Trouble renting a 2 bed/1 bath duplex

[Gene Paniccia]

A couple months ago I bought my second rental property in Cleveland. The first one I got rented to a section 8 tenant in literally 1 day. 

This duplex has been on the market for almost 2 months. I accept section 8 and I haven’t even received a single application. 

Yes, it is in a not great area. 
No, it is not a complete dump of a property. 

Am I having trouble because it is a 2 bedroom or is the section 8 market drying up in Cleveland? 

Considering selling it and hoping I can break even or at least not lose too much money. 

Any useful/constructive ideas?

Thanks,

[R. Elle Berry]

Quote from @Gene Paniccia:

A couple months ago I bought my second rental property in Cleveland. The first one I got rented to a section 8 tenant in literally 1 day. 

This duplex has been on the market for almost 2 months. I accept section 8 and I haven’t even received a single application. 

Yes, it is in a not great area. 
No, it is not a complete dump of a property. 

Am I having trouble because it is a 2 bedroom or is the section 8 market drying up in Cleveland? 

Considering selling it and hoping I can break even or at least not lose too much money. 

Any useful/constructive ideas?

Thanks,

 Hi Gene,

You’re asking great questions, and yes from what I can tell, things are shifting in the Cleveland Section 8 / Housing Choice Voucher market, which could explain some of the issues you’re seeing.

Here are several changes or challenges currently in play. Voucher / Funding Shortfalls, The Cuyahoga Metropolitan Housing Authority (CMHA) is reporting that its voucher program is on track to run out of funds for the year. Because of that, CMHA has asked landlords not to raise rents for Section 8 tenants. So, depending what you’re asking for rent, potential section 8 tenants may not inquire but they know CMHA’s rental scale. 

Putting those factors together, here are a few possible reasons why your duplex hasn’t gotten any applications even though you accept Section 8.

1.Payment standard vs. market rent mismatch. If your rent is above what CMHA considers “reasonable” for your area + amenities, or above what the voucher will cover (especially if the tenant has to cover the rest), then tenants might not apply because the out-of-pocket cost would be too high.

2. Area / perception risk. You mention it’s “not great area.” Some Section 8 tenants may avoid applying for places in areas they perceive as risky etc.

3. Bedroom count / unit type mismatch. Two bedrooms may or may not be in high demand depending on the supply of 2-beds in Section 8 in your area. If there are many similar or better 2-beds available, or some with lower rents, better condition, better location, tenants will pick those.

4. Timing & competition. If other landlords are offering comparable units with better conditions, or in better areas, or lower rents (even slightly), those may get picked first. Also, units that have been vacant longer tend to “look worse” to prospective tenants regardless of condition.

Here are several things you could try, to get more applicants, and/or decide whether selling makes more sense. Evaluate your rent vs payment standard, contact CMHA to find out exactly what their payment standard is for 2-bedrooms in your area.

Make the listing more attractive, visible to voucher holders, highlight improvements, safety, and condition. If possible, do minor upgrades (paint, flooring, landscaping, security) to improve appeal. And try to be prompt in answering inquiries, scheduling showings.

Then reevaluate holding vs selling, best-case scenario: lower rent + vacancies + repairs + permit / inspection costs vs ROI. If the numbers look weak even with adjustments, selling might make sense but before you sell, try the above tweaks to see if vacancy time and rent potential improves. Sometimes shaving off some rent or boosting appeal can rent a property. I hope this information helps you. Feel free to send me a message if you require more details information. Thank you.