How Properly Screening Tenants Can Help Protect Your Property Investment

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How Properly Screening Tenants Can Help Protect Your Property Investment

Protect Your Property Investment

An effective screening tool combined with renters insurance can pay dividends for property management companies. A solution that provides an applicant’s apartment rental payment history and offers insurance options protects PMCs and helps create a community of better renters, say industry professionals.

The better the renter, the most likely that management won’t be left holding the bag because of uninsured damage.

It’s been proven there is a direct correlation between credit quality of the resident and the amount of damage that they may leave behind in insurable losses and uninsurable losses that a deposit is intended to cover.

Finding the right balance of quality residents while minimizing risk and exposure with limited impact to leasing agents and consumers is a growing concern in today’s changing multifamily landscape. Not all screening tools paint a true picture of the applicant, and of those who are approved only 40 percent purchase renters insurance policies.

Recent apartment demand has provided PMCs a great opportunity to maintain high occupancies. In a good market, properties don’t have to lower screening thresholds and take on more risk just to fill units.

But not all applicants are desirable renters, even if they possess good credit scores. Rental payment history that includes late payments, whether or not deposits have been paid and damage-related charges may not always show up on a credit report. Such information can be just as big of a red flag as a questionable credit report.

The one-two punch of a quality screening tool and renters insurance adoption enables management companies to better mitigate risk in the fast-paced multifamily environment. Just as fast as new product hits the market, people are waiting to rent.

A robust screening tool that includes rental payment history profiles helps properties identify higher quality residents quicker. Also, presenting residents with renters insurance options at the time of leasing better protects properties from damages associated with accidents that are bound to happen, even if the resident is as good as gold.

Good rental payment histories often are an indicator of applicants who are less likely to cause damage and purchase a renters insurance policy. A property is most vulnerable when damage occurs by an uninsured resident. Unfortunately, insurable damages like fire, smoke, water and even pet damage aren’t discovered until the resident has moved out. If the resident hasn’t maintained current renters insurance, repayment can drag on for days, weeks and months – or not be made at all.

Inclusion in online leasing helps PMCs get results faster

Online leasing has helped not only streamline screening but also provide a solution that systematically presents renters insurance options at the point of sale. Applicants can apply, get screened and purchase a policy in just a matter of minutes – a one-stop shop.

Along the way, PMCs learn what kind of applicant is knocking at the door, and whether he or she will enable the property to add to or maintain its value.

It’s about the overall credit quality of the residents, which drives bottom-line revenue because they have better folks in there. Higher resident quality should correlate to less losses on the renters insurance side. Overall it, it improves the asset quality and value.