Fulhaus Inc.

Renting vs Buying Furniture: A Closer Look

Renting vs Buying Furniture: A Closer Look

Stripe wall, funky cushions, bedroom

 To rent or to buy, that is the question.
Whether short-term, mid-term, or long-term, the key to higher returns is getting your rental unit furnished in the shortest possible timeline and for the lowest possible cost (not to mention the results that come from good design). When we talk about furniture cost, the price tag is not the only factor, one should consider where your current cash on hand would best be spent. Is spending on upfront furniture costs today, to save money later, the best use of your funds? Or does
it makes more sense to spend less at the outset, and amortise the cost of furnishing, to better utilise your funds towards your growth.
And while standard practice for hosts has been to buy furniture upfront, when is it appropriate to rent? What are the benefits of renting furniture compared to the benefits of owning it?
Cupcakes, Colors, Square plate
The Benefits of Furniture Rental
According to Cushman&Wakefield, the cost of furnishing a Hotel Room with full FF&E can range from 12k to 90k.
Assume you are a short-term rental operator in the master-lease model, with 100 units under management. You likely understand that the growth of your business revolves around acquiring more units as quickly as possible to solidify your brand through market share.
 
  1. A) You don’t need to have tons of cash on hand to get a new unit up
    and running
Rental furniture is of incredible value to small and medium scale hosts looking
to expand their operations, potentially into new markets.
If you want to furnish a new unit but don’t have much cash available – or the resources on the ground to help with a new install – renting makes a lot of sense.
The monthly expense is justified in part because it means hosts do not need
to spend money and managing an inventory of used furniture they may or may
not need anymore. Additionally, renting ensures they have access to the newest design trends as they hit the market. And if the sharing economy phenomenon
has shown us anything, it is that companies that respond best to current trends
will reap the greatest rewards.
Renting furniture is like taking out an insurance policy on design quality, giving the operator the flexibility to change designs as they see fit while financing the payment over a longer-term. A longer payment term is incredibly appealing because it helps operators manage their cash flow better, freeing up capital that would otherwise need to be invested in a bulk order of new coffee tables or television sets.
Rental operators that want their units to remain attractive to guests over time need to stay current with design trends. This means buying new furniture, and so the list of costs detailed above repeats every two-three years.
 
Bedroom, Yellow Wall, Modern, STR
The Takeaway
As the above examples illustrate, renting furniture is appealing for operators
with some combination of the following features:
Manage many units
Have high occupancy rates
Want to scale rapidly
Want to ensure they stay current with design trends
So when it comes time to furnish your next unit, take a minute to consider whether buying really is the best option for your business. Like the master lease model, which operators use to reduce their risk exposure while maximising cash flow, you might find that you can save some dough by renting instead of owning.
 
Bedroom, STR, Painting, Green wall

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