Tenant Vacancy 3 Months!!! :(

[Jessica H.]

Hi everyone,

I purchased my first rental property, a duplex, over 3 months ago and I have been unable to fill in the vacancy. Here is the info:

• It's located in the northern part of So Cal, in a C neighborhood.
• At the time I listed the Unit on Zillow/Craiglist, etc, I asked for a rental amount that other similar properties were going for. Since then, I've seen other (older) properties go for $25-$100 less. My building is new.
• I live about 2 hours away from the property and have hired a property manager for tenant placement almost 3 months ago.
• The PM has let me know they have been showing the property often. They have been receiving applications but of those, he only approved 2 applications. And after I reviewed the screening report, I had to deny them based on no proof of income in the local area (they were relocating), collections, delinquencies, could not verify some of the info submitted in the application, etc.
• His feedback on why this is taking so long is that people like the Unit but not the area.

I am starting to get worried about how long is taking me to find a proper tenant. Here's what I have done and plan to do to see if I can improve my chances:

• I accept small pets.
• My minimum qualification standards include being flexible with bad credit but proof of income and no evictions are non negotiable.
• I've recently started accepting section 8 tenants.
• And now I am considering lowering the rent by $25.

(On a side note: The tenants in the other Unit has been a lot of stress as well. They pay the rent late and they haven't paid this month's rent giving me all kinds of reasons. Now I'm faced with the decision to evict them but at the same time I know how hard it is to fill in the vacancy. I'm going to be hiring the property manager for ongoing management as it is proving challenging to collect rent on the existent tenants.)

I'd love to get your feedback. It has been very stressful and this community is amazing. I look forward to your thoughts! Thanks in advance!

Jessica

[Randy E.]

Three months and not one qualified applicants would be a sign to me to lower to rent.  As @Amy Beth said, renting it for $50 less a month is better than sitting empty three months.  Look below at two apartments that hit the market Jan 1.

Example A: Rent of $1000/month.  Takes three months to lease.  Rent collected for year = $9,000. 

Example B: Rent of $925/month.  Takes one month to lease.  Rent collected for year = $10,175.

Holding out for that extra $50 or $75 a month is costing you a lot more than whatever you think you might be losing by holding out for months for a marginally higher rent.

It sounds like you already know the local rent should be lower, but you're rationalizing your higher price by mentioning the age of the building.  There are other factors other than simply the age of the two buildings.  

Have you seen the interiors of the other apartments to determine if they are similar or better than yours?  Have you driven the various buildings to see if the streets are the same as yours?  Don't be fooled by assuming short distances don't matter when it comes to rent prices.  Very similar properties three blocks apart might fetch prices $200 apart.  You have to put your feet on the ground (or wheels to the street) and conduct an honest comparison.  Or better yet, just heed the market.  No qualified applicants in three months -- the market is telling you something.