Class C and Section 8 Tips?

[Amy E.]

Does anyone have tips for finding tenants for class C and/or Section 8 rentals?

Background: I bought two houses last year in a Class C- neighborhood and quickly rented them out.  One to a Section 8 (50% rent covered, her credit was shot and income too low) and one to a regular Joe with credit just shy of 600 and a good rec from current landlord and employer, and decent income.  Things went pretty well, each renter occasionally paid late but also paid the late fee; the numbers looked great on paper.  So I bought house #3, which was a fixer upper.  Then, regular Joe  turned into a PITA renter and by mutual agreement we terminated the lease (house was in okay shape but was FILTHY).  I used my reserve money to repaint and clean and the house is ready to rent.  Then, the section 8 renter had a death in the family and didn't renew the lease (did not qualify for that size house anymore).   Finally, I finished up my fixer upper.  So now, all three rentals are empty!  EEK.  

Houses 2 and 3 are ready to rent.  House #1 needs to be re-painted, but I don't want to spend the last of my reserve on it until I get the other two rented. House #1  and #2 are in C- neighborhoods, house #3 is in a B- neighborhood.  I'll be honest, since I was focusing on the fixer upper, I did not put much effort into getting the others rented.

But the past couple of weeks I've really started advertising and following up with inquiries. I've had lots of interest in houses 2 and 3, and am showing each a couple of times a week. But I am so leery of getting another Filthy Joe that I'm wondering if I'm being too stringent. I have been asking for good references from both employer and current landlord, a credit score of 600, and no evictions.  I've had half a dozen serious applicants and NO ONE meets the credit score.  Several  checked out fine other than credit, but I still turned them down.  

Am I being too stringent?  My "good" renter had been the section 8 renter who didn't meet any of my rules....the Filthy Joe met the rules but turned out horrible.  So now I am gun shy and do not want to get another bad tenant in, but I feel like the tenants my houses will attract probably will not meet all of my criteria.  I could've had both properties rented several times by now (and thus had enough to repaint the other house and rent it, too).

Thoughts?  What criteria do you all use for Class C rentals and/or dealing with Section 8?