Reviews Go Both Ways

[Nicholas Varner]

Imagine you had a tough day at the office and went out to eat with your significant other, your significant other was in a bad mood too, you fought during the dinner, everything was bothering you, and it showed. You tipped average, you were a pain for the staff, and nobody really wanted you to come back. Instead of you going on Yelp and talking about Chicken being overcooked, imagine if the restaurant's Yelp account could review you as the customer? "He and his wife came in here and were dressed poorly, fought during the meal, berated the staff, and were lousy tippers." 

This probably will not be adopted in the service industry any time soon. Not a lot of upside exists for restaurants to track poor behavior of their guests. However, what about landlords? What if there were a shared space online for landlords to review tenants. I am not talking about qualitative reviews. Landlords in any MSA could elect to disclose information such as the tenant's name, the address he/she was living, was an eviction process ever started against that tenant, was an eviction ever granted, was a Sheriff ever called to set a tenant's property outside, or were the police ever called on your tenants. All of these are examples of public information. Implementing this idea would not disclose any personal sensitive data like social security, credit score, etc. Instead, it aggregates public data for free.

Screening backgrounds will never tell the whole story. It's necessary, but it's incomplete. Sharing problem tenants data publicly reinforces rules, contracts, and laws. It provides disincentives for poor behavior. Consolidation is happening in real estate. Smaller players are getting bigger or getting out. True, the space will never be controlled by just a few players and is fragmented in nature. However, in the roughly 35% of the total housing supply in the U.S. that is rental property and especially in certain neighborhoods, oligarchs are either in place currently or are soon to be in place. This is due to the infrastructure and overhead needed to scale in this business. Barrier to market entry as a large scale landlord is much higher than certain books make it out to be.

If a sub-market were controlled by 2-3 large landlords and a tenant chose to not pay the rent and that data were consumed by the other landlords in that sub-market, that tenant is now facing a real uphill battle the next time he/she procures housing. Is this fair? I don't know. Is it fair that people refuse to pay their rent?

I can't state whether or not this is social benefit to society or not. However, I think that although landlords can benefit from fragmented markets that there are areas of mutual benefit for landlords to look out for one another before you get stuck with a deadbeat tenant. If you think this is controversial and take a look at what @James Wise says on Controversial Marketing.