Should You Furnish Your Melbourne Investment Property? A Guide for Landlords

One of the decisions Melbourne landlords face when preparing an investment property for rent is whether to offer it furnished or unfurnished.

Furnished rental properties can appeal to students, international tenants, professionals relocating to Melbourne and renters seeking a convenient move-in experience. Unfurnished properties, on the other hand, may appeal to families and long-term tenants who prefer to bring their own furniture and personalise their living space.

There is no single answer that works for every property. The right choice depends on the property's location, target tenant market, furnishing costs, ongoing maintenance and expected rental performance.

In this guide, we explore the advantages and disadvantages of furnished and unfurnished rentals in Melbourne and explain how landlords can make an informed decision.

What Is the Difference Between Furnished and Unfurnished Rentals?

A furnished rental generally includes furniture and household items that allow a tenant to use the property without purchasing all the major furnishings themselves.

Depending on the property, these items may include beds, mattresses, sofas, dining tables, chairs, wardrobes and selected appliances. Some properties may also provide kitchenware and other household essentials.

An unfurnished rental generally does not include loose household furniture, although fixed appliances, built-in wardrobes and other fixtures may remain part of the property.

Importantly, the term "furnished" can mean different things to different renters. Landlords should clearly list which items are included rather than relying on the label alone.

1. Which Melbourne Properties Are Best Suited to Furnished Rentals?

Furnished accommodation can be particularly suitable for certain locations and tenant groups.

Properties near universities

Apartments near Monash University, the University of Melbourne and other education facilities may attract students, visiting academics and international renters who do not want to purchase furniture for a temporary or transitional living arrangement.

Apartments near major employment and transport hubs

Properties close to Melbourne's CBD, major hospitals, business districts and public transport may appeal to professionals relocating for work or seeking accommodation while settling into the city.

Properties targeting short-term or transitional accommodation

Some tenants need a home for a limited period while moving between cities, waiting for a permanent residence or completing a temporary work assignment.

However, landlords should distinguish between an ordinary residential tenancy and short-stay accommodation. Different legal, insurance, building and operational requirements may apply depending on the arrangement.

Smaller apartments

A well-furnished apartment with an efficient layout may offer a convenient option for renters who prioritise location and ease of moving.

Even so, furniture should not make the property feel crowded or reduce the practical use of its living space.

2. What Are the Advantages of Furnishing an Investment Property?

Convenience for tenants

Tenants who do not already own furniture may appreciate being able to move in without purchasing large household items.

This can make the property more appealing to renters who are new to Melbourne or who do not want the expense and inconvenience of transporting furniture.

Potential access to a different tenant market

Furnishing a property may help it appeal to renters who specifically seek furnished accommodation.

In suitable locations, this can provide an additional point of difference from competing listings.

A more complete presentation

Carefully selected furniture can help prospective tenants understand how a space can be used.

For example, a small second bedroom may be presented as a study or guest room, provided the listing accurately represents the property's features and the furniture does not obstruct normal use.

Potential rental income benefits

A furnished property may achieve a different rental price from a comparable unfurnished property. However, this is not guaranteed.

Any potential increase should be assessed against the costs of purchasing, maintaining, replacing and storing furniture, as well as the demand for furnished accommodation in the local area.

3. What Are the Disadvantages of Furnished Rentals?

Furnishing a property also introduces additional responsibilities and expenses.

Initial furnishing costs

Landlords may need to purchase beds, mattresses, sofas, dining furniture, desks and other household items.

The total cost depends on the property's size, the quality of the furnishings and the target rental market.

Before investing in furniture, prepare a realistic budget and estimate how long it may take for any additional rental income to offset the expense.

Ongoing maintenance and replacement

Furniture can become damaged, stained or worn through normal use.

Landlords should consider the cost of replacing mattresses, repairing furniture and maintaining appliances or other supplied items.

More detailed record-keeping

A furnished rental requires a clear record of the items supplied with the property.

An inventory, supported by photographs and condition records, can help document the original condition of furniture and other included items.

Potentially narrower tenant demand

Not every tenant wants furnished accommodation. Some renters already own furniture and may prefer an unfurnished property because it allows them to arrange their home according to their own preferences.

The suitability of furnishing therefore depends heavily on the property's location and target tenant profile.

4. What Are the Advantages of Renting Out an Unfurnished Property?

Unfurnished rentals can be a practical choice for landlords seeking a straightforward, longer-term rental arrangement.

Lower upfront costs

Landlords do not need to purchase a full set of loose furniture before advertising the property.

This can be particularly helpful for investors managing renovation expenses, mortgage costs or other property-related commitments.

Less furniture-related maintenance

Without supplied furniture, landlords generally have fewer loose household items to inspect, maintain and replace.

The property will still require normal repairs, safety checks and maintenance, but the management of furniture is reduced.

Appeal to long-term tenants

Families, couples and established professionals may prefer unfurnished accommodation because they already have their own furniture.

These renters may also want to create a living environment that suits their household's needs.

Simpler property presentation

An unfurnished property can help tenants assess room dimensions, storage and layout without furniture occupying the space.

However, the property should still be clean, well maintained and professionally marketed.

5. How Much More Rent Can You Charge for a Furnished Property?

There is no universal premium for furnished rentals in Melbourne.

The difference depends on local demand, property type, furnishing quality, location and the competing rental properties available at the time.

A furnished apartment near a university may attract a different tenant market from a furnished family home in a suburban neighbourhood.

Landlords should compare similar properties rather than assuming that furniture automatically justifies a higher weekly rent.

A useful assessment should consider:

• Comparable furnished rental listings
• Comparable unfurnished rental listings
• The quality and condition of the furniture
• The target tenant market
• Expected vacancy periods
• Furniture replacement costs
• Cleaning and maintenance expenses
• Any additional management or operating costs

A local rental appraisal can help landlords understand how the two options compare in their specific suburb.

6. Calculate the True Return Before Buying Furniture

The best decision is not necessarily the option with the highest advertised rent. Landlords should compare the likely net financial outcome.

Consider a simplified example.

Suppose an unfurnished property could rent for $600 per week, while furnishing it might allow an asking rent of $650 per week.

The potential difference is $50 per week.

Over 52 weeks, that represents a theoretical additional gross rental income of $2,600, assuming the property is occupied for the entire year and achieves the expected rent.

However, this does not account for:

• The initial cost of furniture
• Furniture repairs and replacement
• Additional cleaning
• Any difference in vacancy
• Additional insurance or other applicable costs
• Tax treatment and depreciation rules

If furnishing the property costs several thousand dollars, it may take time to recover that investment.

The actual result will depend on the rent achieved, occupancy and ongoing expenses. Landlords should use realistic estimates rather than treating the potential rental difference as guaranteed income.

7. How to Choose the Right Furniture for a Rental Property

If you decide to furnish your investment property, prioritise durability, practicality and easy maintenance.

Choose durable materials

Rental furniture should be suitable for regular use. Materials that are easy to clean and maintain may reduce the time and expense associated with repairs.

Avoid overcrowding rooms

Furniture should suit the size and layout of the property.

Oversized sofas, bulky dining tables and excessive decorative items can make an apartment feel smaller and reduce usable space.

Prioritise essential items

The furniture required will depend on the target tenant market.

A basic furnished apartment may need a bed, sofa, dining table and practical storage. A property targeting tenants who expect a more complete setup may require additional items.

Before purchasing, research what comparable local furnished rentals actually include.

Keep a consistent style

A simple, neutral style can help create a clean and inviting presentation without requiring expensive designer furniture.

The objective is to make the property functional and attractive rather than to furnish it as a personal home.

8. What Should Landlords Document in a Furnished Rental?

Accurate documentation is particularly important when furniture is included in a tenancy.

Landlords and property managers should consider maintaining:

• An inventory of supplied items
• Photographs showing the condition of furniture
• Records of existing damage
• Relevant appliance information
• Purchase receipts and warranty details where available
• Maintenance and replacement records

The property's condition report should accurately document the premises in accordance with applicable Victorian requirements.

An itemised inventory can supplement the condition report by identifying individual furniture items and their condition.

At the end of the tenancy, these records may help clarify which items were supplied and whether there is evidence of damage beyond fair wear and tear.

9. Does Furnishing a Property Affect Insurance and Tax?

Furnishing decisions may affect a landlord's insurance arrangements and tax record-keeping.

Before purchasing furniture, landlords should check whether their landlord insurance covers supplied contents, accidental damage and other relevant risks. Coverage, exclusions and claim conditions vary by policy.

Tax treatment can also differ depending on the type of expense, the circumstances of the property and the applicable Australian tax rules.

Landlords should retain invoices and relevant records and consult the Australian Taxation Office or a qualified tax professional about the treatment of furniture purchases, repairs and depreciation.

Do not assume that every furniture purchase can be claimed immediately as a tax deduction.

10. How a Property Manager Can Help You Decide

A property manager can help assess whether furnishing a property is commercially sensible.

The assessment should begin with the property's location, likely tenant market and comparable rental evidence.

A property manager may help landlords:

• Compare furnished and unfurnished rental listings
• Identify the property's likely target tenants
• Estimate an appropriate asking rent
• Review property presentation
• Recommend practical improvements
• Coordinate leasing and tenant communication
• Maintain records of supplied furniture
• Manage repairs and ongoing tenancy requirements

The final decision should reflect the property's circumstances rather than a general assumption that furnished rentals are always more profitable.

Furnished vs Unfurnished: Which Option Is Better?

ConsiderationFurnished RentalUnfurnished RentalInitial investmentGenerally higherGenerally lowerFurniture maintenanceAdditional responsibilityUsually minimalTarget tenantsMay appeal to students and relocating professionalsMay appeal to families and established householdsPotential rental premiumPossible, but not guaranteedDepends on the local marketInventory managementMore detailedGenerally simplerBest approachConfirm local furnished-rental demandCompare demand for similar unfurnished properties

Neither option is automatically better. The right choice depends on rental demand, costs, the property itself and the landlord's investment objectives.

Final Thoughts: Make the Decision Based on Your Property and Local Market

Furnishing an investment property can create opportunities, particularly in areas where renters value convenience and move-in-ready accommodation. However, furniture also introduces additional costs, maintenance and record-keeping responsibilities.

For Melbourne landlords, the most important step is to understand the local tenant market before spending money on furnishings.

Compare similar rental properties, calculate the likely net return and consider the type of tenant you want to attract. A property-specific rental appraisal can help you make a more informed decision.

At AUV Real Estate, we help Melbourne property owners assess their rental options, prepare properties for lease and manage the ongoing responsibilities of residential property investment.

If you are considering renting out a furnished or unfurnished property in Melbourne, contact AUV Real Estate to discuss your property and request a rental appraisal.

This article provides general information only and does not constitute financial, tax, insurance or legal advice. Rental conditions and applicable requirements may change. Landlords should verify current Victorian requirements and obtain professional advice where necessary.

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