Resident screening provider FirstAdvantage SafeRent released its Multifamily Applicant Risk Index (MARI) in the fall, a statistical model that property managers can use to benchmark the credit histories of their rental applicants.
The MARI measures current “traffic quality,” or the credit quality of those applying to live in multifamily properties, and compares it to historical averages to derive an overall score. A score of more than 100 indicates a reduced average risk of default, and a score of less than 100 indicates an increased risk of default.
For the third quarter of 2007, the most recent statistics the company has released, the MARI for the entire country was 103, down two points from the second quarter, indicating a slightly riskier applicant pool.
The data, which is updated quarterly, can be broken out by specific geographic regions as well. For instance, in the third quarter, the Northeast had the riskiest applicant pool, with a MARI score of 113, while the Midwest had the least risky applicant pool, with a MARI score of 99.
The metro areas that showed the largest MARI declines from the second quarter to the third quarter were Austin/ San Marcos, Texas; Denver/Boulder/Greeley, Colo.; and Minneapolis/St. Paul, Minn. The three metro areas with the biggest MARI increases (and therefore the biggest jumps in risky applicants) were Jacksonville, Fla.; West Palm Beach/Boca Raton, Fla.; and Greensboro/Winston Salem/High Point, N.C.
Some early data derived from the index has debunked a few myths about applicants with subprime mortgages. Many in the multifamily industry believe that those with subprime mortgages are returning to the rental market in high numbers, and that they will create a windfall of good renters.
But the company’s stats show that of the 25 percent of applicants in August 2007 who once had a mortgage, only 2.6 percent had a subprime mortgage. And when compared to the average applicant, subprime applicants were much more financially stressed—their applicant screening scores were 24 percent lower than the average applicant.
The subprime mortgage collapse is an ongoing process, of course, and future results may disprove those early numbers. The fourth quarter 2007 MARI is expected to be released in the first quarter of 2008.
LeasingDesk expands database
In other resident screening news, LeasingDesk, a subsidiary of RealPage, Inc., recently expanded the criminal database in its resident screening program.
In December, LeasingDesk added Pennsylvania statewide criminal court access as well as criminal court data from 224 counties across the country, adding to the program’s existing databases of sex offenders and terrorists.
The expanded database now allows property managers to screen prospective residents for criminal data in 47 states, and retrieve criminal information from 388 criminal court jurisdictions. This information is compiled into a single report, along with credit and eviction records, fraud data, check writing history, and the company?s proprietary rental payment database.
SIMPSON SEES BOOST WITH REVOLUTION LRO
In October, Simpson Property Group, L.P., reported a 4 percent increase in rental rates after testing the Rainmaker Group’s Revolution LRO revenue management software on six apartment communities. Based on the strength of that test, the property management company installed the software across its portfolio of more than 50 communities, totaling 17,000 units.
The software analyzes a variety of data—seasonal traffic rates, weighted competitor rents, and recent demand among them—to recommend pricing for a given move-in date, unit type, and lease duration, maximizing rents for each community in a property management firm’s portfolio.