Furnishing a rental property can be a great idea, but it's only likely to add value if you have the right type of property and are targeting a specific type of tenant.

Types of properties most suited to being furnished

Some properties are more suited to being furnished than others. Before making a decision, it's a good idea to talk to your property manager about the demographics of the people renting in your area and whether furnished properties are sought after.

Generally, furnished properties suit:

• Short term rentals
• Apartments
• Properties that are difficult to access, for example, a flat that's up a flight of stairs
• Tenants who are unlikely to have their own furniture, like students or new immigrants.

The benefits of furnishing a property

If you've got the right type of property, there's plenty of value to be had for landlords who choose to furnish it. It has the ability in some cases to attract higher rents, and can lead to shorter downtime between tenancies especially apartments.

Top tips for a successfully furnished property

Make sure the furniture is in good condition

Scruffy older furniture can make your property less desirable, putting off potential tenants and reducing your chances of attracting the best market rent.

Be clear what furniture are included

"Fully furnished" can mean different things to different people. Be clear from the outset what furniture is provided by completing a detailed Inventory as well as taking photographs of the items. The Inventory should form part of the tenancy agreement and be dated and signed by the in-coming tenant.

Arrange contents insurance

You should get contents insurance, or have a policy that covers a furnished property to protect yourself from damage to the furniture. It is recommended that you store items of sentimental value off-site, rather than in the property.

Factor in the cost of wear and tear

As well as requiring a large up front expense, you'll be responsible for maintaining or replacing any of the appliances or furniture provided. The tenant is only responsible for repairing any careless or intentional damage to furniture that is caused by them or their guests. It's a good idea to build this cost into the monthly rent.

Talk to a professional about depreciation

If a property is rented out as fully or partly furnished it's possible to depreciate the contents. View the CRA depreciation rates or get advice from a professional accountant.