Should I rent out my apartment furnished or unfurnished?

The return on investment: Is the premium worth it?

The strongest argument for a furnished apartment is the price. You are allowed to add a so-called "furnishing surcharge" to the net rent.

• Higher gross rent: A well-equipped furnished apartment can generate 20 to 30 percent more rent than its empty counterpart.
• The furniture surcharge: The law allows you to pass on the costs of the furniture, including depreciation and interest, to the rent. A furnished apartment therefore generates cash flow from the inventory.

But beware: This calculation only works if the furnished apartment is actually rented out. Vacancy is the biggest enemy of returns. A furnished apartment that stands empty for two months often wipes out the extra profit for the entire year.

The target audience: Who is looking for what?

If you offer a furnished apartment , you narrow your target group, but open yourself up to affluent niche markets.

• Unfurnished apartments attract long-term tenants: families, couples, seniors. They often stay for years or even decades. Tenant turnover is low.
• The furnished apartment: It attracts short-term tenants.
• Expats: International professionals who come to Switzerland for 6 to 24 months. They often expect a "kitchen-sink" approach in a furnished apartment (everything from towels to Wi-Fi must be provided).
• Weekly commuters: Commuters who need a furnished apartment near the city center during the week.
• Separated partners: People going through a divorce who quickly need a furnished apartment as a temporary solution.

Anyone marketing a furnished apartment must understand that these tenants are buying flexibility. They pay more but stay for a shorter time.

The effort: Passive vs. Active

furnished apartment differs massively from the empty one.

• Unfurnished: Hand over the keys, that's it. You often don't hear from the tenant for years, unless the heating breaks down.
• Furnished: A furnished apartment means management.
• Inventory: You have to buy, assemble, and maintain furniture. If the television breaks down in your furnished apartment , you must provide a replacement immediately.
• Tenant turnover: With a furnished apartment, you often have a tenant change every 6 to 12 months. This means : handover, organizing final cleaning, checking the inventory list (are spoons missing?), and re-advertising.
• Wear and tear: In a furnished apartment, floors and furniture suffer more from frequent moves. You have to paint and renovate more often.

runs a furnished apartment effectively has a side job.

Legal pitfalls regarding the furniture surcharge

Many landlords fall into the trap and arbitrarily set the surcharge for their furnished apartments . Rental law is strict in this regard.

The surcharge must correspond to the actual costs.

• Calculation: You must depreciate the replacement value of the furniture over its lifespan (e.g., 10 years). Only this annual depreciation, plus a small interest surcharge, may be added to the monthly rent of the furnished apartment .
• Contestability: If the tenant files a lawsuit, you must provide receipts for every item in the furnished apartment . If you cannot prove the surcharge, the rent will be reduced – retroactively. A furnished apartment is not a license to charge exorbitant rents.

Taxes and Investment

A furnished apartment also has tax implications.

Purchasing furniture for a furnished apartment is an investment. In many cantons, you can't deduct these costs in full immediately, but have to depreciate them over several years.

At the same time, the higher income from the furnished apartment is fully taxable. So you need to calculate carefully: Does the additional return on the furnished apartment , after taxes and depreciation, really exceed the additional costs?

Furthermore: A stylishly furnished apartment requires good taste. Grandma's old sofa simply won't cut it anymore. To make a furnished apartment attractive, you need to invest in modern design. Outdated furniture will turn a furnished apartment into a white elephant.

Location factor: Location, location, location

Whether a furnished apartment works out depends heavily on the location.

• Central location: In Zurich, Geneva or Basel , furnished apartments near banks, pharmaceutical companies or universities usually sell very well.
• Rural areas: In a rural community, hardly anyone looks for a furnished apartment . The market for unfurnished family apartments is much stronger here.

Before you invest, analyze the local market. Are there companies nearby that employ expats? If so, your furnished apartment has potential. If not, stick to traditional rentals.

Conclusion

The decision between furnished and unfurnished is a trade-off between return on investment and peace and quiet. A furnished apartment offers the potential for higher cash flow and appeals to a modern, flexible target group. It is ideal for small apartments in urban locations. However, the price is high: a furnished apartment requires constant care and maintenance and carries a higher vacancy risk .

For most private landlords, renting out their property unfurnished remains the safer and more relaxed option. However, those willing to invest time and possessing the right location can significantly increase their property's return with a furnished apartment . But be honest: Is the hourly wage for the extra work involved in furnishing your apartment truly attractive?

If you are unsure whether your location is suitable for a furnished apartment or how high the legally permissible furniture surcharge may be charged, Loft offers precise data analyses to secure your strategy.

Glossary

• Furnishing surcharge: The legally permissible surcharge on the net rent that a landlord may charge for a furnished apartment . It must cover the depreciation and interest on the furnishings.
• Ready to move in: A standard for a furnished apartment , meaning that everything is provided – from furniture and bedding to cutlery. The tenant only needs to bring their suitcase.
• Inventory list: An indispensable document when handing over a furnished apartment . It records each piece of furniture and its condition to prove damage or loss upon move-out.
• Business Apartment: A professionally managed furnished apartment specifically aimed at business travelers, often offering hotel-like services (cleaning).
• Depreciation: The tax-related and accounting-related loss in value of furniture over time. Important for the correct calculation of the rent for a furnished apartment .