If they have done it before, there is a good chance they will do it again.  Did you really need anyone to tell you that truth?

Probably not.  People follow patterns with their behavior.  If someone has been a “problem tenant” before, chances are they will be a problem tenant again.  However, there are exceptions to every rule and we have been fortunate to find some of these exceptions for our Rent to Own program.

Past evictions are usually good predictors of future evictions.

When people come to us to get qualified for this program, they are coming to us because they can’t get financing due to some kind of credit glitch.  Ironically, we have found that with the right type of underwriting we can decipher if this “glitch” is an exception to their pattern or if it is their pattern.

Those that can show us that it is the exception usually get approved.  We haven’t been right all the time because we are human, but it has been an excellent system.  In fact, the majority of the ones that haven’t worked out usually stemmed from something within in their relationship, such as a divorce.  Something we can’t screen for!

Below is an article about how TransUnion has built a predictive system on following people’s patterns.  If you are a landlord, this may be a useful tool.

A new TransUnion analysis found that prior evictions and rental-related collection records are highly predictive of future evictions. This finding comes as involuntary turnover – due to residents skipping out on payments or other evictions causes – continues to impact property managers. Eviction losses average $3,500 per unit, which includes court costs, lost revenue and other operating expenses.

TransUnion’s analysis also found that evicted residents have nearly three times as many prior eviction and rental-related collection records than non-evicted residents. The analysis examined the records of individuals who were evicted compared to those who were not evicted from nearly 200 properties. In the “not evicted” group, 5.5% of residents had prior evictions. For those who were ultimately evicted, that number rose to 21.7% of residents with a prior eviction. According to the analysis, evicted residents have twice as many prior rental-related collection records than non-evicted residents.

“Rental evictions and collections records offer a unique, insightful look into a resident’s current record. Rental-related collection records may be timelier than eviction public records – which can take weeks or months to process through the system – and the combination of the two helps property managers make smarter decisions about whether to lease to a potential resident,” said Mike Doherty, senior vice president of TransUnion’s rental screening solutions group.

Evicted Residents Non-evicted Residents
Prior Evictions 21.7% 5.5%
Prior Collection Records 13.2% 6.2%

 

TransUnion’s proprietary ResidentScore (which is based on a scale of 350 to 850) aggregates collection and other consumer report information to identify the likelihood of costly negative resident outcomes or future evictions. TransUnion’s analysis showed that the eviction rate for consumers included in the study who had a score between 650 and 749 was only 0.3% while this percentage rose dramatically to 12.3% for those consumers with a score of between 350 and 449.

ResidentScore Eviction Rate
350-449 12.3%
450-499 9.4%
500-549 5.8%
550-649 1.3%
650-749 0.3%
750-850 0.2%

TransUnion ResidentScore is an industry-leading scoring model to more accurately predict the likelihood of costly negative resident outcomes. To learn more about how TransUnion provides property managers with screening tools to make faster, more informed leasing decisions, visit http://www.transunion.com/product/resident-screening.

 
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