At first glance, properly screening lease applicants would seem to pose a considerable challenge for today’s apartment operators.
On the one hand, prospects want their applications vetted and approved almost instantly. At the same time, operators can’t afford to take shortcuts in their evaluations of an applicant as a mistake could mean serious heartache for an apartment community and its staff.
Fortunately, the world of resident screening is evolving to reconcile these competing tensions. With the right solutions and processes in place, apartment managers can process applicants with the speed prospects demand and the rigor needed to protect their communities from unnecessary risk.
The Climate We’re In
In the quest to attract new residents, owner-operators are trying to build the most attractive new buildings, renovate older assets and add every amenity imaginable. But at the end of the day, the property with the best customer service will normally win out. For prospects, part of good customer service is a swift application process. If a property is not able to accommodate their timetable, it’s likely the community down the street can.
But apartment managers have more to consider when screening potential residents than making a quick decision. This is especially true for fee managers, who have three customers when it comes to lease applications: the applicant, their onsite associates and the property’s owners.
If operators sacrifice diligence in the name of a quick decision on an application, they can do a real disservice to their associates and the community’s owners, who will feel the financial impact of a troublesome resident. In the current environment―with capitalization rates compressing and interest rates rising―every line item on a profit-and-loss statement is important to value and cash flow. If a property manager pushes the limits of acceptable risk, it could wind up costing thousands of dollars in lost rent and attorney fees that could have been avoided with the proper underwriting.
The Right Tools
Striking the right balance in screening may seem like a herculean task but the good news is that it can be accomplished thanks to technological advancement.
Operators can now access solutions that run a credit risk threshold assessment, debt-to-income analysis and criminal background and eviction checks within seconds. Furthermore, some programs use algorithms to take the guesswork out of underwriting, which enables operators to avoid accidentally violating Fair Housing standards.
Managers also can access automated tools to quickly obtain an applicant’s rental payment history, which provides a powerful indication of the likelihood of that person paying their rent on time and in full. Additionally, some operators are testing solutions that give them the ability to run credit reports on applicants around the world, allowing them to make better decisions regarding international applicants, who have long presented considerable screening challenges.
Looking to the Future
The advances in both the speed and thoroughness of resident screening have been tremendously exciting. It stands to reason that screening procedures and solutions will only grow more efficient and more rigorous in the years to come. To my eye, automated verification of employment is really the final piece of the speed-accuracy puzzle.
Facial recognition of applicants would be a welcome advancement, too. Instead of having a prospect supply their Social Security number to run their credit history, the applicant would simply glance at a specialized camera. This would help ensure operators are protected from fraudulent applicants.
Make no mistake: resident screening in today’s apartment industry is a complex task, as operators have to satisfy competing demands and interests. But by embracing modern technology, managers can provide prospects with the speed they demand while protecting their assets from unnecessary harm.
Bob Gleason is vice president of operational support at Village Green.