How to build a modern tenant screening tech stack
Not long ago, individual property owners and managers manually set the rents at their buildings. Today, data-driven real estate revenue management systems analyze rent and vacancy metrics at a granular submarket level to determine the right price for a two-bedroom unit in a midrise building with a clubhouse and pool on a given block.
But as recently as the mid-2000s, the only way to get accurate pricing data on the competition was to do the detective work yourself. So, property managers went undercover to physically shop the competition, posing as prospective tenants and applying to live at neighboring properties.
With the adoption of revenue management, some managers pushed back against the technology. They railed that a black box couldn't replace their hard-won, market-specific knowledge. For example, how could a computer account for a manager’s “spidey sense” that a market was starting to change?
It turns out that the programs used data to determine that nuance quite well, and revenue management is now the go-to method for setting rents. Meanwhile, technology adoption in multifamily has skyrocketed. Far from the days when landlords used spreadsheets to run their properties, residential property management users now account for two-thirds of the booming property management software market.
Tenant screening software today's detective work
Yet, there’s still one area many apartment managers tackle manually: tenant screening reports.
Indeed, manually checking tenant credit score, state-specific rental history, eviction history, or payment history can be daunting. Not to mention that securing employment, income verification, and other references over the phone consume most of the application process. According to a recent survey of 230 institutional property managers, these steps can take up to 10 hours per tenant.
At a 300-unit community with an industry average turnover rate of 45%, that’s nearly 1,400 staff hours.
The scourge of document fraud today complicates the process further. Prospective tenants and renters now have a wide array of online tools to alter documents such as paystubs and bank statements. The problem is so widespread that 85% of property managers report being targeted by application fraudsters, compared to 66% pre-pandemic.
To combat this, many rental property managers manually match up paystubs and deposit dates on bank statements or require two months of documentation. But that also doubles the number of paper leasing agents must comb through during the rental application process.
Building a tenant screening tech stack
There is a better way today.
Our 2022 Snappt Tenant Screening Best Practices & Technology for Property Managers Guide breaks down how managers can automate their rental application process while systematically vetting prospects compliant with Fair Housing law. In addition, apartment-industry-specific property management solutions from Yardi, RealPage, MRI, Entrata, and AppFolio include tenant screening functionality.
Tenant background checks: criminal records and credit reports
Each system allows managers to perform a full credit report and nationwide criminal background check electronically. As a result, property managers using background reporting can judiciously eliminate candidates with a criminal history who may have committed violent crimes and serious felonies. Having that kind of delineated criteria in a criminal report is vital since FHA, and HUD regulations prohibit blanket bans against potential tenants with criminal or arrest records.
Bank account linking
The tools can link to prospects’ bank accounts for payment to ensure timely receipt of rent and a basic degree of fraud protection that verifies the validity of an account. While that’s a good screening solution, it only works if prospects and tenants agree to link their accounts; property managers can’t legally require them to do so.
Specialized ID verification solutions let property managers know prospects are who they say. Indeed, the same survey found that verifying a prospect’s ID as legitimate was the most crucial step in the tenant screening process.
CheckpointID, IDinsight, IDology, Jumio, Onfido, and Trulioo all offer point solutions that integrate with major property management systems to ensure IDs are legitimate.
How Snappt sniffs out fraud
Snappt’s documentation fraud detection software completes the tenant screening tech stack by targeting an area other tools miss: document manipulation. It is all too easy for applicants to make subtle changes online to bank statements, previous address history, pay stubs, and W-2s. Yet, to the naked eye, these documents look legitimate.
Snappt’s system checks financial documents' digital DNA to ensure they're legit. First, it employs forensic and image analysis using data-driven algorithms to spot fakes byte by byte. Then, it compares applications against authentic historical document databases to identify micro-anomalies and flag digital alterations. Ultimately, it accepts or rejects the documents; no detective work is needed.
How Snappt sniffs out fraud
No one solution does it all. But by combining background and credit checks with ID verification and Snappt’s fraud detection solution to flag bogus financial statements, today’s apartment pros can bring tenant screening into the modern age.
Learn more about Snappt or request a demo