How do you find good tenants in Chicago?

Question

Recently posted a 3 bedroom completely renovated apartment on Zillow, Craigslist, Domu and Apartments.com. The apartment is in a good area of Chicago.I've gotten nothing but awful applicants despite being very clear in the description of the property that I'm going to be doing a background check and not accepting tenants with prior evictions or bad credit.

Rent is listed at 1700 and I keep getting applicants with a combined income and three kids making 38k/48k. The numbers don't work. You can't afford 1700 a month making 38k with three kids and a car payment.

The listings been up for 15 days and I've gotten close to 100 messages combined from all the platforms listed. Out of those 100 maybe 15 turned into showings and out of that 15 two took an application then never filled it out.

I'm also getting a lot of section 8 applicants that are very militant with wanting to move in right away. I've had them make threats against me when I tell them I'm going to be doing a background check.

How do I avoid all this mess?

Robert Andersen · Answer

Square footage is about 1250.

Just posting an update. Took 2.5? months to rent the unit. Dropping the rent didn't make any difference in the quality of tenant I was getting so I went back up and just waited.

I had the same tenant problems at 1500 that I did at 1700. This advice may work in other scenarios but for me it was bad advice.

Ended up renting at 1600 with tenant paying all utilities except water with a one year lease. I'll see if they stay after the lease is up.

I think the area is the biggest problem or at least from the perspective of the tenants I had looking at it. That was the one recurring complaint that came up over and over. The building is located on the north/east side of humblt park next to logan square. I had a few people mention that they were concerned with the area. I live here and there's buildings three blocks away worth close to million so I don't know what that's all about. I even left the garage open on accident for a day and nothing was stolen.

Matthew Olszak · Answer

So one thing to consider is "asking" vs. "actually getting" when it comes to rent. IE who knows if another property is using your property, which clearly isn't rented yet, as a comp, just as you are using theirs as one. Additionally, 4 blocks can be a totally different subset in certain neighborhoods. Also consider what your tenant base wants - some neighborhoods want high-end finishes, where others are only concerned with space and layout, and others need a combination of the 2. An apartment can have downtown-level condo finishes but will stay stagnant and vacant if the bedrooms are 7x7 depending on what your tenants are looking for.

I personally don't reply to zillow/trulia/hotpads direct messages/emails from the system. I specifically put in my ads the info they need to text or email me directly, which tells me if they actually read the ad or are just pushing the respond button on every single ad within their desired area and price range. I never reply to "Henry would like an application for..." or "Raymunda is requesting information about..." auto-messages.

15 days isn't that long but you should have at least had a few applications come across your desk. I suggest reaching out to some good-on-paper folks who've viewed the unit for feedback on what they didn't like. Folks are brutally honest sometimes and it can help get you some perspective on what's holding your unit back.

Lastly, @ 1700/mo, you could trade a month of vacancy for roughly $140/mo less rent. So if you can rent it by Aug 1 @ 1560, vs maybe having to wait until Sept 1 to get 1700, you'll gross the same amount, and likely have a lot better quality and volume of applicants to chose from.

Paul De Luca · Answer

@Robert Andersen

Are you sure the rent isn't too high? @Mark Ainley recently pointed out on the Straight Up Chicago Investor podcast that you know your rental is overpriced when you're only getting sob stories and Section 8 applicants. People that are adamant about moving in as soon as possible or they want to pay in months of rent in advance are red flags too.

Could you list all of your tenant screening criteria?

Brie Schmidt · Answer

I put all the information in the ad, including my screening criteria. When someone sends me an email I ask "When is your move in date? Is your income at least 3 times rent? Do you have pets? What questions do you have?"

Half don't respond. The half that do are looking too far out, don't make enough, or ask a dumb question that was in the ad. I delete those messages. Half respond with confirmations to my questions and are responsive and professional. I focus on those ones.

You got this weekend to rent it out otherwise you are looking at another month of vacancy. Anyone looking after the 20th is leftovers and I would just take it down at that point and start fresh next month

John Warren · Answer

@Robert Andersen interesting update, and I am glad you took the time to post the update! I think we as investors have greater risk tolerance than a lot of non investors and that is easy to overlook. Hopefully your experience next time will be easier!

Jonathan Klemm · Answer

@Robert Andersen - Sounds to me like this is just a timing and luck type of situation. You never know when your house is going to get rented or sold......you just have to price it right and then stick to your criteria and be patient. This is definitely a test of being a newer investor and something you need to stay positive about and work through. You'll likely laugh at the situation 5 years from now.

Out of curiosity, what is the square footage of the apartment?

Quincy Lockett · Answer

@Robert Andersen

From my experience I think it’s the direct area and pricing. Your block/pricing vs. your advertising. Tenants IMO have grand visions of what the apartment/neighborhood will look like with slick advertising. If you aren’t in a premium area, I’ve learned to lead with the worst aspects of the apartment (undersell) thereby weeding out the dreamers and surprising the applicants that survive the - less than flattering marketing - (over-delivering) with more than they expected visually. Slick photographs and fancy descriptions only over stimulate the imaginations for prospective tenants. Use pics from a low resolution phone. Lead with the least flattering pics of the block and unit. You’ll get less leads but the leads that pass your pre-qualification process with be more enthusiastic to sign a lease.

Robert Andersen · Answer

Ten days? ago or so I had a advertising agency take over finding tenants. They took professional photos and a video of the property. Construction was being done on the basement unit and it's no longer visible when the building is being shown.

I sent you a link to connect. I'll message you a link to the listing. I don't want it posted publicly.

I'll lower the price again to 1500 and post back with the results. I think It's kind of silly at this point as I'm 200/300 cheaper then most of the surrounding properties but I'll give it a go.

Michael K. · Answer

@Robert Andersen read through all the other posts which answered my original questions. What do the pictures look like? Any chance you would be willing to share your rental posting (could PM me)? And what is the scope of the construction going on? That might just be your Achilles heel here.

Michael K. · Answer

Hi Robert, this is a really complex question and probably doesn't boil down to any one thing. My top question is, where are you posting your apartment for rent and what neighborhood are you in? When I first started off as a landlord I tried to maximize rent and occupancy (as one should try to do). However, this sometimes came at the expense of getting less than stellar tenants. I have since then started to lower my rent slightly so that I can attract better tenants. People who are smart with their money, the type of people who will pay rent on time, are also smart enough to look past overpriced apartments. I would consider lowering your rent so long as you aren't killing your margins.

How do you find good tenants in Chicago?

How do you find good tenants in Chicago?

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