Indonesian Property Investment Guide

Take a moment and consider the costs associated with vacant rental properties: mortgage payments, property taxes, hazard insurance, utilities, break-ins, vandalism, maintenance, landscaping. Not a lot of fun to be paying every month, which means you need to cut your rental vacancy rates to a bare minimum.

How does one go about doing this? By following these eight steps to chopping rental vacancies, and staying on the ball.

Step 1: Research BEFORE Investing

Some neighborhoods make for better rental investing than others do, for a variety of reasons. Look into a neighborhood's vacancy rates before investing, and put your finger on the neighborhood's pulse by finding out WHY a neighborhood has a high or low vacancy rate. Talk to appraisers, fellow landlords, realtors, property managers, and anyone else who's knowledgeable about that neighborhood, and find out the vacancy rate.

Step 2: Location and Visibility

Location, location, location, right? Well, kind of. A crucial element of a rental property's location is its visibility, as passersby will see the For Rent sign and call you up to inquire after it. In some ways, these rental applicants are higher quality, as they're already familiar with the neighborhood and exterior of the property, and already feel comfortable with it. The bottom line: areas with a lot of foot traffic are easier to rent than hidden properties.

Step 3: Quick Repairs Turnaround

If your rental property sits around vacant for several months while your contractor or handyman "gets around to it," it will cost you real money. Get the workers in there the day the prior tenants move out, get any repairs done quickly, and get new tenants signing rental application and rental agreement forms. With that being said, it may be worth an extra week or so of vacancy to catch up on any updates you've been putting off, to help attract a higher caliber tenant.

Step 4: Pricing is Key

Deciding on a rent amount should not be estimated; you need to know exactly how to price your rental property so that it's competitive while still maximizing the return on your investment. Walk through some other properties for rent on your block or street, talk to some area landlords or property managers, and make sure you price the rent EXACTLY right.

Step 5: Market to the Right Clientele

Landlords tend to think in terms of the advertising that reaches THEM, but not necessarily the kind of advertising that reaches their pool of potential rental applicants. An extreme example might be advertising in the English-language, yuppie local magazine you read, instead of the local Spanish newspaper, when your rental property is in a largely Hispanic area. Another example is the internet: you use it, but lower end tenants probably don't. Consider what media outlets will actually reach the kind of tenant you're looking for, and pursue those.

Step 6: On Site = On Task

If you own a larger, multi-unit property, you should definitely consider on-site property management. Statistically, on-site property management fills rental vacancies faster than off-site, so consider whether it might make sense to hire someone specifically for that building, and you may even be able to compensate them with nothing more than subsidized rent.

Step 7: Rental Agreement Term

Consider for a moment: if you have two rental properties, but one has a one year rental agreement, and the other has a two year rental agreement, which will be vacant more often? Aside from the term itself, the longer people reside in one place, the deeper their roots in that property sink, and they will be more inclined to remain as a long term tenant. You may have to offer incentives for tenants to commit to two years at first, as our society is more commitment-phobic than ever, but offering a $40 rebate on rent each month, or perhaps subsidizing their utilities or other incentive structure might make sense to ensure that lower vacancy rate.

Step 8: The Rental Agreement with Purchase Option

Advertising your rental properties as rent-to-own, you can accomplish several strategic goals. First, you can attract a higher caliber tenant to submit a rental application, by offering them a chance to advance to homeownership. Second, your tenants will have a greater incentive to pay their rent on time, to maintain their eligibility to purchase the rental property. Third, they'll be far more invested in the property, and will treat it better, as they hope to own it one day. Fourth, you can sell at retail prices, without paying a Realtor commission.

Start printing out those rental application forms, get advertising, and revise your approach to scoring a signature on the dotted line of that rental agreement.