How AI in tenant screening benefits property managers
Rent growth is slowing across the U.S. — it hit a peak of 16.2% growth from early 2021 to 2022, but at this point, rent prices are expected to increase only 1.2% in 2024. Meanwhile, the national vacancy rate could climb to pre-pandemic levels. It’s not a favorable shift for property owners.
To maximize their net operating income, multifamily property managers and rental operators are working to raise revenue while lowering operational costs. You can curb your spending and keep the profit by straightening out inefficiencies and little losses here and there.
By optimizing the tenant screening process, property managers can more easily minimize vacancy times while avoiding excess risk of evictions and late payments.
Many operational costs vary based on the tenants that property managers welcome to their properties — most notably, whether the tenants have a history of paying the rent on time. Unless property managers are highly discerning, they’ll encounter two in every 10 tenants who don’t make timely rent payments.
Integrating Truework’s income verification platform into your workflow allows you to automate and accelerate screening tasks while quickly identifying fraudulent applicants. The result is fewer evictions, less manual work for leasing staff, and a faster application cycle.
Current landscape for property managers
As the rental industry looks for operational efficiencies, it has to resolve several issues affecting its processes:
Rising application fraud
Due to easy access to photo-editing software, readily available templates, and virtual assistants, fraudulent documents are on the rise. In fact, according to Veriff, document fraud with financial services increased by 79% from 2021 to 2022.
Expensive evictions
According to the latest research by Eviction Lab, landlords filed for more than a million evictions in the 10 states tracked, with Virginia and Delaware leading the chart. In fact, in Virginia, 13 out of every 100 renter households had one eviction in the previous 12 months.
With lost rent, legal fees, and maintenance costs, a property manager can expect to lose anywhere from $3,500 to $7,000 on a single eviction case. It’s safe to say less evictions means more profit for you.
Need for quicker turnarounds
According to the American Housing Survey (AHS), 33% of tenants apply to more than a single housing unit when browsing for their new homes.
If a property manager takes too much time performing manual income checks, they risk losing the prospective tenant to a competitor. Plus, they waste valuable resources trying to secure a tenant who is no longer interested.
Benefits of using AI technology to screen tenants
With the rise of document fraud and the need to review applications more quickly, it makes sense to turn to automation for parts of the tenant screening process.
Ask prospective tenants to submit their documents during the application process, then use AI (artificial intelligence) to sift through the applications and speed up verifications, facilitate decision-making, and detect tampering and forgery. You can then pick from the best.
AI-based tenant screening helps property management companies:
Detect fraud earlier in the application process
Research shows humans can detect less than 10% of document fraud, which is a major roadblock as 85% of property managers surveyed by NMHC in 2023 reported receiving applications with income and employment documentation that was fraudulently altered.
AI-based tenant screening helps property management companies automatically detect document fraud by comparing known fraud patterns. With machine learning algorithms instead of naked eyes, property managers gain a much better chance of catching even the slightest modification.
As part of Truework Income for Tenant Screening, property managers can use Truework Documents to automatically evaluate proof of income documents, which employs different machine learning algorithms to convert the data into standardized income reports while running multiple fraud checks.
Reduce manual work for leasing staff
AI tenant screening tools automate time-intensive tasks within the rental application process, freeing your employees to work on client-facing activities and improving your tenants’ experience.
Instead of leasing staff needing to decide how to verify, Truework’s AI uses employer standardization to check what business a prospective tenant works for and in what capacity. It can tell whether an applicant is an Uber staff member versus an Uber driver.
Based on the results, the AI routes a request via the most appropriate verification method, meaning fewer delays in the process.
Minimize vacancy days
Verifying applicant income can take anywhere from a few days to several weeks, depending on the method. Property managers may have to contact employers, scan through documents with a fine-tooth comb, or check with the IRS if nothing else works.
A longer approval pending time means more vacancy days and lost rental income.
Alternatively, AI-based tenant screening can automate verification workflows for property managers. Instead of researching and navigating complicated corporate hierarchies, Truework uses OpenAI’s embeddings to determine the appropriate legal entity to confirm with.
Truework Income for Tenant Screening uses machine learning to map and optimize the contact information of over 100,000 employers to help speed up verifications. As a result, for verificaitons that use Smart Outreach method, 75% are initiated without any manual input, cutting extra vacancy days and avoiding unnecessary applicant drop-offs.
Ready to learn more?
To shorten approval times while mitigating risk, property management teams can look into AI-based tools to expedite the verification process.
