Effects of COVID-19 on Residential Rentals

2020 Survey Report

Residential rentals are at risk

With U.S. unemployment rates at historic highs, we wondered, how is this impacting the residential rental market? To find out what effect the pandemic is having on the residential rental market, Snappt commissioned the 2020 Effects of the COVID-19 Pandemic on Residential Rentals Survey.

This survey focuses on financial document application fraud (altered bank statements, fake pay stubs, etc.) and the connection to evictions within rental portfolios. We surveyed property managers who either manage or are directly involved with evaluating rental applications and renters split among Millennials, Gen-Xers, Boomers and the Silent Generation.

Key Survey Finding

Renters and properties are struggling.

Tenants are struggling to pay rent.

Property Managers report that 53% of tenants are having trouble making rent. In fact, 25% of tenants are paying late, 17% now pay less than full rent, and 11% have stopped paying at all. Additionally, the number of renters paying rent by credit card is soaring. Is this an indicator that these renters are near the end of their financial ropes?

 

Evictions are stacking up

Property Managers report an astounding 21% eviction rate today, a 75% increase from last year. One in four of these are tied to application fraud. Three of ten renters have been or will be evicted after moratoriums expire. In fact, the typical property manager has 15 evictions stacked up waiting for moratoriums to expire.

Key Survey Finding

Financial difficulty leads to application fraud.

Rental application fraud is on the rise.

Did you know that more than a fourth of the financial documentation within rental applications are fraudulently altered? This includes fake pay stubs, altered employment records, and other financial documents are being falsely presented as legitimate during the rental applications process. These types of financial document fraud a difficult to detect, especially when submitted via an online application.

Financial documentation fraud leads to more evictions.

Altering application documents is easy with everyday technology like high-quality scanners and photo-editing software. Although it’s easy to commit, it’s difficult to detect. Unfortunately, this leads to applications with inaccurate information which makes tenant screening riskier than ever before.

Can property managers minimize their risk?

Yes. Property managers can employ a combination of tenant screening best practices combined with affordable technology to stay a step ahead of even the most sophisticated fraudsters and protect their portfolios from losses in these difficult times.

Consider these 4 steps:

Visually inspect every document

Is the visual quality of every document what you would expect? Or, does it look like it has been copied multiple times? Ensure account numbers carry across separate documents. Check that transactional details and other numbers are aligned and match formatting in verified documents you’ve received from the same source in the past.

Double-check the numbers

Call all the telephone numbers on a document to make sure they work; but, how do you know the person on the line is a prior employer or an accomplice in crime? Look up contact information for issuing organizations or corporate HR departments yourself. Ask for details such as a start-date, specific information a friend would be unlikely to know.

Consider the big picture

Does the narrative across all sources of an application agree? Inconsistencies or dead links for live documents are a red flag. How do applicants feel about submitting paperwork in person? Peruse LinkedIn pages and review histories through online databases such as sba.gov or opencorporates.com to ensure a company is legitimate. Ask applicants to print statements in the leasing office.

Utilize Technology

In addition to the previous techniques, many property managers are turning to technology solutions. New tools allow for programmatic evaluation of tenants and identification of fraudulent documents to prevent a fraudulent tenant from ever signing a lease.