We went with applicant #2. Upon further investigation, we realized the assault charge from 23 years ago had been dismissed. Employer checks came back with glowing recs, and I know two people who work in the same company as the wife, where she has been employed for over 20 years.
As for lowering the rent, we are asking $800 (we pay sewer and sanitation) and have had 45+ inquiries. We scheduled 25 showings this week, and had about a dozen or so show up. We ran into another local landlord last night who owns 10 or so properties, and he shared the sentiment that people in our area with outstanding credit/backgrounds are buying. We previously had this property advertised a few months ago for $750 (tenant pays all utilities), but every single applicant was unqualified. We knew several of the interested parties who would have been more than qualified, but they all passed on it. So we took a few months and made some more updates: new flooring, 9 new windows, some plaster repair. While we raised the asking rent, we are now paying the sewer/sanitation (which is charged against the property taxes if unpaid, so many landlords round here include it with rent). So it comes out to be a very similar deal for the tenant. We are definitely seeing a higher caliber applicant this time around, so I feel like our asking price is on target.