When planning to invest in real estate, many options are available to you. The choice between unfurnished and furnished rentals is one of them. If you are struggling to make a decision, this article will help you see more clearly.
Discover the essentials to consider that will allow you to know the best rental formula that suits you best. To better understand our ideas, we first invite you to consult some definitions.
📋 The essentials at a glance: Personally, I consider that the choice depends on your taxation and geographic area: furnished rentals offer a higher return of 10% to 20% on average thanks to LMNP depreciation. However, unfurnished rentals guarantee much greater stability with 3-year leases. I recommend analyzing your investor profile before deciding.
What are unfurnished and furnished rentals?
| Criterion | Unfurnished rental | Furnished rental |
|---|---|---|
| Nature of the contract | Rental of a dwelling without furniture or daily-use equipment. | Rental of a dwelling equipped with furniture and equipment allowing immediate occupancy. |
| Minimum lease duration | Generally 3 years for a standard lease in a primary residence. | Generally 1 year for a standard lease, 9 months for students. |
| Notice period for tenant | 3 months (or 6 months in some cases). | 1 month (or 3 months in some cases). |
| Initial investment | Low, as no furniture needs to be provided. | Higher, as the owner must furnish and equip the dwelling. |
| Flexibility for the owner | Less flexible, longer lease duration and longer notice period. | More flexible, shorter lease and reduced notice period. |
| Vacancy periods | Less turnover, but sometimes difficult to re-rent quickly. | More turnover, especially in student or seasonal areas. |
| Target audience | Tenants wishing to settle long-term with their own furniture. | Tenants looking for a ready-to-live-in home, students or people on the move. |
To know the best return for your rental investment, you must first decide between renting unfurnished or furnished. The first option, as its name suggests, refers to a rental mode without furniture.
When the tenant moves in, an unfurnished dwelling welcomes them. It contains no necessary fittings for the new occupant to live there immediately.
As such, it has neither kitchen appliances, bedding, nor furniture. Also, the room contains no storage or lighting. It is up to the tenant to take care of these to live comfortably daily.
On the other hand, furnished rental indicates a decent dwelling that is well equipped with furniture to ensure peaceful use of the apartment or home.
📍 My experience: In 2024, I switched a Bordeaux studio from unfurnished to furnished rental. By investing only 3,500 euros in sturdy and stylish furniture, I was able to increase the rent by 120 euros per month. The lesson learned is that furnished rentals attract younger profiles but require more reactive management to compensate for higher turnover.
According to the decree of September 2015, there is a list that determines the elements that must be found in the house, namely lighting fixtures, storage shelves, curtains or shutters in the bedrooms, bedding with a cover or duvet, cooking plates, a refrigerator, a microwave oven, kitchen utensils, sufficient tableware, seats, and a table.
Depending on the nature of the accommodation, it must also include household cleaning equipment such as a mop for tile flooring, a vacuum cleaner for carpets, and more.
What are the advantages and disadvantages of unfurnished rental?
| Criterion | Unfurnished Rental | Furnished Rental |
|---|---|---|
| Lease duration | 3 years | 1 year (or 9 months for students) |
| Tenant notice period | 3 months (1 month in tight markets) | 1 month |
| Security deposit | 1 month rent excluding charges | Up to 2 months rent excluding charges |
| Default taxation | Property income | Industrial Profits (BIC) |
When you consider entering the rental sector, know that every decision has strengths as well as weaknesses. The same applies to unfurnished rental. It has many advantages, including greater stability compared to furnished rental.
For an unfurnished dwelling, the minimum lease duration is 36 months. If the landlord wishes to terminate the contract, a 6-month notice must be given to the occupant. If this decision belongs to the tenant, the notice period can range from 1 to 3 months.
Simply put, unfurnished rental offers you a longer lease, thus a sustainable investment. This significantly reduces vacancy periods between tenants. This option does not allow for tenant turnover.
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That’s not all, it makes the landlord’s tasks easier since they do not have to worry about the furniture in the dwelling. It also requires less maintenance work. No equipment repairs are necessary. Unfurnished rental simplifies procedures if you plan to have the house appraised.
As for its disadvantages, the rent set is lower than that for furnished rentals. The rental lease is more rigid. The landlord does not have the right to terminate the contract, regardless of the reason, before the lease duration ends. It must be said that there is a risk if the tenant is a bad payer.
🌍 Did you know?
Thanks to the simplified real regime in furnished rentals (LMNP), you can deduct the depreciation of furniture and walls, which often allows you to show a tax result close to 0 euros for 10 years.
What are the advantages and disadvantages of furnished rental?
Compared to unfurnished rental, the rent set is more attractive. Especially since the furniture is of good quality, it increases the value of the rental property and helps to stand out from the competition.
Besides that, the major advantage of furnished rental lies in taxation. For the micro-BIC regime, the landlord benefits from a deduction of up to 50%.
It is faster to find tenants for a furnished house. Occupants prefer to settle in a home already equipped with essential furniture and equipment.
Despite its many advantages, this option also has drawbacks. Firstly, it is criticized for shorter rental periods.
In this respect, tenant turnover becomes frequent. Additionally, vacancy periods remain recurrent between two tenants.
To comply with the standards in force, furnished rental requires a high initial investment. All equipment and furniture must be regularly maintained.
⚠️ Common Mistake
The mistake is forgetting to carry out an ultra-detailed inventory in furnished rentals. If the condition of the furniture is not precisely noted upon entry, it will be impossible to deduct the cost of damages from the security deposit.
What criteria should be considered when choosing between unfurnished and furnished rental?
- Rental objective: The first criterion to consider concerns your own objective. If you intend to sell your property after a few months of renting, it is better to opt for a furnished rental.
- Notice period: Furnished rentals have a minimum notice period of 3 months. On the other hand, unfurnished rentals require you to respect a minimum notice period of 6 months granted to the tenant. You must therefore be patient before starting the profitable work to be done before selling.
- Available budget: It is equally important to take your budget into account before choosing between these two rental options. If you have extensive financial means, do not hesitate to opt for furnished rental. It requires an initial investment with the repair and maintenance of furniture.
- Financial limits: Conversely, if you have a limited budget, unfurnished rental will definitely suit you. It does not require any additional expenses before the tenant moves in.
- Vacancy periods: In addition, vacancy periods can reduce your income. Especially since you have difficulty finding a new tenant after another leaves.
- Caution for furnished rental: If you have financial difficulties, refrain from furnished rental. This situation is very common.
How to choose the best option to maximize rental profitability?
💡 Practical tip
For unfurnished rentals, favor large spaces (T3 or more) that attract families. For furnished rentals, focus on studios or T2s near university centers or train stations.
If you want to optimize rental profitability, renting a furnished home offers you several possibilities. Thanks to this investment, you can earn higher rents.
Even better, it is faster to find new tenants even if the previous occupant moves out. In most cases, people choose a furnished home rather than an empty one. You therefore continue to collect rent.
It should be noted that renting furnished also offers interesting tax advantages.
According to the non-professional furnished rental scheme or LMNP, it allows you to deduct expenses incurred by the rental and to reduce the taxable value of the property. For the micro BIC scheme, it ensures the application of a flat-rate deduction of 50%.
What are the rules and legal obligations regarding unfurnished and furnished rentals?
For unfurnished rentals, the first obligation applies to a minimum surface area. The dwelling must have a ceiling height of 2.20 m and a living space of 9 m2.
The owner must also guarantee the enclosure and coverage including chimneys, exterior joinery, plumbing, and more.
As for the equipment, the house must have potable water, a kitchen area, sanitary facilities, heating, and wastewater drainage.
Regarding furnished rentals, the apartment must meet the decency conditions.
It must be equipped with all the necessary furniture and equipment such as bedding, lighting, cooking plates, and much more.
Also, the owner is obliged to guarantee peaceful occupation of the house. For example, they must find solutions in case of poor insulation and noise disturbances. This comparison allows you to clearly understand rental management:
👍 Strengths
- Very attractive taxation (BIC)
- Higher rent (approx. 15%)
- Flexible lease management
🔻 Limitations
- High tenant turnover
- Furniture maintenance at owner’s expense
How to calculate the amount of charges and taxes for unfurnished and furnished rentals?
Let’s first consider the case of an unfurnished rental. The owner is required to declare rental income. There are two types of tax regimes: the actual regime and the micro-foncier regime.
With the first, the tax calculation takes into account loan interest, insurance, property tax, and maintenance work if necessary.
Regarding furnished rentals, it is imperative to declare rental income with 2 regime options. There is the micro-BIC regime and the actual regime.
With the first status, it allows you to benefit from a 50% deduction on rental income. In any case, furnished housing offers you better profitability on the tax side.
Unfurnished rental involves renting a property without furniture, with a longer lease (often 3 years) and a longer notice period. Furnished rental includes furniture and equipment allowing the tenant to move in immediately, with a shorter lease and a reduced notice period. It requires a higher initial investment for furnishing and maintenance.
Unfurnished rental offers tenant stability and less turnover, but it is less flexible and requires waiting longer before recovering the property. Furnished rental often generates higher rents and more flexibility, but involves more management, maintenance, and a higher risk of vacancy periods.
The choice depends on your goals and budget. If you prioritize simplicity and limited investment, unfurnished rental is preferable. If you seek higher income and are willing to invest in furniture and management, furnished rental is the best option, especially for temporary tenants or students.
