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I bought a two-family investment property. Each apartment has four large bedrooms and contains more than 2000 square feet. That makes it about twice as large (in terms of number of bedrooms as well as square footage) as the typical rental in my area, and I am trying to rent it for about 50 percent more than you'd get for a two-bedroom.

I'm having trouble finding good tenants. The typical tenants in my area either don't need this much space (because they are young and don't have a large family) or can't responsibly afford this much space (if they could, they would have bought their own house by now).

I'm looking for suggestions on how to find good tenants. Is there a specific type of tenant (students, for example) who would be a better fit for this type of rental? Or maybe I need to bite the bullet and lower my asking rent to be on par with a two-bedroom place. There are many more qualified tenants looking for an apartment at that price point.

Advice appreciated from anyone who also owns very large apartments and has found good tenants for them.

I know the best solution would be to split the house into smaller units, but that is unfortunately not possible due to zoning restrictions.

TTT
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painter48179
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    If you have students in your area, you might consider renting the individual bedrooms, with shared access to common areas. This can be more profitable than renting the apartment as a whole (think multipack vs. single snickers bar pricing), if you can fill all the rooms. Though it comes with its own set of other considerations - increased turnover due to tenants graduating and leaving town, seasonal changes in tenant availability, etc., which you should research to see if you're comfortable with. – CactusCake Jun 25 '18 at 12:52
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    Assuming it wasn't new construction: How did the previous owner manage it and what did the rental history look like? – nanoman Jun 25 '18 at 16:19
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    How's the school district? If it's excellent, that's something to add to your ads. – mkennedy Jun 25 '18 at 21:28
  • @nanoman the previous owner was in a bad financial place and sold it for a song. That's why I bought it knowing it would be hard to rent. I paid only about 50 percent market value (in FSBO deal). So I am making money on it even at the current rental rates. But I could make more money. Worse, the tenants I'm finding are just not great because the typical renter either doesn't need or can't afford 2000 square feet. – painter48179 Jun 26 '18 at 13:05
  • Remember that the justification for holding the property is based on the rental income in relation to the market value (what you could get by selling it -- not what you paid or what your mortgage is). If the market value is that high, consider just flipping it. – nanoman Jun 26 '18 at 13:24

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I wouldn't lower your price just yet. I would recommend listing on a well-known site and allowing realtors to bring you tenants. It will cost you about one month's rent (though that is always negotiable), but they will do the pre-screening for you based on your minimum criteria. They usually already have a network of potential renters, and realtors are by nature good at finding buyers/renters since it's what they do every day. The fee is obviously high compared to finding tenants yourself, however, if you're comparing this to drastically lowering your rent, it's likely worth it. Besides, you can still keep trying to find tenants yourself and it doesn't cost you anything if the realtors don't succeed. If the realtors also fail to find you someone, perhaps then it's time to consider lowering your price.

TTT
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    Another benefit of using a realtor in a case like this is that they may be able to provide advice based on knowledge of the local market, if they are good. – Grade 'Eh' Bacon Jun 25 '18 at 17:29
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It sounds like you bought your investment property with the full expectation that the renter's market will accommodate for your purchase price (which most rent owners would tell you is trying to work the equation backwards).

You could lower your ask rent, but does the investment still make sense in regards to ongoing costs + mortgage? When the investment crosses over the barrier from profitable to costing, or even lies just 1 disaster away from total disaster, then you might want to consider not being tied down to this property.

By all means, follow the other answers regarding spreading out your options, figuring out what a good rent and structure might be. But go back and revisit the numbers after some time to be sure that the investment still makes sense with the vacancy rate and costs.

Shorlan
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