One of the most important things you can do as a landlord is identify the right tenants. And, a tenant background check can reduce the chance of leasing to risky tenants. Here are eight reasons not to rely on credit checks presented by prospective tenants:
Landlords and leasing agents want reliable tenants, but many of them fail to thoroughly screen potential renters. They aren't intentionally lax with their approval requirements; they're just unsure how to find quality tenants. A paper rental application may seem like a helpful tool, but unfortunately some applicants will always be dishonest. Potential renters can fake references or falsify data, whether they list their best friend as a former landlord or have their sister pretend they're gainfully employed.
As the COVID-19 pandemic continues to impact the real estate economy, renters and landlords are concerned about how the disruption is going to affect their ability to make their payments on time. Over April 20-22, CoreLogic hosted a series of 3 webinars as part of the Strategic Agility in Uncertain Times series providing insight on COVID-19’s impact on the real estate, mortgage, and insurance ecosystems. In the first webinar, we dug deep into some of the effects of COVID-19 on the rental market and received a few questions.
Amy Gromowski, a Senior Leader with CoreLogic’s Science & Analytics Center of Excellence, and Jeremy Thomason, Executive Sales Leader for CoreLogic Rental Property Solutions appeared on The Real Wealth Show podcast to discuss how COVID-19 will impact the housing market.
Over the past several years a growing U.S. economy gave way to a strong rental market, with property owners receiving more rental applications from low risk applicants. That is prospective tenants who were more likely to be able to meet their monthly rent payments on time. These low risk applicants had higher incomes, lower rent-to-income ratios, and better credit histories.
You may already know how convenient online rental applications are, but what about tenant screening services? If you think these reports are overkill, absorb these eye-opening facts and think again.
Do you really know who’s living in your home? Most landlords have already begun streamlining their search for the perfect resident by moving to an online rental application. However, without a qualification process in place, a landlord is often left hoping the details on that application are accurate. Professional tenant screening services can help remove the guesswork and give you objective evidence of who applicants are, where they’ve been, and whether they’re worthy of your trust.
Property Insurance & Tenant Screening: Do Landlords Need Both?
Property insurance can help protect your investment from damage caused by renters, but it's a smart move to minimize risk from the outset by screening each online rental application upon submission. Tenant screening services help you weed out bad renters. Prescreening all applicants and getting good landlord insurance coverage are complementary ways to protect yourself and your investment.
—U.S. single-family rent prices increased 2.9% year over year
in January 2020—
- For the 14th consecutive month, Phoenix had the highest year-over-year rent price increase at 6.4%
- Lower-priced rentals experienced increases of 3.5%, compared to gains of 2.6% among higher-priced rentals
CoreLogic® (NYSE: CLGX), a leading global property information, analytics and data-enabled solutions provider, released its latest Single-Family Rent Index (SFRI), which analyzes single-family rent price changes nationally and among 20 metropolitan areas. Data collected for January 2020 shows a national rent increase of 2.9% year over year, down slightly from a 3.2% year-over-year increase in January 2019. Rent prices are now increasing at double the rate of inflation, presenting affordability challenges among current and prospective renters.
Low rental home inventory, relative to demand, fuels the growth of single-family rent prices. The SFRI shows single-family rent prices have climbed between 2010 and 2019. However, overall year-over-year rent price increases have slowed since February 2016, when they peaked at 4.2%, and have stabilized at around 3% over the past year.
Low-end rentals propped up national rent growth in January, which has been an ongoing trend since May 2014. Rent prices among this tier, defined as properties with rent prices less than 75% of the regional median, increased 3.5% year over year in January 2020, down from a gain of 3.9% in January 2019. Meanwhile, high-end rentals, defined as properties with rent prices greater than 125% of a region’s median rent, increased 2.6% in January 2020, down from a gain of 2.9% in January 2019.
Among the 20 metro areas shown in Table 1, and for the 14th consecutive month, Phoenix had the highest year-over-year increase in single-family rents in January 2020 at 6.4% (compared to January 2019). Tucson, Arizona experienced the second-highest rent price growth in January 2020 with gains of 5.2%, followed closely by Las Vegas at 4.9%. Honolulu experienced the lowest rent increases out of all analyzed metros at 0.6%.
Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. Phoenix experienced the highest year-over-year rent growth in January 2020, driven by annual employment growth of 3.2%. Austin, Texas experienced a 3.6% employment growth, which played a role in its above-average rent growth of 3.4% in January. This is compared with the national employment growth average of 1.5%, according to data from the United States Bureau of Labor Statistics.
“The single-family rental market benefited from low unemployment rates over the past year, resulting in an increase in rental demand,” said Molly Boesel, principal economist at CoreLogic. “However, rents are increasing at about double the rate of inflation, which has negatively impacted affordability.”
The single-family rental market accounts for half of the rental housing stock, yet unlike the multifamily market, which has many different sources of rent data, there are minimal quality adjusted single-family rent transaction data. The CoreLogic Single-Family Rent Index (SFRI) serves to fill that void by applying a repeat pairing methodology to single-family rental listing data in the Multiple Listing Service. CoreLogic constructed the SFRI for over 80 metropolitan areas —including 45 metros with four value tiers—and a national composite index.
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