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How harnessing data could help landlords

by Neil Sharma on 07 Mar 2019

What if data could be harnessed to determine renters’ habits and predict their suitability as tenants?

According to Jerome Werniuk, director of sales at Naborly Inc., that day is just around the corner. The real estate industry in Canada has been slower to adopt technology than it has south of the border, but things are beginning to change. Naborly, for instance, is in the business of running credit checks for landlords—up to 100 a day—and, in the process, has amassed an impressive database of information that it intends to parse for trends, habits, and ways to make both landlords’ and tenants’ lives easier.

“Companies like Naborly that aggregate information about tenant migration will completely change how landlords look at their real estate investments,” said Werniuk. “A good way to look at this is through numbers for three categories: average house price, average rental price, and average income.”

Studying those categories will reveal housing prices are increasing much faster than rental rates—although they’re going up, too—but, fortunately, Naborly’s in-house team of data scientists go much deeper. By combing through the information Naborly has captured from over 50,000 tenants within its system, most of whom are in the Greater Toronto Area, they will produce reports that reveal the average age of renters in a postal code, their average income, and their average debt-to-income ratio, to decipher how long they’re likely live in any given rental.

“Right now, nobody knows how many people are living in places and nobody knows how long they typically stay before moving on,” said Werniuk. “Let’s say that Amazon puts a new headquarters in a neighbourhood; there will be a new demographic that would want to live there and that’s exactly the kind of data we’d try to capture. We have all this information about tenants and understand what they’re going to make in a year, whether they have roommates, or live with family or friends. If they have just moved to the city, how many times will they move within that city until they’ve built a network around them?

“When landlords have access to that sort of reporting, they’ll make well-informed decisions.”

At the moment, data gathered by the Toronto Real Estate Board, Canada Mortgage and Housing Agency, and Urbanation comprise most of the information real estate professionals, including investors, use to make decisions.  Naborly endeavours to go granular.

“How could changing income sources impact where you live, meaning what people’s average commute times are and at which point they would be willing to move. If they make $50,000 and have a 20% rent-to-income ratio, how far will they commute to make sure they can still keep the remaining 80% of their income to spend on other things? When someone screens a tenant, they’ll be able to understand where the jobs are know that 95% of tenants won’t be willing to commute beyond X area.”

It might not be long until Naborly answers those questions.

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