Good Tenants Hard to find

35 Replies

So, I have a big beautiful newly renovated flat in a good location that I listed a little over a week ago. I have good pictures, a nice video (uncommon for my area), am priced below the competition, and have my listing on 5 different sites. I don't even bother with a sign in the yard because the calls that come from that are even worse. I have gotten over 80 contacts that have resulted in one showing scheduled (yes ONE) with the only prospect out of 80 that I think may be a good tenant (and she is from out of town) and remains to be seen whether or not she will even show up (in my experience 1 out of 2 don't show). I invest in Erie PA and this is why I have stopped my original plan of expanding in this area...the tenant base SUCKS if you want to have good properties and good tenants while getting a good return on investment. It seems that the most success in my area  is among investors in D-class neighborhoods with D-class properties that they buy for next to nothing and their tenant base is, you guessed it...D and F-class tenants. Makes things easier when you take the first warm body that doesn't have a recent felony and government assistance to pay low rents. Maybe I just don't want it enough, but I don't think that's it; I think it's a moral issue and I just don't feel good about it. A select few are having success with A-class and student housing (with risky high-end rents that may not be sustainable in this market), but it isn't common and it's a small market and shrinking. I'm still doing well with my investments, but its a struggle. Is the middle class disappearing, or exiting the rental market? IDC how much of a discount (unless they are going to give it to me) or how high the return is, it's just not worth it to me to be a junk dealer and I would rather invest in another area/niche or make money through business and invest more passively with a slightly lower return. Earlier today I saw a post in a local REI group offering a duplex for 15k...and I don't want it. If it was a good deal, they wouldn't be offering to others; It's junk with nothing but problems and headaches. I don't see how it can work if only 1 in 100 renters are good tenants with reasonable standards. Maybe its just my market, but I'm curious if anyone else is having the same problem? 

I invest in Kensington, Germantown and Frankford in Philadelphia and definitely don't have any problems finding suitable tenants.  Maybe its just a low population area?  I honestly don't know a whole lot about Erie 

I invest in Erie. A lot of people go for cash flow and so they invest in C or D class areas. I invest in C class. I had my first eviction hearing and won a judgement. On Thursday the constable will be kicking that tenant out if the tenant is stupid enough to still be there. 

When it comes to Erie, most people (especially single women) want to live in Millcreek and not Erie because it's safer. I don't blame them. Millcreek is safer and much nicer and there are tons of nice 1 bedroom places there for not much more than a 1 bedroom in Erie.

Erie is losing population. Although the unemployment rate is somewhat low (4%) you still get lots of unimpressive potential tenants. I always look at their social media when they contact me and I'm not exaggerating when I say 50% of people who contact me about an apartment are either giving the middle finger in their social media photos and/or they have posts about getting high.

I am very selective for most of my properties. Though my cursed property (a duplex) is the thorn in my side. It cashflows very well (it crushes the 2% rule and is more like 3%) and is my westernmost property in Erie yet all my tenants there have sucked (I have a Section 8 tenant there who can't even pay her minimal monthly payments on time). 

For some reason, I'm more selective toward my other multi-family properties, perhaps because I have great tenants in them and don't want to disrupt the aura of positivity in those properties.

I'm basically rambling now... point is... landlording in Erie is like playing a video game on the hard level -  if you can do it you can landlord just about anywhere. 

It is mostly likely your market, and the location of the property within your market.  There are many markets with strong middle class demand. 

yeah, ton of flakes everywhere. Can't get anyone to come to a showing. That's typical anywhere.

But I'm curious where you draw the line between acceptable and unacceptable qualifications.

You know what they say about risk and reward. 

I have taken a risk on tenants who a little less than ideal on paper, but ended up always paying on time and keeping the place in good shape.

It helps if they have some assets to seize just in case.

@Karl B.

Investing in Erie is like playing a video game set on” hard” lol I love that Karl !

As Karl indicated Erie is not the easiest or most affluent city around however it can be lucrative .rest assured there’s plenty of investors in the shadows crushing it where others fail and that can be said for any city really ! Erie has been decimated by bad trade deals and a dwindling middle class for the last twenty years . When manufacturing goes the good working class folks pack up and leave and all that’s left are old people and low income “ renters” .

Know your clientele :

The whole town is c class ( D class in some areas) other than some pocket areas on the west side ( Millcreek) You need to understand there’s not going to be young professionals ,business folks ,and nurses applying for much in this market and they will be looking for home ownership usually or condos up by the bay front . The days of the tenants being a steelworker and mom working at the local jewelry store are over . Now it is a single mom working at Wendy’s living mostly off SSI for her 7 kids . Understand this is your tenant base

Best advise I know for screening is You got to pick through the $)$t to get to the corn ! Advertise online veraciously! Use Facebook screen the profiles as Karl said . You must must be looking at that if you want to succeed in selecting a good tenant these days . Putting out for rent signs in the yard will only invite theft ! Don’t even respond to obvious bad choices thugs punks or people who’s job it is to flip burgers or mow grass . It’s not uncommon for me to get 80 responses and only a handful of decent applicants and even those are sketchy so go with your gut . It’s part of investing in the rust belt. In Erie Don’t buy 50-80k houses hoping to get 900 -1000 in rent . Buy 30- 35k duplexes and rent them for 500-550 per side instead . Your street smarts and intuition play a huge role in screening and your success in this town . An algorithm or credit score will be useless . Good luck and keep moving forward even if it looks bleak keep your head down keep pushing on

Learn to Make money in the mess:

@Jesse Aiken

Sounds like you may have a beautiful new place in an area that’s not quite as beautiful. When you don’t want to put signs up because the folks walking by are deadbeats that’s usually not a great thing. Not that I’m high on signs at all anyway, just saying if the foot traffic are losers you’re in a crappy area. Noticed others mentioned shrinking population, that ain’t gonna help at all. And honestly, underpriced compared to the market just attracts more losers. I have one place that years ago I had awesome pro photos done, I’m talking you could publish the things,... instantly the % responses of folks on welfare dropped to zero. Same body copy, same headline, better pics. It was like they saw it and said “no point in even asking..” Raise your price to the absolute top of market and you’ll likely see a similar effect, I do.

@Jesse Aiken

Solid concerns. I'd be interested to know more details on the listing--rent, location, style. It could be some more marketing or tweaks or word of mouth to get your unit in front of the right people. I would also encourage you to press on. Sounds like you're still in your first year and probably still getting your systems in place. I'd stay positive and keep pushing forward.

Maybe an open house house would encourage more people to want to come see the property? The any contacts you get you can funnel them to the open house.

My area has 75 people per day moving here so we have no problem finding people who need a house to rent.

Originally posted by @Brendan Markle :

I invest in Kensington, Germantown and Frankford in Philadelphia and definitely don't have any problems finding suitable tenants.  Maybe its just a low population area?  I honestly don't know a whole lot about Erie 

 Do you invest above Kensington or below Kensington or both? 

@Jesse Aiken I think skipping the yard sign is a bad idea. Your best tenant is going to be someone who is already in the area. Either they work close by or have friends/family in the area. It also attracts people who may not have been planning to move. They just happened to see a sign and like the area, so they call.

In order to filter through the "how much is rent" and "how many bedrooms" questions from a yard sign, have the sign list a website address that directs to your listing. Another option is list property details in a voice mail and don't answer any calls. This will filter out the junk without you needing to do anything.

I have said it so many times on the forums, that yard signs are the oldest and best way to rent properties. High traffic locations are even better for this. 

I put up signage with “on Zillow” instead of a phone number. Therefore we don’t waste each other’s time but I get the visibility, which works!

Good luck

@Karl B. 

I agree that Millcreek is a more sought-after area. Maybe partially due to safety concerns, but I think the main reason is because of the better school district and because it's generally a nicer area. Cash flow tends to be less though since properties sell for higher prices.

The first thing I do to screen tenants is look them up on facebook and do a court docket name search. Probably only one in five make it past that for a phone call, one in five make it past the phone interview (if they even answer the phone or call back), and half of those that schedule a viewing don't even show up. It's depressing lol.

I'm just frustrated and needed to vent. I know I will be successful if I keep plugging away and be patient.

Sorry to hear about your eviction. I hope everything goes smooth and you aren't left with any major issues after they leave. I like your analogy comparing landlording in Erie to playing a video game on hard...so true. It's a tough market that requires thick skin, but there's plenty of money to be made.

@Joe Splitrock @Patrick M.

I just put a for rent sign in the yard that says "on zillow." I hadn't thought to do that instead of a phone number. Very simple and I should have thought of it. Thanks for the tip! I don't like getting cold calls from people who I can't pre-screen.

The unit is in a nice area across the street from a park that gets a lot of foot traffic. My listing is up on 5 different sites, but I'm hoping that the sign produces some better prospects.   

Are you looking for super high credit scores? I have many wonderful tenants with crappy credit.

@Jill F.

I generally look for 600+ but can bend on that. I look at the report, not just the score. My criteria are reasonable. The tenant base here is just not very good in general. This market is unique and hard to explain to those who haven't experienced it first hand.

Like @Karl B. said: landlording in Erie is like playing a video game on the hard level



 

@Jesse Aiken I can't speak to the demographics of your town, but I can tell you if you had 80 contact resulting in one showing, you are doing something to turns off your leads. 

You should have a 3 to 1 or 5 to 1 ratio from contacts to showings. They were interested enough to activley reach out to you, and something you tell them, makes them think it's not worth to see it in person.

I am totally reading between the lines, but are you asking them a lot of qualifing questions? Do you respond by email or do you call them? If so, how long does it take you to call them.

We do showings open house style and so we schedule an appointment with literally everyone, even people we would probably not rent; that's still traffic that shows competition to the target audience.

Some investors have a hard time to transition from C and D class rentals to B and A - they treat the tenants a little bit condesending and A or B tenants won't accept that and rather look eslewhere - they are interviewing their landlord just as much as the landlord is interviewing them!

@Jesse Aiken -  Location trumps all things when determining your potential applicant pool.  If you have a bad area, then a higher qualified tenant will not look your way, regardless of the price or condition of the house.

If you're in a good location then you either need to have a nice product and a fair price or a decent product and a lower than market price.  I typically shoot for the best product, with just a fraction below market rent.  With this strategy I get my pick of the litter and they usually stay for more than a 1 year because they can't get a unit as nice, for the same price.

@Marcus Auerbach - The problem isn't that people aren't interested in looking at the unit, it's the opposite in that I am not interested in showing it to most of them. After looking at facebook and county court dockets, I don't even call 4 out of 5. Probably 2 out of three people I call don't answer or respond to a message (I call same day or within 24 hours), and 2 out of 3 I talk to are disqualified during a simple, standard, quick 10 question phone interview. My criteria are not unreasonable and I will bend on certain things depending on the individual. 600+ credit (may bend depending on report), no evictions, gross combined income 3x monthly rent (verifiable), good landlord/employer reference (if possible), and general good character. Most contacts don't come close to meeting basic criteria and although it may work in some markets, scheduling open house showings with everyone would be a bad idea in my market. My ad is thorough but it seems that most people don't even read it (or care) based on what people tell me over the phone. 

The property is in solid C+/B- area with a park across the street in a market where pretty much everything in the city of Erie is C or D. It's a large unit that is higher quality than anything comparable that I have seen, listed slightly under market with the goal of filling quickly and encouraging longer tenancy/lower turnover. @Michael Ablan - I use the same strategy as you by offering a nice product in a good area for a good price.
   

The issue is with the tenant pool. I find that typically, immediately after a unit is listed, I get bombarded with unqualified contacts who may have been unsuccessfully looking for a place for some time and have been passed over by everyone else. They are looking for a landlord who doesn't screen very well and as soon as they find out that someone is actually going to ask them some questions and look into things, they move to the next new listing and keep clicking away until they find something.

Erie is a very unique market and difficult to explain to those who are not familiar. 
I realize that most people in this business have the same issues, but it seems that this market in particular is more difficult than most. Some investors basically just become slumlords so they can better absorb the expenses that come with common issues in this market. I think that is a big part of the problem. It has set somewhat of a standard and become status quo. It seems that things are starting to look up and will improve in the future. It can be frustrating to spend a large amount of time, effort, and money to provide a nice home and then have to sift through a mess of contacts in order to find a handful of potentials. Regardless, I would rather uphold my standards even if it takes a little more time and effort.

There is still a lot of opportunity in this market and things are happening to indicate a strengthening economy (finally). There are many very successful investors in Erie and still opportunity to make money and create wealth, but it's tricky. It's like other Erie investors said in previous comments referencing the Erie market in particular:

@Dennis M. -Learn to Make money in the mess

@Karl B. -point is... landlording in Erie is like playing a video game on the hard level - if you can do it you can landlord just about anywhere

I was just frustrated and needed to vent. Thank you for your comments and for trying to help. On the upside, I had a showing with a seemingly well-qualified prospect this morning. She loved the unit, was excited, and is applying. Fingers crossed!









 

@Jesse Aiken

I had a vacancy this last Friday before the end of the month On a four bed apt I ran Facebook ads on Tuesday it was rented and a new lease signed I literally never missed a rent payment money or lost time on it . I even got 75$ per month . I had to screen about 90-100 folks .. but it only takes one rabbit ! Personally I think your standard is too high . These are renters not homeowners if they had a great job a high level person with high credit big income they would be a homeowner like you Jesse

@Dennis M.

You may be right and my standards might be a little higher than some. Even so, I'm OK with it and don't think I'm unreasonable. I think it's all relative to what you are offering and what you're willing to put up with. As I'm sure you know, it would be hard to compare apples to apples with units in this market and someone with lower standards and/or section 8 is definitely going to have an easier time finding tenants. Not that there is anything wrong with that per se (everyone needs a place to live), it's just a different strategy and isn't for me. My last turnover was also at zero vacancy loss and an increase with the new tenant on a 2 year lease. Sometimes it's luck of the draw. Erie is a widely varied market; from 12-1400 for a nice place in Millcreek to 350 for a dump on the lower east side. It just so happens that the majority of renters in Erie city seem to be on the lower end of both quality and price. I think I'm somewhere just above the middle and there are plenty of qualified renters at that level, even if they are a little harder to find, and I'm willing to do a little more work to find the right tenant. For me, losing a month rent if necessary (usually only takes an extra week or 2) to avoid an eviction, a bad tenant, or a short residency/quick turnover is well worth the extra effort; even if it is frustrating at times. I provide nice units and won't place someone who I think may cause problems.

That’s a legitimate strategy and I commend you for maintaining a high standard and going after a better quality of tenant but you must know and be aware that you are limiting yourself to The top 15-20% of the entire rental market which is going to make it much harder to fit that criteria . I would much rather rent two 500 apartments than find a great tenant willing to pay 1000 in this town .its much easier to sell a 2,000$ car than it is to sell a 10,000$ car .i would caution you on having a two year lease that’s a rookie mistake you should avoid . The lease is actually geared for the tenant not you so keep them shorter . 

@Dennis M.

Understandable, and I agree that in general, a lower price point is the norm in the rental business (especially in Erie) and with the renter demographic in general; excluding luxury and short-term renters. However, I disagree with the statement that a 2 year lease is a mistake. I think it depends on your customer base and it is a great strategy used by many investors/landlords to reduce turnover costs.

The 2 year lease encourages resident's to stay longer and reduce turnover, which is one of the biggest killers of profit in the rental business. I think it depends on your clientele. If I have a tenant who is questionable, then of course I would not want anything more than a one year lease. In fact, I have tenants (inherited) on month to month leases for just that reason. On the other hand, exemplary tenants are preferable to have on longer term leases to encourage retention.

I also disagree that the lease favors the tenant. That depends the laws and your lease. I use the plain language lease provided as a member of the NWPA apartment association. Using this lease, as a landlord, I can end any lease with 30 days notice without reason. As a tenant, there is a lease break fee equal to 2x the monthly rent if it is ended before the lease term. I find this to actually favor the landlord.

In my experience, high quality tenants on longer term leases pay early and cause zero issues. Some of that is undoubtedly due to luck, but in my opinion, the majority is more likely due to stringent screening and providing a good product/service.

@Dennis M.

Another thought: It seems that in our market, success depends on quality -or- quantity, not both, and it seems that the masters of the rental market at the extremes are the most successful. Often times transitioning directly from one to the other..from quantity exchanging for quality, often over generations, these companies are the most successful. It's the middle that is missing, which is where I stand, for better or worse; which is unfortunate for me, our community, and our country as a whole. The middle class is missing. Maybe this is the true root of my frustration. Hopefully that is changing as our market changes from a manufacturing powerhouse to service and technology. Although our views and strategies may differ, I admire you and your success.

I have enjoyed our discussion!


Originally posted by @Jesse Aiken :

@Dennis M.

Another thought: It seems that in our market, success depends on quality -or- quantity, not both, and it seems that the masters of the rental market at the extremes are the most successful. Often times transitioning directly from one to the other..from quantity exchanging for quality, often over generations, these companies are the most successful. It's the middle that is missing, which is where I stand, for better or worse; which is unfortunate for me, our community, and our country as a whole. The middle class is missing. Maybe this is the true root of my frustration. Hopefully that is changing as our market changes from a manufacturing powerhouse to service and technology. Although our views and strategies may differ, I admire you and your success.

I have enjoyed our discussion!

 I don’t like it either but I tell myself I will make money in the mess and try to make lemonade out of lemons . I hate that the city has turned to a dust bowl of its former glory but to be honest I don’t actually live there so I can disconnect from that without any real sentimental attachment. I guess I just see it as a market that most arent willing to do and too unsanitary to get their hands dirty in . The more barriers to entry seem to help guys like me willing to take on risk and park their money in these markets . I guess you can say I just accept the fact my clientele will likely be a younger person with blue hair, covered in tattoos with a bunch of whiny kids and a menial job for income and that’s okay ! . If that is my market then I will give the market what it wants and that is a safe comfortable older two bed apt for 500 bucks a month .everyone needs a place a to stay and I unabashedly say I am in this to make myself  money -not start a community reinvestment program to help single mothers on welfare. There are actually times I purposely screen out potential tenants that want more info because they are clearly “ too good” for the asset ! I know that sounds crazy but They are too quality of a person to live at this place and I’m not wasting my time courting them or showing the place  lol If the market says “provide low income housing to fill the demand “ that’s exactly what I’m going to do . I will find a way to make money if it kills me  .that being said I’m sure there’s a market for a higher end type investing strategy utilizing student housing condos or higher class assets in this city . It’s just not something I do mostly because that would require capital I don’t have and it simply  won’t offer me crazy good returns I’ve come to expect in my market . Venting is a good thing , this is a great place to vent because we’ve all been frustrated defeated and had our gonads kicked up into our throat at one time or another in this field !