As I mentioned in the another string, I've decided to sell a duplex I own. It's been for rent since December and the tenant pool is so bad, that I've just given up and have decided to cash out. I have four new apartments coming on stream in the next month and I'm dreading dealing with filling them. Most of these are studios and are more affordable. Hopefully, I'll attract better tenants. We'll see.

I've been advertising mainly on Zillow and over the past couple of days I collected. 4 zillow apps. All were recent evictees. One guy was a prison guard who uploaded a paycheck from January as "proof of income". He had two LL/Tenant proceedings against him last year. Another applicant had 3 "ESA's"; two cats and one dog. She and her boyfriend had both eviction histories and criminal histories. Another applicant wanted to know why she kept getting rejected for apartments (another evictee) and "how long am I going to have to live in my car?" I'm meeting none of these folks--this is all coming from pre-screening them.

I know rooming houses are seen as the armpit of real estate investing but I said this previously and I'm going to say it again. My rooming house applicants are BETTER---yes BETTER. They're far less entitled, are grateful for modest accommodations and don't have any of these sorts of issues. I've thought long and hard about this and I'm not quite sure why this is. As I mentioned before, I've transitioned two of them to apartments and they remain good tenants. The applicants I'm getting for apartments WOULD NOT qualify to rent a room from me let alone an apartment.

Maybe it's my area, but if this is a broad trend, I think a few things are possible:

1) There's a ton of folks sleeping on couches and living in their cars. There will be pressure to force landlords to lower requirements to house them (i.e. lowering income requirements to 2 times rent, blocking eviction/criminal records and etc.).

2) Vacancies will be longer and rent concessions will be far deeper than anyone anticipates. I'm not excessively leveraged so this is more frustrating than economic loss per se however for those who bought at inflated prices over the past couple of years, this is going to be highly problematic.

I hear you and I feel the frustration!

This is one of the reasons why I'm getting into Commercial. Generally speaking, the tenants there are better quality because they already HAVE housing and are running their own business. In other words, they're out there WORKING for a living, not sitting at home and expecting the rest of society to provide their daily bread.

Side note: I've been studying the Book of Ruth recently, one of the shorter reads in the Old Testament at only 4 Chapters. The commentary I've been using (Enduring Word online) talked about how Ruth, as a foreigner in Israel, wasn't entitled to any social security benefits that most poor people were back then. Gleaning around the edges of the field was mainly for Israelite poor so they could WORK to provide for themselves. But she was peristent and humble and thus secured a blessing for herself.

Fast forward to today: entitlement is directly tied to the "come one, come all" social safety nets we've put in place that go far beyond the intended goal of helping out the least among us. The "least among us" today have food, housing, transportation, medical care... and most have a free Govt phone, internet, and enough $ left over for weed and booze. No wonder people feel "housing is a right!"

So far, commercial real estate has escaped almost all regulations. No Covid moratoriums. No blockage of what I can screen on. No Federal Fail Housing Law. No ESAs/service animals. It's simply a different type of investment in today's world of endless socialists trying to make housing an investor's burden so they can buy votes to stay in power.

Consider looking into as you cash out of traditional residential real estate, and keep rockin' that rooming house. I admit, the one thing I'm wishing I had was your ability to lock folks out almost immediately! That would save so much time, money, and hassle if I could just deny entry if someone didn't pay!

My goals is to have my portfolio mostly converted to commercial within 5 years. I'm already slightly over 50% by $ value and number of units. Let me testify: the EASE of management more than makes up for the fact that the $ return isn't quite as high on the monthly end. Still, with the ability to repurpose, I've actually been getting 1.3 - 1.7% rule... on COMMERCIAL. Without all the management hassles and with cheaper expenses overall.

I had a good experience running a furnished condo as a Motel Alternative. Catering to business people, divorcees, home sellers who needed housing for a month or two.

Tim---if I could find another small rooming house (10 rooms max), I'd buy. If you get a big place, that's like running a hotel. If you keep it small, it's like running an apartment. I actually find it easier when it comes to access and turns. Often I don't even have to advertise to fill vacancies. Demand is high and turnover low. Also, no LL/Tenant laws to contend with.

Sid: Commercial is definitely the way to go. I may 1031 into a commercial situation further down the road. The great thing with commercial is that I'm not limited to my local area and these properties lend themselves more to being remote given that the tenant handles maintenance.

In my small down commercial is dead. Maybe storage buildings are a winner but the number of them has doubled in the last 3 years so maybe that is saturated

My suggestion would be class B properties. 3 bed 2 bath ranches from the 60s and cater to people who have good jobs. My experience is that low rent attracts unqualified people. High rent attracts higher qualified people.

If you do the 1031, I would aim to keep it small.

I know I have peeled off a couple of places this year that I have owned for 20 plus years. I could always put someone new into the place or place the building into phase maintenance and sell them. I am electing a slow grow business model.

GKARL, I'm finding the same thing in my area for tenants. I just sold my nicest and most expensive house. It had sat empty for 8 months. And this wasn't the first time, so I decided to sell. Just met with an accountant and found out that I need to pay an extra $40K in taxes on that property.

Are these applicants mostly younger or older?

Do you have rentals near a University?

I know we've all had to put up with the hoards of 'bad decision makers/not my fault' applicants lately. They seemed to have mushroomed with all the handouts the last few years.

That said, there has to be a few good decision makers in your target community. What is keeping them from applying to your duplex? Once you understand that dynamic then you will know where to invest.

For example. Does the duplex rent for more than the average person in this neighborhood can afford? If that's the case then divest and reinvest in smaller/cheaper places.

Perhaps the local market is oversaturated with rentals which is going to drive rents (and prices) down. Is that a temporary thing because of some big business closing or the sign of a decaying city on it's way down. In one case you may have to settle for lower rent for a while, in the other you need to divest and reinvest in a different community.

The saying "can't see the forest for the trees" comes to mind. In short, don't let the forest of bad tenants keep you from seeing the needs and wants of the few good tenants. What are they looking for and where. That will help you find your target properties to meet the needs of the few good ones.

Have you tried advertising on FB Marketplace? Zillow has been my go-to for years, but the last time I advertised a vacancy there I had very low interest and only had two people show up for the open house.

I advertised a open house for the following weekend on FB Marketplace and was INUNDATED. I collected triple the number of applications that I had at any other open house, and actually had three applicants that I would have considered. And this was December in Wisconsin, which is a lousy time to try to find a tenant.

Gman,

Just a thought...

Have you considered re-organizing? Sell the least profitable and hardest to rent, use the money to pay off the debt on the good ones.

Paid properties reduce the stress and increase the profit.