Did you know that American renters have lost millions of dollars due through house rental scams? Not only that, but the Washington D.C. area is one of the cities most vulnerable to these scams.
If you’re a landlord, what can you do to protect yourself from scam tenants? Let’s look into the rental scams you should constantly be keeping an eye out for.
When tenants apply for an apartment they’re usually required to provide proof of employment. Unfortunately, the documents that prospective renters show you are not necessarily reliable.
Fake pay stubs can be purchased online to cover the reality that the potential tenant is underemployed or unemployed. This likely means that they don’t have the means to actually pay the rent.
Money Wiring Scams
Almost everyone is aware of this old internet scam, but it’s important to realize that it can occur with home rentals as well.
The way it works is like this. An application for an apartment is received from overseas. If accepted, the “renter” will send a certified check and “accidentally” overpay. They’ll then ask for you to wire them the money back immediately.
The scam here is that the check is fraudulent, but will likely take a few weeks to bounce. In the meantime, the landlord is scammed out of the money he wired back to the scam tenant.
Tenants Who Have No Intention of Paying Rent
It isn’t abnormal for even good tenants to have issues paying rent on time occasionally. There are some renters, though, who move in without ever intending to pay you any rent at all.
These scam tenants assume that it will take you several months to catch on to the fact that they never intend to pay. This is why it’s essential to have a thorough tenant screening process. Otherwise, you could be stuck with these non-paying tenants until you can successfully evict them.
A Tenant Who Poses as the Landlord
It’s hard to believe that anyone would carry out these types of house rental scams, but unfortunately, it does happen.
After securing an apartment, the tenant you rented the unit to will show the place to other prospective tenants. They’ll then collect security deposits and the first and last month’s rent. They’ll skip out of town with the money, potentially having collected deposits from several unassuming people.
It also happens that the scam tenants will rent the unit out to one person and then act as the landlord and collect rent monthly.
A Tenant Who Rents On the Owner’s Behalf
Similar to the previous house rental scam, in this trick the tenant will show the unit to other prospective renters claiming to be acting on the owner’s behalf. They’ll claim that the owner is overseas, out of town, sick, or simply too busy to show the property themselves.
They’ll collect the first and last month’s rent and a security deposit and then disappear.
Tips to Avoid These Rental Scams as a Landlord
Being a landlord means that you always have to be on your toes. That being said, here are a number of tips for making sure that you don’t fall prey to these rental tricks and rental scams.
Keep an Eye On Your Home
Some of these house rental scams rely on a landlord not being particularly attentive to their property. If you don’t live near your rental properties, you might consider hiring a person or a home watching service to check in on the house and keep an eye out for strange activity.
Ask For References and Actually Check Them
It’s common for landlords to ask for references, but how many actually call them?
It’s easy enough for a scam tenant to write down random names and phone numbers. Simply having references doesn’t mean that much. Give them a call and ask them about your prospective tenant.
If their references are previous landlords, you can ask them a number of questions. Where the property was, who was on the lease, and how long they stayed are typical questions. You can also ask how much the rent was and if they ever had trouble paying on time.
Previous landlords can also be quizzed about tenant behavior, neighborhood complaints, pets, and if any damage was done to the property. It’s also a good idea to ask why and under what conditions the tenant moved out.
If the references are personal references, you can still get useful information about the potential tenants.
Ask them their relationship and how long they’ve known each other. You can ask about things like smoking, pets, and their overall character.
Change the Locks Regularly
If your rental property is frequently changing hands, you might want to change the locks each time a new tenant moves in. Otherwise, an old tenant could have made copies of the keys and still have access to the apartment.
Verify Potential Tenant’s Employer
In order to make sure that pay stubs and employment information aren’t fraudulent, you can contact the employer they list.
You can ask them to confirm that the renter has been employed at the company for the same amount of time they claim. You can also ask about their salary, position, the terms of employment, and the hours worked. You can also search for a character reference here as well, asking about their work performance, timeliness, and if they’ve ever been reprimanded.
Run a Credit Check
When you run a credit check, don’t just look at the score number. Take a more detailed look at their payment history to make sure they have a good track record for making payments on time.
Do a Google Search
Google is an incredibly powerful tool for landlords. Doing a quick Google search of potential tenants can be very informative.
First, you can use Google to verify the prior address and phone number they’ve provided for you. You will also be able to find out if they have a criminal record or a history of perpetrating Craigslist house rental scams.
Use Online Payment Portals
One way that you can avoid rental scams involving money wiring is to avoid dealing with checks at all costs. There are a number of different online sites where you can set it up that your tenants can pay online. You therefore will never run into the issue where they “overpay” and then need you to quickly wire them the reimbursement.
Don’t Let the Tenant Overpay
No matter how the tenant is paying, simply never let them overpay for any reason. There’s no reason for them to do this, and it should therefore be seen as a giant red flag. If you do receive a check where the tenant has overpaid, return it and don’t deposit it.
Always Meet Tenants Before Letting Them Move-In
It is simply the best practice to always meet your tenant before signing a lease with them.
There is really no substitute for meeting with a person face-to-face. First, if they’re unable to meet you at all, that’s reason to be worried. Second, if they do meet with you, your intuition is one of your most powerful tools to determine whether or not this person is trustworthy.
Request References For Each Renter Not Just One
If you’re renting to a couple or a group of people, make sure to get references for each person. Just because one tenant has a steady job and can scrape together some references doesn’t mean the same applies to the others.
Be Skeptical When a Third Party Becomes Involved
Needing a third party involved as an intermediary in terms of payment is a tactic of money wiring scams. While there are reasonable explanations for why a good tenant would have a third party involved in payment, it’s important to generally be skeptical and stay on your toes.
Don’t Let Yourself Be Pushed By an Unexplained Sense of Urgency
Another red flag is if there is an unexplained sense of urgency on the part of the renter. This is why you should be particularly cautious if you’re feeling pressured to act right away. People who are trying to scam you are counting on people making hasty decisions.
Keep Scam Tenants at Bay By Understanding Their Tactics
When you own residential real estate, you’re expecting that the benefits will outweigh the risks. No one wants to end up in a nightmare scenario where they fall prey to one of these rental scams.
Is it time for you to hire professional property management for your residential real estate? Contact Nomadic Real Estate today to discuss your property management needs.