Multi-Housing News - August 2009 - (Page 40)

tech trends Diamonds in the Rough Savvy screening practices help identify qualified residents that weren’t visible before By Christopher Hosford, Contributing Editor With foreclosures at an all-time high, rental properties are seeing quite a few applicants come through their doors. Meanwhile, enduring increasing pressure on occupancy and rates, many apartment communities might feel this is the time to relax screening methods and welcome these new applicants with open arms. Not so fast. Deadbeats can cost the multifamily community much more than one or two month’s back rent. But there are new technologies that can help management find qualified residents in places where they just weren’t visible before, and without having to relax standards one iota. “Given what’s going on in the market today, technology is important as a strategic tool for companies that are trying to maximize their opportunities with the applicant pool they already have,” says Nevel DeHart, executive vice president with First Advantage SafeRent. The company’s databases and statistical modeling technology helps properties parse their renter applicants for anything that might raise a red flag, including financial miscues and criminal activity. “The first is financial, and the second is desirability,” DeHart notes. “And after 9/11 we were able to get access to lots of consolidated criminal data, as well as terrorism alerts and watches. All of a sudden there are more things that the property manager and owner should be interested in than just financial information.” Leveraging automation Why technology for screening resident applications? Well, if you’ve ever been a job applicant or screened prospective employees, you know that phone references and fax verifications can be just plain misleading. Further, today’s resident-screening systems go far beyond flagging whom to exclude. Screening services also can maximize the value of an applicant pool, finding somewhat marginal people who might previously have been eliminated. The key, the experts say, shouldn’t be to lower don’t use credit often, or are “unbanked.” This might be particularly true for applicants to Class D and C communities. Here, the usual rent-to-income ratio or credit score might flag someone as a poor risk, even as his rental history reveals him as a steady, on-time payer. “Anybody can eyeball a credit report and separate the really good applicants from the bad,” Britti states. “It’s that group in the middle that are tough to make a decision on.” New credit-scoring algorithms “help property managers make harder decisions more consistently and intelligently.” In screening applicants in all Class types, technology should be smart enough to separate decent risks from poor ones. After all, there are renters with high incomes in Class A communities who can’t handle their money well, just as many lower-income people pay on time. RentBureau offers a service called RentPredict, which is a kind of credit score for renters. The company says it delves into its 6 million resident records using 26 different data inputs to predict how consistently someone will pay his or her rent. And the data points are diverse, touching on many indicators. Thus, Hartz says, even a first-time rental applicant can be scored on his likelihood of paying. “Yes, the economy is forcing property managers to stretch how they look at folks,” says Hartz. “You don’t want to rent to just anybody. But having an apartment stay vacant is tough as well. These days, property managers are coming to people like us to make better decisions, to stop the bad guys, yes, but not to turn away the good folks.” MHN screening standards to keep occupancy up. It’s to use technology better, and smarter, to uncover diamonds in the rough. “Today there are a lot of people going back into rental housing because they may have been foreclosed on,” says Michael Britti, group vice president with TransUnion Rental Screening Solutions (TURSS). “But we can remove that mortgage situation from the report so the default isn’t included when you’re looking at a person’s credit. That’s the right way to do it today. People are actually cleaning up their credit by going into default.” Adding in an applicant’s actual rental payment history also is key, and perhaps more pertinent, than mere credit history. Many resident screening companies have enhanced their services with proprietary rental history data from RentBureau, allowing management companies to access rental payment history records online. “Few people realize that rental data is not captured on a regular basis,” notes Eric W. Hartz, president and CEO of RentBureau. “What’s out there is collection data, maybe some public notice or eviction data, but that’s only negative information. And it’s 90 to 180 days late.” Track record Rental history can be important in assessing applicants with “thin” credit histories—those who To comment, e-mail diana.mosher@nielsen.com. MHN ONLINE Standardize Your Leasing Practices for a Healthier Bottom Line in a Challenging Market www.multi-housingnews.com/Leasing 40 August 2009 | Multi-Housing News http://www.multi-housingnews.com/Leasing

Table of Contents for the Digital Edition of Multi-Housing News - August 2009

Multi-Housing News - August 2009
Contents
From the Editor
Executive Insight: David Hendrickson, JLL
Market Pulse
Operations
Finance: Green Lenders
Property Management: Mentoring
Development & Design: Green
Profile: AMLI
Market Report: Florida
Kitchen & Bath: Saving Water
Products: Paints & Finishes
Technology: Resident Screening
Perspective: Leasing Practices

Multi-Housing News - August 2009