Class C Tenant Criteria

[Austin Lukes]

Hello all, 

I've got a class C property that has not provided me much in the way of qualified tenants. I was curious if I am being too stringent on my criteria... I have a background in consumer lending in a nicer area of town - typical clientele are 750+ FICO with cumulative DTI (with new debt) of <35%... I know this is not typical for a renter though, particular in a relatively lower income area where my class C property is located.

It is a first-time dive into the rental space, as it is a starter home my wife and I purchased and have been fortunate to be in a place that we don't particularly need to sell. The primary motivators in retaining it and dipping our toes into the rental space are: 2.50% APR and sufficient margin to cover maintenance/capex/vacancy based on "recommended percentages of gross rent." The 2.50% APR is the major kicker though, for sure.

The issue is getting that first tenant in. 

Some of our initial baseline, no-go, criteria when we first listed were: 600+ credit score, no evictions, no bankruptcy, and income 3x rent... however, after finding that very few interested parties were eligible to even "enter a review phase" of landlord verifications etc, we loosened up a bit and went to an objective scoring model that I tweaked from a few ideas obtained after speaking to both rental professionals in my local area and some on this forum. 

Our current criteria are: no evictions, no bankruptcy, income 2.5x rent, max of 5 non-medical related collection items, and no collections related to unpaid rent or other past rental related obligations. The objecting scoring matrix that we created allows for somebody with a sub-600 score to still be eligible, they just don't gain as many points for being below that threshold... however, still, individuals still seem to be frequently getting denied based on bankruptcy or 6+ non-medical collections...... I have some auto-denials in the "review phase" based on landlord reference such as numerous late pays on rent, numerous documented lease violations, and move-out damages exceeded collected deposit... but still have yet to enter the "landlord reference/review phase" of my screening process due to the details on their CBR's as noted above.

Am I still being too strict for class C tenants with the above-underlined criteria???