a structured, data-driven approach to evaluating neighborhood and property quality, but it does adjust its model with on-the-ground intelligence, according to CEO Ganguly. “We have our own employees on the ground … so if our data science says this is a D neighborhood … but our employee on the ground says it used to be a D but it’s not any more (we take that into account),” he said, adding that the company also adheres to strict property condition standards — rehabbing if necessary — to ensure a consistent level of quality for tenants
renting a HomeUnion-branded property. Maintaining strict property condition and neighborhood quality standards in turn helps to attract high-quality renters, Ganguly noted. “What is important to the investor is the renter,” he said. “You find better renters in better neighborhoods with better schools.” A ‘Losing Disaster’ That is a lesson Keeton learned the hard way when screening for tenants in the blue collar neighborhoods where Morningside had acquired properties.
Early on, tenant screening was lax, which proved to be a mistake.
“That’s a losing disaster because they are going to end up wrecking the house or you are going to have to evict them or whatever,” he said, adding that the company quickly tightened up its tenant screening practices and has stuck to those even when that results in higher vacancy rates. Keeton also noted that rehabbing before renting worked well for the blue collar neighborhoods where Morningside purchased single family rentals.
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