Monday, November 10, 2008
RentPredict.com- Stop Financial Losses from Risky Renters, Identifies Good Renters
RentBureau launched its newest product to help the multifamily industry stop annual losses of $5 billion dollars to renters who skip, leave without paying rent, write bad checks, or are evicted.
RentPredict.com debuted at the 2008 National Apartment Association Conference and Expo in Orlando.
Brent Sobol, Founder of Toro Properties, remarked, "This site helps savvy landlords stop the criminal behavior of chronic deadbeat tenants that move from apartments to houses and vice versa. Wish I would have had access to this data years ago."
After a simple 2-step signup, owners and managers are instantly able to receive a score, 1-999, telling them the percentage likelihood that their applicant will pay their rent. For example, a score of 970 means an applicant is 97% likely to pay their rent and is a good risk.
The score is calculated individually for each applicant using a proven scientific method called statistical regression that uses algorithms predicting how someone will pay their rent. RentPredict.com’s algorithm is strong due to its unique access to RentBureau’s database of millions of detailed rental records – both positive and negative – the key element of the score.
This ability to determine whether someone will default or pay as agreed means avoided headaches and significant improvement to the bottom line. RentBureau’s analysis shows the use of RentPredict.com as part of the screening process can be worth 1%-2% in Net Operating Income improvement.
Because RentPredict.com is easily accessible on-line to the entire multifamily industry nationwide, independent rental owners, such as Sobol, and larger apartment companies, such as Miles Properties, are using the service regularly. At $9.95 per report, RentPredict.com provides significant value complementing existing applicant screening services.
RentPredict.com is offering a free trial, so any owner or manager wanting to assess whether renters will pay can try it at www.rentpredict.com.
Labels: rental payment histories
Tougher Economic Times Mean More People Living Together
Residents of Atlanta are moving in with family and friends to save money due to the current economic conditions as reported to the Atlanta Journal Constitution.
"Economically, it makes sense," said Eric Bram, 23. Bram is living with 2 friends in a 3 bedroom apartment, each splitting the $1,785-a-month rent.
This problem facing the multifamily industry is not just isolated in Atlanta. The whole industry has many challenges to face with the wave of the "Shadow Market." With more vacant homes and condos now turning into rental units and the new trend of people doubling up in units, the multifamily industry as a whole may have a hard time reversing its recent soft performance.
“Doubling up has happened before. What we haven’t had in previous downturns is the supply of [unsold] condominiums and homes now being rented,” said Marvin Banks, a retired apartment industry executive and faculty member of Emory University and Georgia State University, both in Atlanta.
“Those two factors are the unusual or over-the-top factors impacting apartments right now,” Banks said.
To overcome these factors, changes are being made and incentives are being given to help attract renters to apartment complexes. Some apartment companies have made changes in their decisioning with credit-crunched consumers so as to allow them to rent.
“We relaxed our standards regarding [prospective renters involved in] foreclosures six months ago,” Melissa Severson, a property manager at The Villas At Hampton, said. The Villas At Hampton is a luxury apartment complex in the Atlanta area. “Once gas prices went up, it became apparent we had to re-evaluate [our standards]. There’s so many challenges right now.”
Read the Atlanta Journal Constitution article online for more information.
RentBureau Data Becomes a Part of Wharton Research Data
WRDS is a comprehensive web-based data management system that allows researchers, faculty and students to easily retrieve information from a wide variety of financial, economic, and marketing data sources. WRDS provides access to important research data services at 250 prestigious academic and government institutions worldwide. WRDS was developed in 1993 for faculty at the Wharton School of the University of Pennsylvania. WRDS carries a broad set of historical data from the world's leading providers of research-quality databases.
Because of the partnership with RentBureau, WRDS will be the first provider ever of live rental payment history data for academic research. This data will be used by professors and students researching in the fields of economics, real estate and finance.
RentBureau’s data includes over 5 million rental records. The records, from across the U.S., contain detailed information including lease start and end dates, lease amounts, and tradelines on lease payment histories, such as paid or late. The data is refreshed every 24 hours and can be used to analyze trends, as leading indicators or other applications. The data also contains rental collection and write-off information.
The data became available online from WRDS starting September 9, 2008. It will provide a new valuable data set that has never been available before for academic study presenting new opportunities for research.
“We have always known that RentBureau data has value for the multifamily and credit industries. It is great to know it has an application for academic uses also,” commented Hartz.
Eric Bradlow, Professor of Marketing, Statistics, and Education at The Wharton School, added, “This new and unique data source will provide academics all over the world the ability to study rental markets in the same ways that housing mortgage markets have been studied for years.”
Labels: rental payment histories, research
Rental Payment Histories Used to Help Lower Income People Obtain Credit
Data collected by RentBureau will form the basis of Big Issue Invest's Alternative Credit Scoring Initiative to help the financially excluded build their credit by paying their rent. This initiative may bring as many as 1.2 million low-income people into the mainstream credit market.
Big Issue Invest developed the initiative to help lower income people find affordable credit by proving that alternative data, such as rent, can be as predictive as mainstream credit decision-making models. These mainstream models tend to have less data on lower income people, so borrowers turn to high cost lenders, exacerbating problems of over-indebtedness.
The rental payment histories will be used for Big Issue Invest’s proof of concept, which adds alternative data to traditional credit scoring models. The proof concept will test rental data collected by RentBureau for its ability to predict consumer payments and help banks increase their ability to adequately assess the credit risk and borrowing capacity of the lower income population.
“RentBureau knows rental payment histories are highly predictive credit models here in the U.S.,” commented Solomon. “By working with Big Issue Invest on this project we are able to further our mission of recognizing the value of good residents across the Atlantic.”
“RentBureau’s systems enables us to easily and quickly supply affordable housing data to our analytics company to study,” added Sarah Forster, consultant to The Big Issue and principal in this initiative. “We look forward to seeing how rental data can predict other consumer financial behavior helping the underbanked in the U.K.”
Labels: affordable housing, alternative data, credit, rent, rental payment histories, underbanked
Wednesday, August 27, 2008
Your Data is Trying to Tell You Something. Are you Listening?
But what is not often discussed is what we can do translate the data into predictions we need to help us take the right actions.
From not showing up too early for a flight that is hours late to making sure you are renting to someone who you know will pay as agreed – the game is finding the right information at the right time coupled with the right analytical tools to use it.
THINKING BY NUMBERS IS SMART
I just finished a great book, Super Crunchers: Why Thinking By Numbers is the New Way to be Smart, by Ian Ayres, a professor at Yale Law School and an economist. The basis of Ian’s book is with the vast increase in available data, people with the right know-how can use information to make predictions that were inaccurate or impossible before. He points out, even industry experts armed with years of experience miss accurate predictions more often than people who properly crunch numbers.
Ian uses examples from the wine industry where a Super Cruncher using only variables was better able to predict great vintages than the top wine experts. He does the same with six highly regarded legal experts predicting how the Supreme Court would rule. He does the same for movie making, baseball, on-line dating services and even medical diagnosis.
ACCESSING THE RIGHT INFORMATION AT THE RIGHT TIME WITH THE RIGHT ANALYTICAL TOOLS IS CRITICAL
Super Crunchers are able to make such accurate predictions because they can now access information previously unavailable and from it, pull the data that matters. What is interesting is they are using mathematics that has been around for centuries, but are leveraging the horsepower of computers and networks to draw conclusions more quickly and effectively.
Super Crunchers do not allow themselves to be biased by past experience or mentalities of “this is how it’s always been” or “no one knows better than us." Ian does not dispute that making accurate predictions is both an art and a science, but in my opinion it’s clear we place too much weight on the art because we often have neither the time, interest, resources nor understanding to get better at the science.
Good news, now others are doing it for us - from Google to eBay to even the local dry cleaners – companies are finding the data that matters and doing the analysis for us.
PREDICTIVE APARTMENT INDUSTRY DATA IS HERE NOW
The apartment industry is no different. There are vast amounts of information available about everything from monthly financials to scores to show if your rental applicants will pay their rent. The key is making sure the best information is being used in the most effective and timely fashion, and is not muddied by subjective expertise.
Data can play a major role in the apartment industry as well. The apartment industry records over $120 billion a year in revenue, yet loses over $5 billion in bad debt to residents who skip, are evicted, and cause damage. Further, there are millions of residents with little traditional credit, being turned away or having to pay higher security deposits because it cannot be proven they will be great renters.
Data is now available to address this issue from credit, public and criminal information. New formulas based on science, not art, are shifting decisions from best guesses to objective predictions about resident applicants. Our company, RentBureau, is contributing to this increased data pool providing data to the apartment industry’s Super Crunchers to help them most accurately predict if someone will pay their rent.
TOOLS TO USE THE APARTMENT DATA EXIST AS WELL
The Super Crunchers are screening companies, and the data is aggregated detailed rental histories updated every 24 hours coupled with a score showing the percentage likelihood someone will pay. This is not just more information to pile on top of what is already in use; it is highly predictive information that complements what is already available.
Companies like On-Site and websites like www.screeningworks.com and www.mynewplace.com provide tools to find and assess applicants, crunching vast amounts of data. www.RentPredict.com, a RentBureau offering, allows landlords to instantly generate a rental score measuring likelihood an applicant will pay as agreed.
And this is just the beginning. Existing and new sources of data are surfacing all the time and the apartment industry is poised to take full advantage. And if the Super Crunchers are unbiased analyzers of the right information at the right time – it will be worth listening to what they have to say about your data and what actions to take.
Eric Hartz
CEO, RentBureau
Atlanta, GA
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