnover is much lower than in the case of furnished rentals, which more easily attract students or holidaymakers for short periods.

But profitability is not assessed on the gross but on the net in order to properly judge the real interest of the selected solution. Thus, in addition to the collection of rents, you will have to take into account various elements such as local taxes, charges, your tax regime (more advantageous in the case of empty rentals, as seen above) and your marginal tax bracket. All these expenses will be deducted from your gross income.
Therefore, whatever formula you choose, you need to go through an evaluation of the net profitability of your investment because only this will allow you to measure the difference in performance between empty and furnished rentals.

Empty or furnished rental: how to choose?

Empty or furnished rental: how to choose?

To make your choice, I suggest you start by weighing the pros and cons for each type of rental. The empty rental is the one that offers the more restrictive of the two, since the notice of departure is 3 months and the initial lease is signed for 3 years, which offers a certain security to the owner, namely long periods without having to look for a tenant.

Furnished rentals allow for a flexible lease with a higher rent, but with the possibility of giving one month's notice. The initial term of the lease is a minimum of one year, which is less restrictive for the tenant. Moreover, if the tenant is a student, the minimum term will only be 9 months, which may be convenient for some landlords who then use the accommodation as a holiday rental at high prices or can take advantage of this to occupy the accommodation themselves or to carry out certain work.
This type of rental accommodation is generally suitable for younger people who do not yet own their own furniture. Students can thus find practical accommodation several hundred kilometres away from their parents' home to pursue their studies. Students coming from abroad for a semester or a year in France are also particularly interested in this type of accommodation.
However, the counterpart remains in the short duration of the presence of the same tenant, which may disinterest some owners.

If the lessor wishes to recover his dwelling, he will have to give 6 months' notice before the end of the lease to the tenant for an empty rental and 3 months' notice for a furnished rental.
However, the procedures are more complex for an empty dwelling. The justification is generally made when the owner decides to live in the dwelling himself. He may also decide to house one of his family members or he may sell the property.

While rents are lower in empty housing, taxation is more important. As for the administrative procedures, they are much more practical for empty housing (micro-financial regime).

In conclusion, "furnished rental really deserves our attention in order to develop a patrimony and collect income with a softened taxation."