It’s common for landlords to include basic appliances in their rental properties for tenants to use. However, it’s important to consider what happens when an appliance breaks or needs to be replaced and build that into your rental agreement. While not common, it’s also possible to have a rental that does not include appliances. Running this sort of rental property will require a business model that accommodates your tenants’ extra investment and may only appeal to renters looking for long-term housing situations.
We’ll dive into all of that in a minute. First, let’s cover the times when it’s required that you provide appliances and the benefits for both parties when they are responsible for appliances. Plus, I’ll give you a look into my business model and how I manage to be as hands-off on my rental properties as possible.
First, Let’s Define “Appliances”
In this article, when I refer to “appliances,” I’m mostly talking about the appliances in a kitchen—stoves, refrigerators, dishwashers, and sometimes microwaves (mostly over-the-range ones). I’m not referring to things like water heaters or furnaces as those are absolutely your responsibility to furnish. I’m also not talking about smaller appliances like toasters, coffee makers, or Instant Pots. Unless you’re running a super-fancy rental property that charges a premium or are catering to corporate clients that need apartments for employees, I wouldn’t expect anyone to provide any of these.
Are Appliances Required for FHA Loans?
If you’re using an FHA loan for a rental property, there are some stipulations that I find to be a little weird when it comes to appliances. For example, FHA lenders don’t care if a home has a refrigerator included, but they require a stove. Further, they don’t need a microwave to be included, but if there is an over-the-range microwave installed for tenants, it has to include an exhaust fan.
So I guess when trying to answer whether or not the FHA lenders require appliances, my answer would be: yes, but also no. But also yes. It’s complicated. Talk to your lender about their specifications when it comes to appliances before signing your promissory note.
Why Would a Landlord Want to Include Appliances in a Lease Agreement?
So what would make a landlord want to invest more money into a rental property by furnishing appliances? Well, for one thing, you’ll be able to charge a higher price as you’re removing the headache your tenant would have when sourcing appliances.
In addition, it’s pretty standard for apartments or rental properties which cater to younger renters to include appliances. In these cases, not having appliances already installed in the home would hinder your chances of getting that spot filled with a tenant.
That said, you don’t need to buy high-end stainless steel appliances (though you could build that into your rental price). Many renters will be more than happy to have a basic fridge with a top freezer and a four-burner stove and oven. There are appliance vendors who specifically cater to “apartment-sized” smaller appliances for this very reason. If you cannot find them, try looking for a scratch-and-dent appliance store in your area, as you might be able to score a great deal on a fully functioning stove or fridge that couldn’t be sold for full price elsewhere.
Why Would a Tenant Prefer to Furnish Their Own Appliances?
I’ve found that tenants of houses are more inclined to bring their own appliances with them than those renting apartments. I think it’s due to the feeling of ownership one has making investments in their home. Also, tenants may want something nicer than what’s provided and have specific aesthetic tastes. Bringing their own appliances with them gives them the chance to tailor the home to their needs and style, rather than having to work around basic (and most likely bland) appliances.
My Thoughts About Including Appliances in Rental Properties
I’ve been a landlord for a number of years, so I’m very familiar with determining whether it’s worth the hassle to include appliances in a rental or not. Here’s what I’ve found:
Long story short, I’m in the property business and not the appliance business. I don’t want to deal with calls all hours of the night because of a broken appliance. I know that I want to be hands-off, so I adjust my business model to accommodate that.
I will usually offer to supply basic appliances, but I let renters know that if they break down or if the renter wants to upgrade, I’ll gladly remove the appliances from the property. Replacing or repairing appliances is not included in my rental agreements.
To some, that might sound harsh, but like I said, I know how I want my business to run, so I adjust the business model accordingly.
What I do to cover this is to charge a lower price for rent than the market rate. I do this not only to accommodate my tenants needing to invest in their own appliances but for another very good reason:
Offering a lower-than-market rate for rent means I get a bigger pool of potential tenants. Because of this, I get to have my pick of renters, and I can find ones who want a hands-off landlord that are in it for the long haul.
Having these policies in place has given me a lot of long-term renters. My turnover rate is exceptionally low thanks to my ability to find handy tenants, who want to feel invested in their own homes, and who want a feeling of ownership without the hassle of actually owning a property.
Final Thoughts
I see renting as giving someone the keys to a $500,000 asset without needing to actually own it outright themselves. Consequently, I want to make sure those who are caring for that half a million-dollar asset will take care of it and stay with me for the long haul.
I prefer dealing with tenants who see this property as a home of their own, so in my experience, it’s very common that they will be responsible for the appliances. I’m happy to supply basic appliances to get them started but explicitly state in my retail agreements that any repairs or upgrades are their responsibility and not mine.
Your mileage may vary, though. Deciding who will be responsible for appliances depends mainly on your business model and how hands-on you want to be in the care of your property. I think it’s probably more common to provide appliances than not, but not required (unless you have an FHA loan). No matter which route you decide to go, make sure your rental agreements cover expectations for repairs, replacements, or removals of appliances so that everyone understands ahead of time what to do in the event of a leaky dishwasher in the middle of the night.
How do you usually handle appliances in your rentals? Leave a comment and let us know.
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