Artificial intelligence (AI) has taken many industries by storm, used to streamline operations and source information in just a few steps. Property management has also benefited from AI-powered tools that can make core tasks easier, including tenant screening. However, its users are also susceptible to the common downsides of AI. Landlords need to consider the pitfalls to avoid potential issues going forward.
Key Highlights:
- AI simplifies tenant screening by automating background checks and evaluating applicants through data like income, rental history, and criminal records, allowing landlords to process more applications efficiently.
- Predictive scoring models help identify tenant risks by analyzing patterns across multiple data points, offering a more data-driven approach than traditional manual reviews.
- Major risks include bias and lack of transparency, as AI can unintentionally learn from biased data sets or produce results that landlords struggle to explain to applicants.
- Compliance with Fair Housing laws is crucial, since biased algorithms can lead to discrimination based on protected characteristics such as race, religion, or disability.
- Best practices involve maintaining human oversight, verifying vendor credibility, ensuring data privacy, and keeping screening processes transparent to applicants.
How AI Is Used For Tenant Screening
AI tools are usually used for their main advantages, such as the ability to source data from multiple sources and process it to produce accurate evaluations. This speeds up tenant screening in property management, allowing landlords or property managers to focus on other matters.
Automated background checks can be conducted using AI systems, which process vast amounts of data to verify information such as identification, employment, income, rental history, criminal history, and other relevant data to ensure that a potential tenant will follow lease rules.
Predictive scoring models are then used to evaluate all gathered information and determine tenant risks based on numbers and patterns. Assessed parameters may include financial data and publicly available information, such as criminal records.
In some AI products, previous landlord references or application letters can also be analyzed using natural language processing, though this approach is more prone to errors than data-driven processes.
What Are The Risks?
AI-powered screening tools are not perfect, as even prominent names have yet to perfect theirs without the risk of infringement or bias. Some of the common risks include:
- Lack of Transparency: A landlord may not be tech-savvy enough to explain to potential tenants how the screening process works, seeing as they need to explain how the AI tool will assess them.
- Algorithm Bias: AI learns by processing public data online, and in some cases of machine learning, the techniques used remain unsupervised. That means even the bad parts of the internet are included in the materials that AI learns, including historical bias.
- Legal Issues: Since AI screening tools are still subject to landlord-tenant laws like the Fair Housing Act, bias can lead to discrimination based on race, color, religion, sex, disability, familial status, and national origin.
- False Outcomes: Some tools may not work as intended when bias is involved. You may end up getting bad tenants instead. Even with its accuracy with record-based data, complex components like letters and landlord references can still be misread.
What Are The Benefits?
- Speed: With AI, you can review more applications than you typically can, which can be ideal if you manage multiple rental units and want to reduce your workload.
- Data Accuracy: You eliminate human error with AI tools, ensuring you don't overlook crucial data. Miscalculations rarely occur, if at all, though this may apply only to numerical or fixed data.
- Fraud Detection: Some platforms have detection features that can identify forged documents or false information, which is difficult for the untrained eye. This can help protect you, your investment property, and your tenants.
- Time and Cost Efficiency: Automating the tenant screening process can save you money for both administrative and service costs.
Questions to Ask
Before you adopt an AI tool and use it regularly, you need to ask specific questions to ensure it fits your needs and does not violate any laws or regulations.
- How does the AI tool process information?
- What are the databases it uses?
- Has the model been tested for bias and legal compliance?
- Can you review and override automated results?
- Is the product worth the price?
- Can it do the job better than you or a property manager?
Best Practices to Apply for Tenant Screening AI Tools
Always Have The Final Say
The AI tools should be used to streamline operations, not take over completely. There are still matters that need to be examined by the landlord or property manager. After using the tool to get over the tedious parts of tenant screening, you should verify the outcomes manually.
Research the Vendor
Look into the developer or vendor of the AI tool to ensure they are compliant with the relevant laws and regulations governing tenant screening. You can look at reviews from other landlords who use it and try to avoid products with few users.
Check the Features
Some AI tools for tenant screening let you customize the process, so you can choose which criteria to use and what acceptable scores are. If you can control how it works, then you can tailor its features to fit your business plans.
Be Transparent With Applicants
Inform your applicants that their information will be entered into an AI system. Some may frown upon this practice and could even dissuade some applicants, but transparency falls under the disclosure requirements of Fair Housing regulations.
Ensure Data Privacy and Security
AI tools are still vulnerable to breaches or malware, so be sure to protect the data you input, such as credit information, social security numbers, and other tenant information. Check the AI product to see if it features encryption for a more secure process.
AI-Powered Tenant Screening FAQs
How does AI improve the tenant screening process?
- AI tools can process large amounts of data from multiple sources in minutes, ensuring faster, more accurate, and more consistent evaluations than manual reviews. This allows landlords to focus on other property management tasks.
What kind of information do AI tools analyze?
- They typically review identification, employment and income verification, credit history, rental history, criminal records, and previous landlord references to assess an applicant’s reliability.
Are AI tenant screening tools accurate?
- AI tools are highly accurate with data-driven information, such as numbers and records. However, they can still make mistakes when analyzing text-based materials like personal statements or recommendation letters.
What are the potential risks of using AI for tenant screening?
- Some common risks include algorithm bias, lack of transparency, legal noncompliance, false results, and data privacy concerns. These issues can lead to unfair or inaccurate screening outcomes.
When You Trust The Human Factor More
Given the pace of innovation, artificial intelligence still has a long way to go before it becomes flawless —if that ever happens at all. It’s still a great idea to bank on professionals in the field who already have experience and unique insights, like PMI Georgia.
Our tenant screening services use comprehensive criteria to help you find the right tenants for your investment property. We even use factors that most screening services don’t, providing you with a clearer picture of who you will rent to.
Contact us, and we can tell you your trust in us won’t be misplaced.
