Thursday, August 28, 2014

Furnishing a Rental

Happy Thursday! The week is almost over and summer last long weekend is in sight. With the closing date of one of our rentals fast approaching, I am beginning to think if I should be furnishing this unit before leasing it out. After all, a furnished suite would rake in more rental income which means a higher ROI. Better yet, it gives an interior design aficionado like me a brand new project to tackle. 

The condo in question was the one that was cancelled by the builder to make room for another elevator. This was the old layout. 1+Den and 2-bedroom are still the most popular units in Toronto's rental market, and ours was a 2-bedroom with only one bathroom. It came with a French balcony (aka not a real balcony). 

The old floor plan: 2-bedroom + 1 bathroom

The builder was very generous by offering us this new unit at no additional cost. It is still a 2-bedroom suite, but it is 50 sq ft bigger and has a second full bathroom with a walk-in shower. Crazy sweet right? Who doesn't like to have a soaking tub AND a walk-in shower under one roof? Just when we thought nothing else could top that, the builder gave us a corner suite which comes with a wrap-around balcony and an unobstructed park view! Our tenant will have access to this humongous balcony from every single room of this condo! I did some quick math, and these pricey downtown Toronto premiums would easily cost an additional $100,000! 

The new floor plan: 2 bedroom + 2 bathroom + corner unit + wrap-around balcony!

That means if we are to sell this unit today, we stand to gain 100K, without even factoring in the appreciation. But we are not going to do that. I am a long-term investor, and I know there is still so much potential in this downtown pocket. The only direction the property value will go is up, and not to say the ongoing income stream it's going to generate for us! 

So back to furnishing the rental suite. One of the options I am considering is a rent-to-own model, a new concept in the interior decorating world that I think would be very neat and has a lot of potential. The idea was inspired by Emblem Furniture, who offer home furniture rental. This model would work particularly well for people who own or lease a rental property. It allows me to re-assess my decision to furnish the suite after a couple of years, and determine whether I want to buy out the furniture (i.e. keep the rental furnished) or return them and walk away. It also gives me access to new and stylish furniture at a much lower upfront cost which again means higher ROI for us. It would be interesting to see if this model actually takes off. Stay tuned for updates on how I furnish and decorate #projectrental.  

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