TransUnion Survey Finds Small and Large Property Managers Value Different Factors for Evaluating Residents
A new TransUnion (NYSE:TRU) survey found that the number of properties one manages impacts which traits are used for evaluating prospective residents. Six in 10 (60.4%) small property managers ranked income and employment information as the most important factor. Seven in 10 (70%) large property managers ranked rental and eviction history as the most important tool for screening residents.
Both small (those persons managing 100 units or less) and large (those persons managing 101 or more units) property managers ranked criminal and background checks as the third most important factor, and credit history as the least important factor.
“For small property managers, finding residents who can afford the rental price is clearly an important factor, but the historical information in criminal background checks, evictions reports and credit checks should not be ignored. Surprisingly, all sizes of property managers saw less value in credit history for assessing an applicant’s risk level. We’ve found that credit history can be the most predictive way to determine a resident’s likelihood to pay and potentially avoid the time, effort and costs of evicting a delinquent resident.”
While 89.6% of property managers conduct credit checks and 83.9% conduct criminal background checks on all of their prospective residents, only 69.1% conduct eviction reports. Nearly one-fifth (17.2%) never use eviction reports during their rental screening process.
The nationwide survey was administered in June and included 493 responses from property managers, with 55 respondents managing 101 or more rental units. The survey findings are being released during the 2015 National Apartment Association Education Conference & Exposition in Las Vegas.
The survey found that while more than half of property managers (52.1%) are concerned about the profitability and reliability of their residents this year, rental unit vacancies remains low. Eight in 10 (82.2%) small property managers have no vacant units while 88.9% of large property managers have vacancy rates below 10%.
Large property managers were also able to increase rental prices on the majority of their units in the last year. More than seven in 10 (71.7%) large property managers increased their rental prices, while half (50.1%) of small property managers increased rent.
“Although property managers are concerned about resident profitability, low vacancy rates and increased rental prices indicate the rental market is healthy and competitive,” said Doherty. “Finding reliable residents at the right price point is important for property managers of all sizes, and our survey findings show property managers are taking the right steps.”
Rental Payment Reporting
The survey found that, despite an industry push to report rental payments, nine in 10 (93.6%) property managers do not report rental payment performance to the credit bureaus. A TransUnion analysis in 2014 found that the subprime segment of the population (those with a VantageScore® 3.0 score of 600 or below) could experience positive effects from rental payment reporting with only one month of on-time rental payment information.
The survey findings also found a lack of awareness about rental payment reporting. Seven in 10 (72.4%) property managers who do not report said they do not know how. Another 25.5% of respondents said they believe rental payment reporting is not necessary. “Rental payment reporting is a win-win for property managers, who will appear attractive to good applicants, and for apartment residents, who may see credit benefits from consistently pay their rent on time,” said Doherty.
The property managers who report payment information said there have been positive benefits. Nearly six in 10 (59.2%) property managers said rental payment reporting has moderately or strongly helped to attract reliable residents.
Other key survey findings:
- Nearly nine in 10 (87%) property managers believe it is less difficult or about the same to find qualified renters compared to last year.
- 74.9% of property managers have no rental units currently vacant. Another 13.6% have less than 5% vacancy in their units.
- Small property managers experienced more stable turnover rates, with four in ten (43%) reporting no resident turnover.
- All of the large property managers surveyed by TransUnion experienced turnover in their buildings in the last year. Only 20% of large property managers had less than 10% turnover.
TransUnion provides property managers with screening tools to make faster, more informed leasing decisions, including ResidentScore, an industry-leading scoring model to more accurately predict the likelihood of costly negative resident outcomes. TransUnion also offers ResidentCredit, a fast, easy and complimentary solution for reporting rental payment information. This solution debuted at NAA in 2014.
To learn more about TransUnion’s rental screening solutions and the property manager survey, visit transunioninsights.com/rentalsurvey.
About TransUnion (NYSE:TRU)
Information is a powerful thing. At TransUnion, we realize that. We are dedicated to finding innovative ways information can be used to help individuals make better and smarter decisions. We help uncover unique stories, trends and insights behind each data point, using historical information as well as alternative data sources. This allows a variety of markets and businesses to better manage risk and consumers to better manage their credit, personal information and identity. Today, TransUnion has a global presence in more than 30 countries and a leading presence in several international markets across North America, Africa, Latin America and Asia. Through the power of information, TransUnion is working to build stronger economies and families and safer communities worldwide.
We call this Information for Good. http://www.transunion.com/business