03-12-18 Tenant Screening…how far is too far?

Landlords have in the past relied on a bit of a three legged stool to screen tenants...application with references, credit check, and criminal background check.

While landlords have for a number of years had the additional ability to stalk their prospective tenants on the internet like a Tinder date a couple of Canandian start-ups are taking this to an entirely different level.

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Naborly

Certn

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    Runs a full-service back-end for tenant screening from application to approval
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    The tenant provides their employment, financial and rental history information which Naborly then verifies and analyzes to create a risk profile of the applicant
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    Over time the company is tracking what they term as "tenancy outcomes" through their
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    Naborly claims their process removes traditional factors of discrimination and that their algorithms meet and exceed Fair Housing requirements in the US and FCRA Compliance in Canada
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    Tenants and property managers are also allowed to provide feedback to verify disputes and evictions
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    Currently the service is free to landlords with revenues being generated through promoting renter's insurance to the prospective tenants making application through the system
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    Takes the screening process many levels deeper through additional social, behavioral, and financial profiles
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    Social scans are performed by gathering all publicly available social profiles, email addresses, mailing information, social media profiles, and known aliases.
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    Social scans also search out adverse media coverage related to the applicant
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    Behavioral profiling gauges the applicant's ethics, honesty, intelligence, attitudes and beliefs to develop a quantitative understanding of risk
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    Financial profiling goes beyond what the applicant states as their income and employment by accessing bank account balances, spending habits, and historical payment data from the applicant's employer including recent and projected pay increases; if provided by the employer

Now, of course our customers are real estate investors so for the most part we are in your corner every step of the way.  However, some of this does seem a bit overreaching. 

Decisions are being made about individuals based on algorithms and data collected through various means.  One must have faith in both the math behind the equation as well as have faith in the data being gathered.

One cannot forget either before embarking on the use of one of these types of services that they are at their core tech start-ups with one of them reportedly having a staff of only 12.  While one can assume with all companies that their intentions are honorable at the end of the day their ultimate goal is to be sold for a 10x multiple and generate the founders and early investors a hefty return.

Certn even goes as far in one of its blog posts to call out the dangers of "free tenant screening" citing that the landlord is the one collecting the data but is then allowing a third-party vendor (Naborly) to sell that data to yet a fourth party.  This is probably carries much higher risk in Canada where privacy laws are more strict than the US; for now at least.

What is your opinion of these types of platforms?  Do they really lower the level of discrimination in housing decisions or do they provide a veil by which to further mask those issues?  Or, is this the way landlords finally get the upper hand on "professional tenants?"


I always look for a few extra calls on Monday as I know so many investors are working full-time jobs and the weekend is the opportunity to get extra time to view properties and get offers accepted.  Text me at 833-FUNDYES a good time for us to talk about your weekend successes and get funding started ASAP!

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