Sell or hold this vacant rental?

Question

6 months vacant, lowered price twice, $400 under market, still can't find a tenant for one of my rentals. Have about 300K equity in this one.

Type of tenants it attracts are not great. Everyone want's to apply but they don't have the money. Lot's of people want to run a day care out of it, but don't want to pay business rent.

I had no issues filling 3 other vacancies, even in more rural areas in the last few months.

The area this house is in is declining I feel, based on the types of applicants I get. I get a ton of applicants but few qualify credit or income wise. Lot's of qualified ones who say they will apply don't.

I'm left with the choice of holding through the summer renting season or selling it and 1031 exchanging to another house or two. Trouble is, my interest rate on this house is 3.625%. I'm looking at 7-8% rates to buy one or two more rentals as replacements...and they will bleed money even when rented out.

So hold or sell? Right now reading my own thoughts here, it seems like selling and replacing with other properties will lose even more money and I'm better off just holding.

Sherief Elbassuoni · Answer

Change the PM company.

Post the ad on Zillow, apartment dot com, and avail

Between these three websites, you should have a tenant

Jack B. · Answer

Congrats on getting 20 calls a week for section 8 tenants who have no other choice but a small pool of section 8 landlords in Cleveland, lol. Seattle is the 6th most expensive housing market in the country, not Cleveland Ohio where houses are 20K

https://www.redfin.com/OH/Clev...

20 calls a week is a joke. I get 100+ inquiries a week just for for this house. The problem is almost nobody qualifies for a 650 credit score or income 3x the rent in the area this house is located. Because this is such an expensive market, few renters have the income or credit to afford to rent here anymore. Those who have the credit and income buy. Hence why the four houses that turned over recently, everyone of them bought a house.

Bob Stevens · Answer

Well not 20k, ( those prices were 10 years ago, now 100kish ) but I get it, Stil fire you PM, This is why the world invests in Cleveland, double digit net caps, unlimited tenants,

BTW, if their score is a bit low, just ask for more of a SD, or two months upfront.  Same if income is just a little low, Get more upfront, See this is what your PM co should be doing, LOL,

BTW the example you provided, well sorry this just shows the ignorance out there. But thats ok, Thats a war zone and terrible,

This is typical, ( can provide 100s of examples)  Not bad for 45k with 1400 in rent 6 years ago :990 Yellowstone Rd, Cleveland Heights, OH 44121 | TruliaAll the best,

Mike Dymski · Answer

You may have to post a link to your rental listing for the members to provide thoughts on rental rate, location, condition, keep/sell, etc.

Austin Steed · Answer

Do you have professional photos on your listing online?

I manage most of my rentals in Columbus OH and I've noticed a huge difference in applicants if property is cleaned up and professional photos are taken. The same applies to selling a property too.

I like your debt on this property. If you can get a tenant in there and cashflow I would keep it

Ran Iarovich · Answer

- new photographs and videos

- new PM company

- post throughout mls websites

- calculate risk attached to creating looser rental applications

Dave Skow · Answer

@Jack B.- thanks ....  what  area  is this in ?  as  many areas arent  declining in the PNW / Seattle  area ......might selling  it  to a  builder / developer be  worthy of  consideraion ?   Maybe try to loosen up your renter criteria and  allow a  renter  to  rent it  ..... are you charging for  people to apply to rent it ? (Everyone want's to apply but they don't have the money.) ..if so - consider making application a free thing  .....maybe   allow  applicants  with  decent  credit history   a shot

Alecia Loveless · Answer

@Jack B. I like the idea of some professional photos and then perhaps a virtual stager where someone takes the pictures and virtually puts furniture in them and makes them look nice and beautiful and upscale/homey. Might help attract a better class of tenant who can and will qualify and follow through. Then you can reuse the images each time the unit is vacant.

Kevin Sobilo · Answer

@Jack B., you mention the common rule of thumb "income 3x rent". Many landlords make the mistake of using net income when it should be gross income. Are you correctly using gross income?

Also, I do an additional verification where I require rent PLUS monthly debt payments to be no more than 45% of gross monthly income. These rules mirror the front and back end ratios used to qualify for mortgages.

Vadim F. · Answer

In all fairness, receiving 100+ inquires a week is worthless if you can't find a tenant to occupy the property. In regards to that 1br Cleveland property you posted it can generate $650-$700/mo for rent, so thats a pretty awesome ROI.

Sell or hold this vacant rental?

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