Unlocking the Potential of On-Demand Furnished Living in Multifamily Buildings

Launching an on-demand furnished living platform in a multifamily building can offer several advantages and disadvantages. It is crucial to consider these when making an informed decision. In this blog, we explore the pros and cons of on-demand furnishing in multifamily buildings.

The pros:

1. Growing Need for Furnished Housing in the US: 

More and more people in the US are seeking furnished accommodations. Whether it’s for work, studies, or personal reasons, having a ready-to-go furnished space saves time and the hassle of moving or buying furniture temporarily. Major cities with strong job markets, educational institutions, and tourist attractions tend to have a higher demand for furnished housing. This demand provides an opportunity to leverage existing assets in a new way.

2. Cities People are Migrating to for Employment: 

The specific cities people are migrating to for employment can vary based on industry trends, economic factors, and regional opportunities. Places like Austin, Seattle, Denver, and Atlanta have been attracting talent with their growing industries and strong economies. Doing your research to see how your target market aligns with these trends can help you get higher occupancy rates.

3. Premium Pricing for Furnished Apartments: 

Furnished apartments can fetch a higher price compared to unfurnished ones. The premium can vary based on location, length of stay, furniture quality, and amenities offered. Generally, furnished apartments can command a premium ranging from 10% to 50% or more, depending on market conditions and demand-supply dynamics. Dive into market research to find out the potential premium for your area and adjust pricing accordingly. 

4. Enhanced Attractiveness to Tenants: 

Offering furnished apartments can attract a broader range of tenants, including professionals, students, and individuals seeking temporary housing. The convenience and time-saving aspects of moving into a fully furnished unit can be a huge selling point.

5. Competitive Edge: 

Stand out from the competition by providing furnished apartments. It’s a unique offering that sets your property apart and caters to a specific niche, helping you attract and retain tenants in a competitive rental market.

Cons:

1. Higher Initial Investment: 

Starting a furnished living program requires some upfront investment to furnish the units. Furniture, appliances, electronics, and decor can add up, so proper budgeting and financial planning are a must to ensure a positive return on investment.

2. Maintenance and Replacement Costs: 

Furnished apartments may need more maintenance than unfurnished ones. Wear and tear on furniture, appliances, and other furnishings may necessitate repairs or replacements more frequently, adding to operational costs.

3. Limited Flexibility: 

Offering furnished apartments reduces flexibility for potential tenants who prefer to bring their own furniture or have specific preferences. Some individuals may already possess furniture or wish to personalize their living space, and the lack of flexibility can limit the appeal of the furnished living program.

4. Management Complexity: 

Managing a furnished living program can be more intricate than handling traditional unfurnished units. Coordinating furniture inventory, handling move-in and move-out logistics, and ensuring the ongoing maintenance of furnishings require efficient management and organization.

Institutional real estate owners, such as real estate investment trusts (REITs) or large property management companies, have recognized the potential in the furnished living market and have begun building or partnering with furnished living platforms. However, the extent of institutional owners’ involvement in this space may vary depending on the market and individual strategies. 

Setting up an on-demand furnished living platform in a multifamily building is a promising venture, but make sure to consider the growing demand, potential premium pricing, and the complexities it brings. Also, weigh the initial investment and maintenance costs against the benefits it offers.

Inhabitr’s multifamily furniture projects leverage our proprietary Furniture Cloud with live inventory across millions of SKUs. We aim to help you be more efficient with all of your furnishing needs, also offering lease and buy pricing options to align with your business plan. Check us out!