BOTTOM LINE: ASSET MANAGEMENT
APARTMENT FINANCE TODAY • FEBRUARY 2008
MARI Me
FirstAdvantage SafeRent introduces a tool for
measuring renters’ credit risk.
By Jerry Ascierto
Resident screening provider
FirstAdvantage SafeRent
released its Multifamily
Applicant Risk Index
(MARI) in the fall, a statistical
model that property
managers can use to benchmark
the credit histories of
their rental applicants.
The MARI measures current “traffic
quality,” or the credit quality of those
applying to live in multifamily properties,
and compares it to historical averages
to derive an overall score. A score
of more than 100 indicates a reduced
average risk of default, and a score of
less than 100 indicates an increased risk
of default.
For the third quarter of 2007, the
most recent statistics the company has
released, the MARI for the entire country
was 103, down two points from the
second quarter, indicating a slightly
riskier applicant pool.
The data, which is updated quarterly,
can be broken out by specific geographic
regions as well. For instance, in the third
quarter, the Northeast had the riskiest
applicant pool, with a MARI score of 113,
while the Midwest had the least risky
applicant pool, with a MARI score of 99.
The metro areas that showed the
largest MARI declines from the second
quarter to the third quarter were Austin/
San Marcos, Texas; Denver/Boulder/Greeley, Colo.; and Minneapolis/St. Paul,
Minn. The three metro areas with the
biggest MARI increases (and therefore
the biggest jumps in risky applicants)
were Jacksonville, Fla.; West Palm
Beach/Boca Raton, Fla.; and
Greensboro/Winston Salem/High
Point, N.C.
Some early data derived from the
index has debunked a few myths about
applicants with subprime mortgages.
Many in the multifamily industry
believe that those with subprime mortgages
are returning to the rental market
in high numbers, and that they will create
a windfall of good renters.
But the company’s stats show that of
the 25 percent of applicants in August
2007 who once had a mortgage, only
2.6 percent had a subprime mortgage.
And when compared to the average
applicant, subprime applicants were
much more financially stressed—their
applicant screening scores were 24 percent
lower than the average applicant.
The subprime mortgage collapse is
an ongoing process, of course, and
future results may disprove those early
numbers. The fourth quarter 2007
MARI is expected to be released in the
first quarter of 2008.
LeasingDesk expands database
In other resident screening news,
LeasingDesk, a subsidiary of RealPage,
Inc., recently expanded the criminal
database in its resident screening program.
In December, LeasingDesk added
Pennsylvania statewide criminal court
access as well as criminal court data
from 224 counties across the country,
adding to the program’s existing databases
of sex offenders and terrorists.
The expanded database now allows
property managers to screen prospective
residents for criminal data in 47
states, and retrieve criminal information
from 388 criminal court jurisdictions.
This information is compiled into
a single report, along with credit and
eviction records, fraud data, check writing
history, and the company’s proprietary
rental payment database.
SIMPSON SEES
BOOST WITH
REVOLUTION LRO
In October, Simpson Property
Group, L.P., reported a 4 percent
increase in rental rates after testing
the Rainmaker Group’s
Revolution LRO revenue management
software on six apartment
communities. Based on the
strength of that test, the property
management company installed
the software across its portfolio
of more than 50 communities,
totaling 17,000 units.
The software analyzes a variety
of data—seasonal traffic rates,
weighted competitor rents, and
recent demand among them—to
recommend pricing for a given
move-in date, unit type, and lease
duration, maximizing rents for
each community in a property
management firm’s portfolio.
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