3.5 Sale of Business Assets – Furniture
In this video, Erica discusses furniture as inclusion and how this is managed in terms of valuing and transferring the assets.
Typical Inventory
- A turnkey vacation rental will usually be sold with furniture already in place
- Most listings in MLS or on Vrolio will have a field to search for this
- Typically included will be all beds, mattresses, couches & sofa beds, tables, chairs and accent pieces. Outdoor furniture can also be included.
Valuation calculations
Furniture adds value to a short-term rental and it’s important to calculate the value using depreciation and life expectancy of the assets.
Use the Furniture Valuation sheet in the Workbook to check the example and download the form in the Resources section to take with you on a property visit. It’s a fairly simple formula.
Transferring inventory with the sale
Compile an ‘as seen on’ inventory reference
- Create a video record of inclusions – cover everything in drawers/cupboards and closets. This way you have a record of any damaged or worn items as well.
- List the exclusions
- Be aware of appraisal issues as it is not common on a residential purchase to include furniture.
- Make sure everything is there on day of closing and do a second video to compare with the first.
Investors will want to know:
- Is the property being sold furnished?
- What is the condition of the furniture?
- Does the asking price support the furniture that is being included?
- What is the estimated depreciated value of the furniture?