Struggling to rent Duplex unit

12 Replies

I purchased a duplex last year in a university town, but not intending for it to be a college rental. The duplex had a vacant unit and another under lease till July of 2019. I was able to remodel a half bath and paint the unit and get it rented within a couple months after purchase. The second unit came vacant in July and was in slightly worse condition. Performed a more thorough rehab, remodelling all bathrooms (3), replacing carpet and flooring and fully repainted.

The unit has been available for rent for about a 3 weeks now at the same rent as the other unit and is in much better condition, but struggling to find quality tenants. We posted through rentlinx which hits a bunch of other sites. We have lots of interest, but no one is submitting applications. It seems our criteria (the same as Brandon's tenant criteria) for tenants may be making tenants reluctant to submit applications. We do not charge for submitting applications either. I struggle with lowering the rent because it seems that rent is appropriate for the unit size and location. The rent is the same as the previous lease and the adjoining unit.

Any thoughts on what we can do attract more serious tenants?

I would say this. Do not modify your qualifications. It is better to reduce the cost of rent then give on your requirements of 3X gross income compared to monthly rent, no criminal background, or whatever you have. Taking a little less in rent is worth the piece of mind of not having a tenant that gives you constant headaches, have to pay for an eviction, is late on rent etc. 

In terms of lowering rent. Let's say you lower your rents by 50 bucks a month. That'd be 600 a year in gross rents lost. But if the unit rents for 600-1000 a month (making a guess), having it vacant for another month is worse since you'll have lost more revenue that year compared to lowering the price 50 bucks. 

Final consideration. As the summer winds down and you get closer to T-giving and Christmas it becomes harder, in most markets, to find tenants who want to move. 

My advice, lower the rents a little even if you think you're at market rates. 

Good luck

Andrew

Try a small rent reduction if it sits vacant for another week. Is this a good time for renting the property or is there a better time of the year?

@Brian Morreale

If the plan is to keep your rents where they're at, you might consider doing a half-off first month's move-in special.  Sometimes the costs of moving + SD + 1st month's rent can be a barrier for tenants.  This gives them a break on that while also maintaining your desired rental rates.  As @Andrew Gingerich said, keep your screening standards though.  

Appreciate all the responses. The idea of reducing the first month's rent seems appealing vs. lowering my standards or lowering the monthly rate. I'll keep you posted on what happens after we advertise that. Thanks everyone!

@Brian Morreale

I wouldn't lower your standards. Lowering the rent is a lot better than getting sub-par tenants. Some markets will have pretty strong seasonal swings and it sounds like that may be your case. Most students sign leases in the Spring and Summer to start in the fall, so once you hit August/September your tenant pool is decreased quite a bit. I would lower the rent until you start getting qualified applicants.  I would also try to get an 18 month lease signed if you can. That will put your lease ending at a more favorable time of the year. 

@Brian Morreale I have seen this with our duplex actually, and we landlords typically think the rent is just right and the potential tenants see it differently because the fancy apartment building down the road is offering ONE-MONTH FREE rent and potential tenants expect us to do the same but at a lower rent to the apartment building, of course. 

Look, after I got tired of showings, I started listening for the nuances of the potential tenants' questions. Only then did I start to hear questions such as do you offer any incentives? (really what they are asking is: do you have ONE mone free rent), I started to read between the lines. And gave free month and rented the place in a few days! 

Pay attention to the market and the potential tenants so that you can get this thing rented, remember you are almost approaching a whole month without RENT anyways. 

I hope it gets rented asap, Brian. Goodluck. 

I plan on investing in a college town too. There are several student housing complexes that offer low rents, movie theater, pool, BBQ area, and more, but they also have terrible management, and parties constantly. They can be hard to compete with though. I would check out those places in your town to see what they offer how much their rent is, and what you could do to compete with them. Let us know how it turns out. I agree that lowering rent is better then changing your criteria if possible.

Not sure if you're giving out applications before tours but I try not to give prospective tenants an application until vetting them over phone and a tour.

It’s probably price is still too high or your being too picky . You can sit on your high morals and lose money everyday but I wouldn’t . Are you advertising heavy on Facebook ? If your not and going by Zillow trulia and hotpads then your only hitting a fraction of the potential pool of tenants 

Just wanted to provide some closure to my question and all the great advice I received. I ended up lowering the rent by $100/month and was able to get a few applicants within a couple weeks and eventually a tenant in this week. I did learn a few things though.

First, the rent was not the issue. All the applicants stated it was the cheapest rent the found in the area for a 3 bedroom/2 bathroom rental, especially considering it was nicer than most at a higher price.

Second, I learned the enrollment and the local university was down about 10-15% over the last couple of years.

Finally, I learned that there has been a large increase in student housing in the last 2 years, leading to roughly a 30% vacancy rate in the city at the moment and a lot of major companies offering incentives (first month free, free preferred parking, reduced rate with multi-year contract, etc.) to pull tenants. 

These factors mixed with the time of year (after school year started), simply made applicants scarce. I decided to structure my lease to expire at the end of spring to put myself in a better market for when it comes vacant again.

Thank you so much to everyone for their advice and input. Look forward to talking with all of you more around the site!