Having Trouble Renting Unit in First Property

[Kevin Zmick]

Hey All! New forum member here.

Long story short, I ended up through circumstances deciding this was a good time for me to buy a live-in two flat, which I mention because it is not a cash-positive investment for me. I'm happy with my purchase but am having a very hard time finding a tenant for the vacant unit. I've lived in the city for over 10 years and have been in a lot of apartments, and I can't see what it is about the unit that could be giving me so much trouble. Newer appliances, free nice laundry, 2nd floor, yard space, storage, clean bathroom, included heat, installed window A/C.

Appraisal suggested the unit was worth 2,300 a month, which I felt was a bit high, so I listed it for $2,150 with no move in fee and a 2k deposit. No takers after 1 month (September) on the market. Lowered the price to $2,050, more interest, but no takers for a Nov 1 move in. As of yesterday, I listed at 1995 with half off first month for a Nov 1 move-in. 

I can afford to have the unit empty, but obviously don't want to do that, and am at a loss around what I should do going forward. I'm stressing because I wasn't anticipating this and am not excited about the prospect of paying 2k more than I was expecting when my mortgage payments kick in next month.

I'll be searching the forum for answers as well, but since I am kinda desperate at the moment, I thought I would go straight to the source for advice. Any strategies for enticing clients? How to find the right price?

Thanks in advance!

PS My realtor did me a solid and listed the place on that network for free and isn't taking a commission, but as a trade off I'm kinda on my own as far as finding someone when leads come in.

[Nathan Gesner]

Quote from @Kevin Zmick:

When a property doesn't rent, there are two primary reasons: the price is too high or your marketing isn't reaching the right audience.

If your REALTOR listed it in the MLS, then it's probably syndicated to the best websites and you're casting a wide net. That indicates price is the problem. The slowest months of the year are typically October - December. Weather cools, people are busy with school, resting from summer, prepping for the holidays, etc. You need to be aggressive with your pricing to compete for the few available renters.

I recommend dropping our price to $1,750 and offering a month-to-month lease or six-month lease. That fills your unit for the winter and buys you time to prepare for the next time. It also makes getting rid of a difficult tenant easier. In the spring you can list it for market rate and have better marketing/screening strategies in place.

HOW TO SCREEN APPLICANTS

I recommend you include some of your key qualification criteria in the advertisement. For example, I mention that every adult must pay a $30 application fee, pass my credit/criminal background, make a combined income of 3x the rent, and whether or not the property accepts pets. Use the top three or four discriminators so applicants can screen themselves.

Then you need to have clear screening criteria yourself. What's the lowest credit score you will allow? Do you check Landlord references? Do you verify their income? Do you know how to read the credit/criminal background? What if they have collections or judgments?

Here's a detailed guide on how to screen applicants: Application Screening Guide