For apartment operators, it’s among the most frustrating—not to mention costly—of outcomes. A resident skips out on his or her lease before it’s up, leaving behind an unexpected vacancy as well as no small amount of unpaid rent.

Renters fail to satisfy the terms of their leases for a variety of reasons. Some may feel they don’t have a choice after suddenly losing their job. Other residents--known in the industry as “serial skippers”--make skipping out on leases a habit and seem determined to abuse the system by hopping from one community to the next, while meeting as little of their financial obligations as possible at each stop.

“We generally don’t even call them ‘serial skippers,’ ” says Marc Raskulinecz, Senior Vice President of Property and Asset Management at Newport Beach, Calif.-based CORE Realty Holdings Management. “We call them ‘people who are chasing the next deal.’ ”

Regardless of the term deemed most descriptive, operators seek to protect themselves from serial skippers in several ways. Typically, they use credit scores, employment history and current income levels to access the likelihood that an applicant will meet the terms of his or her lease.

Today, many apartment managers also are incorporating prospects’ up-to-date rental payment history in their evaluations of lease applications--and are finding the information to be powerful protection against skippers.

“This data has been a tremendous help to my company,” says Michael Johnson, Executive Vice President at Memphis, Tenn.-based Alco Management. The operator uses rental payment data that Experian RentBureau collects every 24 hours from participating managers, electronic rent payment services and collection companies.

“Anybody who’s skipping out is going to show up in this database first,” Johnson says. “It’s going to hit the database before it hits their credit report, just because of the time it takes to go through a collection agency. We find people through this service who are not honoring their leases--either they’re delinquent or they have skipped--and we won’t rent to them.”

There’s sound reason for Alco’s approach. According to a study by Experian RentBureau, how an individual has paid rent in the past is a strong indicator of how that person will pay rent in the future. Lease default rates for prospects with a positive rental payment history (meaning one with no skips or unpaid balances) are only 5.96 percent. On the other hand, default rates for prospects with one prior unpaid balance jump to 23.20 percent.

Those with two or more rental debts (meaning they are likely serial skippers) have a default rate of 35.20 percent, nearly six times higher than applicants with positive rental histories.

The Many Effects of Skippers

Multifamily operators say it’s critical for managers to use all the resources available to them to prevent skippers from leasing at their communities because of the considerable financial havoc they can wreak.

As Johnson notes, not only does a lease skip leave a community without the rent it was expecting, but it creates other unplanned financial exposures as well.

“There’s the turnover cost because you’ve got to turn the unit after someone leaves,” Johnson says. “Also, there are probably increased advertisement costs, because now you’ve got more units to fill.”

Less obviously, skippers can also affect the morale of a community, according to Johnson.

“If you have a lot of that happening in the same property, it creates some perception among your other residents that something’s wrong,” he says. “People are moving out too fast, and it makes other residents ask, ‘What’s going on with this property?’”

Just as rental payment history can help prevent skippers from renting at a community in the first place, so too can it help collect from former residents who left a community owing money and are now applying for a lease at another property.

Like Alco Management, CORE Realty Holdings Management Inc. contributes to and accesses rental history.

“When we began reporting the data, we started to get more people who were then calling and trying to settle past debt,” Raskulinecz says. “The reason was pretty clear: their live payment history is now following them.”

Stephen Ursery is a content specialist for LinnellTaylor Marketing.