An interesting concept for tenant selection process

[Steve Babiak]

I just came across this link that might be worth considering when choosing a tenant. 

http://www.quora.com/What-are-the-most-interesting...

Read the comments posted there too. 

Basically, evaluate 37% of the pool of applicants and then pick the first one after those who is better than all of the first 37%; all of the first 37% get declined. Obviously, your screening criteria might be tricky, but you can measure income, longevity with prior rentals, longevity at jobs, eviction counts, felony counts, etc and arrive at a score using a formula. 

Now that the premise is set, let's discuss pro and con of this concept. 

[Jim Sokoloff]

The math is unassailable, provided you can reduce your screening evaluation to a single "fitness score". As an engineer/computer scientist, I love the idea of it, and I've loosely applied this theorem to my own dating, ending up with a spouse that I think is the best fit of anyone I ever dated. Obviously,I chose her, but then back-tested this theorem and it fit nicely.

The cons off the top of my head:

1. In most cases, your fitness function is going to be so non-predictive, and all you need is "good enough to be profitable and low-maintenance" not "the very best in the pool".

2. You're going to turn away a lot of qualified candidates, and if you have multiple properties, may develop a reputation for being arbitrary and capricious.

3. If applicants are paying $25/adult (or more) to apply and you have a-priori decided that they're in the first 37% (and therefore have zero chance of being selected), you might be running afoul of local laws. Even if you're not, you're being a dick, IMO. These are people's lives and they care where they live. It's real life for them, not a math optimization problem. Particularly to the applicant who "sets the bar" (the one in the first 1/e that scores the highest): If they applied later (or were considered later), they'd have gotten the place, but instead get a rejection letter. They are very likely to have a big "WTF?" moment.

4. The system only works if you know the approximate value of N (the number of applicants). You can guess at this, but it also changes over time as more applications trickle in.

5. If you own multiple properties, I doubt you'd be looked upon favorably in a housing discrimination court case where you dropped not only the first 37% a-priori, but also dropped all the marginal applicants until you found a winner.

6. If you want better tenants on average, I think it's easier to just set higher qualifying standards and take the first applicant that meets those standards.