Many apartment communities face the challenge of residents who skip out on leases before they’re fulfilled. And every resident who skips out on a lease leaves an unexpected vacancy in his or her wake.

Residents skip out on leases for many different reasons. Sometimes they’re the victims of an unfortunate circumstance (e.g., an unexpected job loss), but for some renters, it’s intentional — and they’ve made a habit of doing it wherever they go. Residents who consistently leave behind unfulfilled lease terms to bolt for the next community are known as “serial skippers.”

Serial skippers are obviously bad for a multifamily community. They not only harm communities financially, but also require operators to spend money to turn unexpectedly vacant units. But fortunately, rental screening technology has come a long way over the years, and there are effective ways to identify whether a prospective resident is likely to be a serial skipper. 

The best way to protect against serial skippers is to reject their lease applications from the start. But that’s easier said than done, because it can take months before rental collections are reported to the credit bureaus. To catch them before they strike again, operators need to know the limitations of certain screening methods and the opportunities available through newer screening methods.

Limitations of credit reports and scores
Checking credit reports and scores is a routine part of any community’s resident screening process. Generally speaking, credit reports and scores provide a very good indication of how consistently an applicant pays his or her bills. But they don’t tell the entire story. For instance, civil judgments and tax liens are no longer reported on credit reports, meaning applicants with these financial risks could apply for new leases without detection. 

Limitations of income checks

Can a prospect pay rent consistently? Does the applicant have the income to afford the community? Checking current income levels can give leasing associates a sense of whether a prospect will struggle to pay rent on time and in full every month. But the most common ways of checking income in the industry, calling employers and reviewing pay stubs, are becoming increasingly difficult. 

The manual process has encountered two big challenges recently. Pay stubs are easily fabricated with templates available on the dark web, and many employers are hesitant to verify income due to the risk of litigation. The best way to verify income is to use an automated service, which is gaining traction.

Opportunities through rental payment history
Having access to a prospect’s rental payment history is a powerful complement to credit scores and pay stubs, because it shows a leasing team exactly how well applicants have fulfilled their lease obligations in the past. Technology that regularly updates rental payment history data from operators and makes that data available to other operators helps leasing associates identify serial skippers from the start and prevent them from moving in. Rental payment history platforms even show whether an applicant has a current lease in place that needs to be fulfilled. 

According to a study by Experian® RentBureau®, the lease default rate for prospects with a positive rental payment history (i.e., one with no skips or unpaid balances) are only 5.96 percent. On the other hand, the default rate for prospects with one prior unpaid balance jump to 23.2 percent. Those with two or more rental debts — likely serial skippers — have a default rate of 35.2 percent, nearly six times higher than applicants with positive rental histories.

The best way to protect against serial skippers is to prevent them from moving in in the first place, which can be done through comprehensive resident screening and application evaluation. Proper screening technology ensures that your community will accept the residents who will be loyal paying customers and reject likely serial skippers.