OUTDATED FURNITURE

When businesses acquire an asset (e.g., machinery), they can either expense the full cost immediately (cash-basis accounting) or spread the cost over its useful life through capitalization. The latter provides a more accurate picture of profitability by recording depreciation or amortization expenses monthly. For instance, furniture and fixtures typically have an accounting life of 5 to 12 years.

Take this example: A company purchases a Php100,000 couch and assumes a 5-year lifespan. Instead of recording a one-time Php100,000 expense, they allocate Php1,667 per month (Php100,000 ÷ 60 months) as depreciation.

The same principle applies to property rentals. Many landlords buy furniture—such as dining sets or bed frames—for tenants to use. However, because most operate with a mom-and-pop mindset, they treat these purchases as one-time expenses or, worse, assume the furniture will last indefinitely. This results in outdated interiors that deter prospective tenants, leading to prolonged vacancies and lost income.

By adopting a capitalization approach, landlords can:

1.⁠ ⁠Accurately assess the profitability of their rental business by spreading furniture costs over time.

2.⁠ ⁠Choose the right furniture (Philux vs. SM Home) for their properties.

2.⁠ ⁠Recognize the need for periodic furniture replacement or refurbishment, rather than dreading it as a major one-time expense.

3.⁠ ⁠Reduce vacancy periods by ensuring their units remain attractive to tenants, ultimately increasing revenue.

Simply put: Update your furniture regularly to keep your unit competitive in the rental market. Refreshing your furniture doesn’t just attract new tenants—it can also entice current residents in the same building to switch to your unit.