Classification and selection of tenants in residential real estate: a constructivist approach
Abstract
Choosing a tenant is a key issue in the housing rental market. Knowing, a priori, whether a tenant will pay the rent on time, be able to hold a good relationship with the neighbors or take care of the property (i.e. whether s/he will be a “good” tenant) is not a simple endeavor. It is crucial, however, as it can help save time, money and conflicts that can end up in court. This study aims to address this issue, through the integrated use of cognitive maps and the Decision EXpert (DEX) technique. Grounded on a constructivist logic, the study brought together a panel of experts with experience and knowledge in the residential rental market, in order to identify and articulate the criteria to be taken into account in the classification and selection of tenants. The results achieved show that the integration of these two methodologies (i.e. cognitive maps and DEX) can help increase our understanding of the decision problem at hand, and lead to more informed and potentially better tenant choices. Advantages and limitations of the framework are also discussed.
Keyword : decision making, real estate market, classification and selection of tenants, cognitive maps, decision EXpert (DEX)
How to Cite
Fonseca, M. B. F., Ferreira, F. A., Fang, W., & Jalali, M. S. (2018). Classification and selection of tenants in residential real estate: a constructivist approach. International Journal of Strategic Property Management, 22(1), 1-11. https://doi.org/10.3846/ijspm.2018.317
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Ackermann, F., & Eden, C. (2001). SODA – journey making and mapping in practice. In J. Rosenhead & J. Mingers (Eds.), Rational analysis for a problematic world revisited: problem structuring methods for complexity, uncertainty and conflict (pp. 43-60). (2nd ed.). Chichester: John Wiley & Sons.
Aickelin, U., & Dowsland, K. (2002). Enhanced direct and indirect genetic algorithm approaches for a mall layout and tenant selection problem. Journal of Heuristics, 8(5), 503-514. https://doi.org/10.1023/A:1016536623961
Anikeeff, M. (1996). Shopping center tenant selection and mix: a review. In J. Benjamin (Ed.), Research issues in real estate: megatrends in retail real estate (pp. 215-238). Dordrecht: Kluwer Academic Publishers. https://doi.org/10.1007/978–94–009–1802–3_11
Baklouti, I. (2014). A psychological approach to microfinance credit scoring via a classification and regression tree. Intelligent Systems in Accounting, Finance and Management, 21(4), 193-208. https://doi.org/10.1002/isaf.1355
Bana e Costa, C., Stewart, T., & Vansnick, J. (1997). Multicriteria decision analysis: some thoughts based on the tutorial and discussions sessions of the ESIGMA meetings. European Journal of Operational Research, 99(1), 28-37. https://doi.org/10.1016/S0377–2217(96)00380–3
Bell, S., & Morse, S. 2013. Groups and facilitators within problem structuring processes. Journal of the Operational Research Society, 64(7), 959-972. https://doi.org/10.1057/jors.2012.110
Belton, V., & Stewart, T. (2002). Multiple criteria decision analysis: an integrated approach. Dordrecht: Kluwer Academic Publishers. https://doi.org/10.1007/978–1-4615–1495–4
Bohanec, M. (2014). DEXi: program for multi-attribute decision making user’s manual. Ljubljana University, Slovenia.
Bohanec, M., & Rajkovic, V. (1999). Multi-attribute decision modeling: Industrial applications of DEX. Informatica, 23(4), 487-491.
Bohanec, M., Rajkovic, V., Zupan, B., & Bratko, I. (2013). DEX methodology: three decades of qualitative multi-attribute modeling. Informatica, 37(1), 49-54.
Burnaz, S., & Topcu, I. 2011. A decision support on planning retail tenant mix in shopping malls. Procedia Social and Behavorial Sciences, 24(1), 317-324. https://doi.org/10.1016/j.sbspro.2011.09.124
Carter, S. (2011). Housing tenure choice and the dual income household. Journal of Housing Economics, 20(3), 159-170. https://doi.org/10.1016/j.jhe.2011.06.002
Case, B., Goetzmann, W., & Rouwenhorst, K. (2000). Global real estate markets: cycles and fundamentals. National Bureau of Economic Research Working Paper 7566. Cambridge.
Cheng, P., Lin, Z., & Liu, Y. (2008). A model of time-on-market and real estate price under sequential search with recall. Real Estate Economics, 36(4), 813-843. https://doi.org/10.1111/j.1540–6229.2008.00231.x
Chye, K., Chin, T., & Peng, G. (2004). Credit scoring using data mining techniques. Singapore Management Review, 26(2), 25-47.
Cirman, A., Pahor, M., & Verbic, M. (2015). Determinants of time on the market in a thin real estate market. Engineering Economics, 26(1), 4-11. https://doi.org/10.5755/j01.ee.26.1.3905
Eden, C. (1988). Cognitive mapping. European Journal of Operational Research, 36(1), 1-13. https://doi.org/10.1016/0377–2217(88)90002–1
Eden, C. (2004). Analyzing cognitive maps to help structure issues or problems. European Journal of Operational Research, 159(3), 673-686. https://doi.org/10.1016/S0377–2217(03)00431–4
Eden, C., & Ackermann, F. (2001). SODA – The principles. In J. Rosenhead & J. Mingers (Eds.), Rational analysis for a problematic world revisited: problem structuring methods for complexity, uncertainty and conflict (pp. 21-41). (2nd ed.). Chichester: John Wiley & Sons.
Eden, C., & Ackermann, F. (2004). Cognitive mapping expert views for policy analysis in the public sector. European Journal of Operational Research, 152(3), 615-630. https://doi.org/10.1016/S0377–2217(03)00061–4
Ferreira, F. (2016). Are you pleased with your neighborhood? A fuzzy cognitive mapping-based approach for measuring residential neighborhood satisfaction in urban communities. International Journal of Strategic Property Management, 20(2), 130-141. https://doi.org/10.3846/1648715X.2015.1121169
Ferreira, F., Jalali, M., Bento, P., Marques, C., & Ferreira, J. (2017a). Enhancing individual entrepreneurial orientation measurement using a metacognitive decision making-based framework. International Entrepreneurship and Management Journal, 13(2), 327-346. https://doi.org/10.1007/s11365–016–0388–5
Ferreira, F., Jalali, M., Meidutė-Kavaliauskienė, I., & Viana, B. (2015a). A metacognitive decision making based-approach to bank customer loyalty measurement and management. Technological and Economic Development of Economy, 21(2): 280-300. https://doi.org/10.3846/20294913.2014.981764
Ferreira, F., Jalali, M., Zavadskas, E., & Meidutė-Kavaliauskienė, I. (2017b). Assessing payment instrument alternatives using cognitive mapping and the Choquet integral. Transformations in Business & Economics, 16(2|41), 170-187.
Ferreira, F., Marques, C., Bento, P., Ferreira, J., & Jalali, M. (2015b). Operationalizing and measuring individual entrepreneurial orientation using cognitive mapping and MCDA techniques. Journal of Business Research, 68(12), 2691-2702. https://doi.org/10.1016/j.jbusres.2015.04.002
Ferreira, F., Santos, S., Rodrigues, P., & Spahr, R. (2014). Evaluating retail banking service quality and convenience with MCDA techniques: A case study at the bank branch level. Journal of Business Economics and Management, 15(1), 1-21. https://doi.org/10.3846/16111699.2012.673504
Ferreira, F., Spahr, R., Sunderman, M., Banaitis, A., & Ferreira, J. (2017c). A learning-oriented decision-making process for real estate brokerage service evaluation. Service Business, 11(3), 453-474. https://doi.org/10.1007/s11628–016–0315–4
Filipe, M., Ferreira, F., & Santos, S. (2015). A multiple criteria information system for pedagogical evaluation and professional development of teachers. Journal of the Operational Research Society, 66(11), 1769-1782. https://doi.org/10.1057/jors.2014.129
Furick, M. (2006). Using neural networks to develop a new model to screen applicants for apartment rentals. PhD Thesis. Nova Southeastern University. Fort Lauderdale, FL, USA.
Gbadegesin, J., & Oletubo, A. (2013). Analysis of tenant selection criteria in an emerging rental market. Global Journal of Management and Business Research Interdisciplinary, 13(7), 1-12.
Gonçalves, T., Ferreira, F., Jalali, M., & Meidutė-Kavaliauskienė, I. (2016). An idiosyncratic decision support system for credit risk analysis of small and medium-sized enterprises. Technological and Economic Development of Economy, 22(4), 598-616.
Goodhart, C., & Hofmann, B. (2007). House prices and the macroeconomy: implications for banking and price stability. Oxford: Oxford University Press.
Hjalmarsson, E., & Hjalmarsson, R. (2009). Efficiency in housing markets: which home buyers know how to discount?. Journal of Banking & Finance, 33(11), 2150-2163. https://doi.org/10.1016/j.jbankfin.2009.05.014
Jackson, J., Jones, C., & Balsmeir, P. (1986). An empirical analysis of tenant selection under federal rent supplement programs: a first step. Real Estate Economics, 14(1), 72-90. https://doi.org/10.1111/1540–6229.00370
Jalali, M., Ferreira, F., Ferreira, J., & Meidutė-Kavaliauskienė, I. (2016). Integrating metacognitive and psychometric decision-making approaches for bank customer loyalty measurement. International Journal of Information Technology & Decision Making, 15(4), 815-837. https://doi.org/10.1142/S0219622015500236
Ju, L., Wenbin, X., & Bei, Z. (2011). Construction of costumer classification model based on inconsistent decision table. International Journal of e-Education, e-Business, e-Management and e-Learning, 1(3), 269-273.
Keeney, R. (1992). Value-focused thinking: a path to creative decisionmaking. Harvard: Harvard University Press.
Keeney, R. (1996). Value-focused thinking: Identifying decision opportunities and creating alternatives. European Journal of Operational Research, 92(3), 537-549. https://doi.org/10.1016/0377–2217(96)00004–5
Klein, J., & Cooper, D. (1982). Cognitive maps of decision-makers in a complex game. Journal of the Operational Research Society, 33(1), 63-71. https://doi.org/10.1057/jors.1982.7
Kwahk, K., & Kim, Y. (1999). Supporting business process redesign using cognitive maps. Decision Support Systems, 25(2), 155-178. https://doi.org/10.1016/S0167–9236(99)00003–2
Larsen, R., & Sommervoll, D. (2009). The impact on rent from tenant and landlord characteristics and interaction. Regional Science and Urban Economics, 39(3), 316-322. https://doi.org/10.1016/j.regsciurbeco.2008.10.004
Lima, G. (2003). Interfaces entre a ciência da informação e a ciência cognitiva. Ciência da Informação, 32(1), 77-87. https://doi.org/10.1590/S0100–19652003000100008
Lin, Z., & Liu, Y. (2008). Real estate returns and risk with heterogeneous investors. Real Estate Economics, 36(4), 753-776. https://doi.org/10.1111/j.1540–6229.2008.00229.x
Maier, G., & Herath, S. (2009). Real estate market efficiency: a survey of literature. SRE Discussion Paper 2009–07, Wien.
Miceli, T., & Sirmans, C. (1999). Tenant turnover, rental contracts and self-selection. Journal of Housing Economics, 8(4), 301-311. https://doi.org/10.1006/jhec.1999.0253
Montibeller, G., Ackermann, F., Belton, V., & Ensslin, L. (2008). Reasoning maps for decision aid: an integrated approach for problem-structuring and multi-criteria evaluation. Journal of Operational Research Society, 59(5), 575-589. https://doi.org/10.1057/palgrave.jors.2602347
Olawande, O. (2011). Harnessing real estate investment through proper tenant selection in Nigeria. Property Management, 29(4), 383-397. https://doi.org/10.1108/02637471111154827
Poterba, J., Weil, D., & Shiller, R. (1991). House price dynamics: the role of tax policy and demography. Brookings Papers on Economic Activity, 22(2), 143-203. https://doi.org/10.2307/2534591
Shaw, D., Ackermann, F., & Eden, C. (2003). Approaches to sharing knowledge in group problem structuring. Journal of the Operational Research Society, 54(9), 936-948. https://doi.org/10.1057/palgrave.jors.2601581
Taskova, K., Stojanova, D., Bohanec, M., & Dzerpski, S. (2007). A qualitative decision-support model for evaluating researchers. Informatica, 31(4), 479-486.
Yau, C., & Davis, T. (1994). Using multi-criteria analysis for tenant selection. Decision Support Systems, 12(3), 233-244. https://doi.org/10.1016/0167–9236(94)90007–8
Zavadskas, E., & Turskis, Z. (2011). Multiple criteria decision making (MCDM) methods in economics: an overview. Technological and Economic Development of Economy, 17(2), 397-427. https://doi.org/10.3846/20294913.2011.593291
Zu, Q., Wu, T., & Wang, H. (2010). A multi-factor customer classification evaluation model. Computing and Informatics, 29(4), 509-520.
Aickelin, U., & Dowsland, K. (2002). Enhanced direct and indirect genetic algorithm approaches for a mall layout and tenant selection problem. Journal of Heuristics, 8(5), 503-514. https://doi.org/10.1023/A:1016536623961
Anikeeff, M. (1996). Shopping center tenant selection and mix: a review. In J. Benjamin (Ed.), Research issues in real estate: megatrends in retail real estate (pp. 215-238). Dordrecht: Kluwer Academic Publishers. https://doi.org/10.1007/978–94–009–1802–3_11
Baklouti, I. (2014). A psychological approach to microfinance credit scoring via a classification and regression tree. Intelligent Systems in Accounting, Finance and Management, 21(4), 193-208. https://doi.org/10.1002/isaf.1355
Bana e Costa, C., Stewart, T., & Vansnick, J. (1997). Multicriteria decision analysis: some thoughts based on the tutorial and discussions sessions of the ESIGMA meetings. European Journal of Operational Research, 99(1), 28-37. https://doi.org/10.1016/S0377–2217(96)00380–3
Bell, S., & Morse, S. 2013. Groups and facilitators within problem structuring processes. Journal of the Operational Research Society, 64(7), 959-972. https://doi.org/10.1057/jors.2012.110
Belton, V., & Stewart, T. (2002). Multiple criteria decision analysis: an integrated approach. Dordrecht: Kluwer Academic Publishers. https://doi.org/10.1007/978–1-4615–1495–4
Bohanec, M. (2014). DEXi: program for multi-attribute decision making user’s manual. Ljubljana University, Slovenia.
Bohanec, M., & Rajkovic, V. (1999). Multi-attribute decision modeling: Industrial applications of DEX. Informatica, 23(4), 487-491.
Bohanec, M., Rajkovic, V., Zupan, B., & Bratko, I. (2013). DEX methodology: three decades of qualitative multi-attribute modeling. Informatica, 37(1), 49-54.
Burnaz, S., & Topcu, I. 2011. A decision support on planning retail tenant mix in shopping malls. Procedia Social and Behavorial Sciences, 24(1), 317-324. https://doi.org/10.1016/j.sbspro.2011.09.124
Carter, S. (2011). Housing tenure choice and the dual income household. Journal of Housing Economics, 20(3), 159-170. https://doi.org/10.1016/j.jhe.2011.06.002
Case, B., Goetzmann, W., & Rouwenhorst, K. (2000). Global real estate markets: cycles and fundamentals. National Bureau of Economic Research Working Paper 7566. Cambridge.
Cheng, P., Lin, Z., & Liu, Y. (2008). A model of time-on-market and real estate price under sequential search with recall. Real Estate Economics, 36(4), 813-843. https://doi.org/10.1111/j.1540–6229.2008.00231.x
Chye, K., Chin, T., & Peng, G. (2004). Credit scoring using data mining techniques. Singapore Management Review, 26(2), 25-47.
Cirman, A., Pahor, M., & Verbic, M. (2015). Determinants of time on the market in a thin real estate market. Engineering Economics, 26(1), 4-11. https://doi.org/10.5755/j01.ee.26.1.3905
Eden, C. (1988). Cognitive mapping. European Journal of Operational Research, 36(1), 1-13. https://doi.org/10.1016/0377–2217(88)90002–1
Eden, C. (2004). Analyzing cognitive maps to help structure issues or problems. European Journal of Operational Research, 159(3), 673-686. https://doi.org/10.1016/S0377–2217(03)00431–4
Eden, C., & Ackermann, F. (2001). SODA – The principles. In J. Rosenhead & J. Mingers (Eds.), Rational analysis for a problematic world revisited: problem structuring methods for complexity, uncertainty and conflict (pp. 21-41). (2nd ed.). Chichester: John Wiley & Sons.
Eden, C., & Ackermann, F. (2004). Cognitive mapping expert views for policy analysis in the public sector. European Journal of Operational Research, 152(3), 615-630. https://doi.org/10.1016/S0377–2217(03)00061–4
Ferreira, F. (2016). Are you pleased with your neighborhood? A fuzzy cognitive mapping-based approach for measuring residential neighborhood satisfaction in urban communities. International Journal of Strategic Property Management, 20(2), 130-141. https://doi.org/10.3846/1648715X.2015.1121169
Ferreira, F., Jalali, M., Bento, P., Marques, C., & Ferreira, J. (2017a). Enhancing individual entrepreneurial orientation measurement using a metacognitive decision making-based framework. International Entrepreneurship and Management Journal, 13(2), 327-346. https://doi.org/10.1007/s11365–016–0388–5
Ferreira, F., Jalali, M., Meidutė-Kavaliauskienė, I., & Viana, B. (2015a). A metacognitive decision making based-approach to bank customer loyalty measurement and management. Technological and Economic Development of Economy, 21(2): 280-300. https://doi.org/10.3846/20294913.2014.981764
Ferreira, F., Jalali, M., Zavadskas, E., & Meidutė-Kavaliauskienė, I. (2017b). Assessing payment instrument alternatives using cognitive mapping and the Choquet integral. Transformations in Business & Economics, 16(2|41), 170-187.
Ferreira, F., Marques, C., Bento, P., Ferreira, J., & Jalali, M. (2015b). Operationalizing and measuring individual entrepreneurial orientation using cognitive mapping and MCDA techniques. Journal of Business Research, 68(12), 2691-2702. https://doi.org/10.1016/j.jbusres.2015.04.002
Ferreira, F., Santos, S., Rodrigues, P., & Spahr, R. (2014). Evaluating retail banking service quality and convenience with MCDA techniques: A case study at the bank branch level. Journal of Business Economics and Management, 15(1), 1-21. https://doi.org/10.3846/16111699.2012.673504
Ferreira, F., Spahr, R., Sunderman, M., Banaitis, A., & Ferreira, J. (2017c). A learning-oriented decision-making process for real estate brokerage service evaluation. Service Business, 11(3), 453-474. https://doi.org/10.1007/s11628–016–0315–4
Filipe, M., Ferreira, F., & Santos, S. (2015). A multiple criteria information system for pedagogical evaluation and professional development of teachers. Journal of the Operational Research Society, 66(11), 1769-1782. https://doi.org/10.1057/jors.2014.129
Furick, M. (2006). Using neural networks to develop a new model to screen applicants for apartment rentals. PhD Thesis. Nova Southeastern University. Fort Lauderdale, FL, USA.
Gbadegesin, J., & Oletubo, A. (2013). Analysis of tenant selection criteria in an emerging rental market. Global Journal of Management and Business Research Interdisciplinary, 13(7), 1-12.
Gonçalves, T., Ferreira, F., Jalali, M., & Meidutė-Kavaliauskienė, I. (2016). An idiosyncratic decision support system for credit risk analysis of small and medium-sized enterprises. Technological and Economic Development of Economy, 22(4), 598-616.
Goodhart, C., & Hofmann, B. (2007). House prices and the macroeconomy: implications for banking and price stability. Oxford: Oxford University Press.
Hjalmarsson, E., & Hjalmarsson, R. (2009). Efficiency in housing markets: which home buyers know how to discount?. Journal of Banking & Finance, 33(11), 2150-2163. https://doi.org/10.1016/j.jbankfin.2009.05.014
Jackson, J., Jones, C., & Balsmeir, P. (1986). An empirical analysis of tenant selection under federal rent supplement programs: a first step. Real Estate Economics, 14(1), 72-90. https://doi.org/10.1111/1540–6229.00370
Jalali, M., Ferreira, F., Ferreira, J., & Meidutė-Kavaliauskienė, I. (2016). Integrating metacognitive and psychometric decision-making approaches for bank customer loyalty measurement. International Journal of Information Technology & Decision Making, 15(4), 815-837. https://doi.org/10.1142/S0219622015500236
Ju, L., Wenbin, X., & Bei, Z. (2011). Construction of costumer classification model based on inconsistent decision table. International Journal of e-Education, e-Business, e-Management and e-Learning, 1(3), 269-273.
Keeney, R. (1992). Value-focused thinking: a path to creative decisionmaking. Harvard: Harvard University Press.
Keeney, R. (1996). Value-focused thinking: Identifying decision opportunities and creating alternatives. European Journal of Operational Research, 92(3), 537-549. https://doi.org/10.1016/0377–2217(96)00004–5
Klein, J., & Cooper, D. (1982). Cognitive maps of decision-makers in a complex game. Journal of the Operational Research Society, 33(1), 63-71. https://doi.org/10.1057/jors.1982.7
Kwahk, K., & Kim, Y. (1999). Supporting business process redesign using cognitive maps. Decision Support Systems, 25(2), 155-178. https://doi.org/10.1016/S0167–9236(99)00003–2
Larsen, R., & Sommervoll, D. (2009). The impact on rent from tenant and landlord characteristics and interaction. Regional Science and Urban Economics, 39(3), 316-322. https://doi.org/10.1016/j.regsciurbeco.2008.10.004
Lima, G. (2003). Interfaces entre a ciência da informação e a ciência cognitiva. Ciência da Informação, 32(1), 77-87. https://doi.org/10.1590/S0100–19652003000100008
Lin, Z., & Liu, Y. (2008). Real estate returns and risk with heterogeneous investors. Real Estate Economics, 36(4), 753-776. https://doi.org/10.1111/j.1540–6229.2008.00229.x
Maier, G., & Herath, S. (2009). Real estate market efficiency: a survey of literature. SRE Discussion Paper 2009–07, Wien.
Miceli, T., & Sirmans, C. (1999). Tenant turnover, rental contracts and self-selection. Journal of Housing Economics, 8(4), 301-311. https://doi.org/10.1006/jhec.1999.0253
Montibeller, G., Ackermann, F., Belton, V., & Ensslin, L. (2008). Reasoning maps for decision aid: an integrated approach for problem-structuring and multi-criteria evaluation. Journal of Operational Research Society, 59(5), 575-589. https://doi.org/10.1057/palgrave.jors.2602347
Olawande, O. (2011). Harnessing real estate investment through proper tenant selection in Nigeria. Property Management, 29(4), 383-397. https://doi.org/10.1108/02637471111154827
Poterba, J., Weil, D., & Shiller, R. (1991). House price dynamics: the role of tax policy and demography. Brookings Papers on Economic Activity, 22(2), 143-203. https://doi.org/10.2307/2534591
Shaw, D., Ackermann, F., & Eden, C. (2003). Approaches to sharing knowledge in group problem structuring. Journal of the Operational Research Society, 54(9), 936-948. https://doi.org/10.1057/palgrave.jors.2601581
Taskova, K., Stojanova, D., Bohanec, M., & Dzerpski, S. (2007). A qualitative decision-support model for evaluating researchers. Informatica, 31(4), 479-486.
Yau, C., & Davis, T. (1994). Using multi-criteria analysis for tenant selection. Decision Support Systems, 12(3), 233-244. https://doi.org/10.1016/0167–9236(94)90007–8
Zavadskas, E., & Turskis, Z. (2011). Multiple criteria decision making (MCDM) methods in economics: an overview. Technological and Economic Development of Economy, 17(2), 397-427. https://doi.org/10.3846/20294913.2011.593291
Zu, Q., Wu, T., & Wang, H. (2010). A multi-factor customer classification evaluation model. Computing and Informatics, 29(4), 509-520.