Pick any city — Amsterdam, Rotterdam, Utrecht —and you'll find a plague of apartments, houses, flats, villas, boats and caravans for rent. There's more choice than at a 7-11 convenience store. Good news then? Well, that depends on your point of view. While those looking for accommodation can shop around, demand extras and bargain like never before, times are wicked for owners. And particularly tough for those looking to rent out their properties to expatriates on temporary assignment in The Netherlands. Economic lesson: the balance of supply and demand is at the heart of the problem. As the property sale market has softened, many owners have opted to rent until the market recovers – so, more supply. However, as the economy has slowed, firms have downsized and have less need of expatriate expertise - so, less demand. This article outlines strategies for owners aimed at increasing their chances of successfully renting out their property and optimising their returns in an ugly market. Fair market price Be realistic. Yes, two years ago, it was possible to rent out a 75 m2 apartment in Amsterdam for EUR 1, 950. But those days are gone. Long gone. EUR 1, 300 is more realistic. It makes no difference that you have your mortgage costs to cover. This is 100 percent not interesting to a potential tenant who has a choice of twenty similar apartments. You cannot pass on your financial burden to anyone else if this means charging a monthly rent above the going market rate. This is often an issue for foreign owners who bought at the top of the market and now plan to return home or move on to another assignment elsewhere. Think about the "white space" Grab your calculator. If you wait five months to conclude that (as above) you're charging EUR 650 too much and then drop to a market rate of EUR 1300 – that's an expensive lesson. Instead of renting immediately for EUR 1300, earning EUR 6500 over five months and being satisfied, you have focused on the EUR 9750 you believe you deserve and are reluctant to forego. The natural tendency is to feel you would be losing EUR 650 a month for five months, totalling €3250. This is where I tip a bucket of cold water over you and start screaming. Money in the hand now – cash now – talks loudly. Take the market rate, make a short contract not exceeding 12 months and then review the market later. Bottom line: EUR 6500 now is better than... well, nothing. Provide value for money Now, more than ever, tenants insist on more bang for their buck. So, to stand out owners need to ask themselves what extras they can provide. Consider the segment you are targeting. If you're going for the business professional with a budget of (±) EUR 1200 – 1500, then quality/new furnishing, a washing machine/dryer, a stereo/DVD and TV in the living room, and all modern appliances in the kitchen are essential. If, on the other hand, you’re targeting the (±) EUR 800 – 1000 segment, concessions can be made. Be practical. Potential tenants are more likely to value a microwave than designer tea towels. Look to break-even by depreciating new investments over 48 months. For example, if you buy new furniture for EUR 3000, then this should justify an additional EUR 63 on the monthly rent. Finally, be responsive. If someone has set their minds on a microwave, don't lose a deal for an investment of a few hundred euros. Presentation I am constantly amazed at lack of attention to detail when it comes to preparing a property for viewing. For the sake of fifteen minutes and a minimal damage to your wallet, it's possible to transform the look of an apartment and thereby encourage someone to rent it. For example: make sure the street outside and the stairway inside are clean and free from junk mail, paper or bicycles; vacuum the place; buy some flowers; fill your fruit bowl with, well, fruit; make sure the lamps work; remove bird crap from the window; make the beds and hide the laundry. If you need to decorate, keep it neutral. Remember that your favorite colour – bright green – may not be my favorite colour (orange). Opt for off-white, or white, as this offends no one. You can always permit a tenant to undertake some limited decorating and contractually oblige them to restore the apartment to its original state when they leave. Bend and flex Invariably, a tenant will always want to negotiate something. Price is the most obvious but other demands can also be potential deal-breakers. Although sometimes unreasonable, if you put yourself in their position, you may be able to accommodate them. For example, someone living in uncomfortable or temporary housing may want to move into your apartment tomorrow – not in two weeks time when you plan to finish preparations. Don't lose a deal by sticking with the original availability date. If you communicate to the tenant that they can move in earlier but that work is still being completed, many will be delighted at your flexibility. Beds can also be an issue. They may want an extra double bed, for example, or two singles. When furnishing, look for options here such as sofa beds, which allow a space to be used as either a study or guest room. Which agency? False premise: if I register with enough agencies (or makelaars), I am more likely to get the ideal tenant. In reality, the following happens: it's a small world and agencies talk to each other, so it will be clear that your property is registered in multiple places. One of two things will then occur.  Either agencies will push unsuitable, uninteresting clients in your direction to make sure that they are first to get the deal – this can cost you huge amounts of time and result in a client not really matching your profile. Alternatively, agencies will lose interest in your property, assuming that their chances of renting it are low because others are in the frame. My advice – select one agency, possibly two, and give them the time to locate the right client. If you are looking to rent to a foreigner in The Netherlands on temporary assignment, then find an agency that has access to these clients and not one that simply claims they have. Look for a track record, information and a website in English and ask to speak with former clients if in any doubt. Cost When registering with an agency to rent your property, make sure you know not only what costs are involved but also what you get for your money. Ask if there are costs for: registration, contracts, ongoing fees for management, check-in/out, or other services. Verbal agreements and smiles are never enough. Make sure you get it all down in an agreement and that both parties sign it. Ask about the effort the agency will make to promote your property in mailings, websites, with corporate accounts and so forth. Merely having you in their database is unlikely to get you very far in this market of over supply. To sum up: it is about being aware and being creative. Remain informed about what the market is doing in respect of price and continue being creative when providing value to prospective clients. Someone, somewhere wants to rent your apartment tomorrow – you don't have to leave closing a deal to chance.

19 August 2003

Mike Russell

This column is for informative purposes only, is general in nature, and is not intended to be a substitute for competent legal and professional advice pertaining to each individual case. Mike Russell MBA, PhD, is a Managing Partner of Perfect Housing.

[Copyright Expatica 2008]