Furnished a two-bedroom on a rumor. Sat on it 11 weeks.

I have six units across three small buildings, all unfurnished long-term until this one. A regional office about a mile from one of my buildings announced they were adding staff, and I decided the two-bedroom coming vacant should go furnished for corporate people.

What I spent: $13,800 on furniture, mattresses, kitchen, linens, TV, small stuff I forgot to count until the credit card statement came. I also had to put utilities and internet in my name because that's the whole point of the package, about $310 a month.

The unfurnished rent on that unit is $1,600. I priced it furnished at $2,750 and thought that was conservative. It sat 11 weeks. I got three inquiries, all individuals, none of them companies, and one of them wanted three weeks which I turned down because I'd read that under 30 days pulls you into short-term rental rules in my city. I ended up signing a nine-month tenant at $1,875 furnished, and I'm storing the dining set because they had their own.

Cost of the experiment, roughly: $2,900 in rent I didn't collect versus just re-renting it plain, $850 in utilities during vacancy, and $13,800 of furniture earning me $275 a month over the unfurnished number.

What I'd do differently: I'd get one signed or at least verbally committed corporate relationship before I bought a single mattress. The office expanding didn't mean anyone at that office had authority to place housing, and I never found out who did until after I'd given up. Furnish to a customer, not to a headline.

2 replies

2tonyv88SO4CPRO6

The 11 weeks doesn't surprise me and I'd put the cause on lead time rather than demand. On the management side, corporate placements almost never arrive the week you're ready. Relocation firms and the bigger employers run vendor lists, and getting onto one takes paperwork and time, insurance certificate, W-9, sometimes a site visit, and then you wait for someone to actually have a person to place. I've had units approved in April and get their first assignment in September.

So the sequence you describe, vacancy first then furniture then hunting for a client, is the expensive order. The people I see do this well keep the unit earning something plain while they do the vendor work, then convert on a turn once they have a pipeline.

One other thing. $2,750 with utilities and internet included on a two-bedroom is not crazy, but corporate buyers compare against what a provider quotes them, and providers include housekeeping intervals and a 24-hour phone number. If you're not offering that, you're competing on price with people who are offering more.

1karen_whitfieldPG4APRO7

I nearly did this with a house I hold next to some acreage, and the thing that stopped me was boring. I couldn't name the company that would call. I could name the industry, I could name the highway, I couldn't name a person with a purchase order.

Your $275 a month over unfurnished on $13,800 is a five-year payback ignoring wear, and furniture doesn't last five years with turnover. But you learned it for under three grand of real loss, which is cheap. I'd keep the furniture in storage rather than sell it at a loss and try again when you actually have the relationship, not before.

Furnished a two-bedroom on a rumor. Sat on it 11 weeks.

2 replies