How to Avoid Rental Scams

Table of Contents

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.

Fraudulent Documents

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.

The word scam highlighted in the dictionary by someone researching rental scams.

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.

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Enhanced Reporting

Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

Scroll down to learn more about Reports:

Navigate to the "Reports" module in your portal:

Owner Portal Reports
  • Keep in mind, these reports are dynamic records. They will refresh to display current information every time you view them. 

Enhanced Rent Roll Report:

Enhanced Rent Roll Report
  • The Enhanced Rent Roll Report will show the rent amount, last payment date, move-in date, lease expiration date, and security deposit amount for each of your tenants. 
  • It will also show a portfolio summary with occupancy percentage, vacancy loss, and more!

Unit Comparison Report:

Unit Comparison Report
  • If you own multiple units (or buildings) with Nomadic, you’ll get access to the Unit Comparison Report. 
  • This report enables you to quickly compare financial performance between your units at a glance without toggling between individual reports. 

Income Statement Month-Over-Month:

Income Statement by Month Report
  • The Income Statement Detail – Monthly Report serves as a month-over-month record of portfolio performance. You’ll see itemized income and expense categories and can track monthly. This report will update with fresh data every time you view it. 

Financial Statements

Financial statements will be published to your portal on a monthly basis. The statements are found in your Documents library, and provide a historical record of all financial performance. The statements serve as a snapshot of financial performance over a given period, and are static documents (unlike Reports, the statements do not update/change in real-time). 

Scroll down for more info about the Financial Statements in your Documents library:

The Documents area contains monthly financial statements:

Owner Portal Documents
  • The statements in the Documents are are static documents. They are posted to the portal once a month to serve as a historical record of financial performance. 

Download a statement to see month and YTD financials:

Owner Portal Property Statement

You'll also find a month-over-month operating statement:

Month over Month Statement

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

Commincation Dashboard Screenshot
  • The communications module will contain a record of all messages that you create through the portal. 

Click the "New Message" button and send your message:

Owner Portal New Message Screenshot

Responses will show up in the conversation ticket:

Portal Conversation Response Screenshot
  • You’ll get an email notification whenever you get a response, and you’ll also see the message in your portal next time you log in. 

You can reply in-line using the comment box:

Owner Portal Comment

Each conversation will be logged in its entirety:

Portal Conversation Snapshot

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

Owner Ledger Dates
  • The date reflected in the lefthand column is the actual transaction date, not the “bill date”. This is the date the transaction was actually processed. 

If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

Ledger Property Column
  • You can filter the ledger to look at just one property, all properties, or specific sets of properties. 
  • If you only have one property with us, you’ll just see the ledger for that property. 

The Description column displays the transaction type:

Owner Ledger Description Column
  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

Owner Ledger Amount Column
  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
  • Negative Amounts:  if an amount is negative, this is a transaction that is either payable to Nomadic or is an amount that has already been paid to you. Typically this will be for repair costs or management/leasing fees. Owner draws (net distributions into your checking/savings account) also reflect as negative amounts, since they have already been paid to you. 

The Account Balance column shows a sum of positive/negative transactions at a given point in time:

Owner Ledger Account Balance Column
  • Account Balance should always equal zero after a net distribution has been processed. When the balance is zero, this means that all expenses have been paid and you’ve received the remainder as net operating income, leaving a balance of zero (meaning: no one is due any money, as all funds have been distributed appropriately). 

Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

PW Portal Filters

View a snapshot of income and expenses on your dashboard:

PW Owner Dashboard View

See every transaction in real-time on your ledger:

Owner Portal Ledger View

Statements and forms will be posted to your documents library:

Owner Portal Document Library

View a suite of real-time financial reports:

Portal Reports View

See a running list of all bills, and drill down for more detail:

Owner Portal Bills View

Under Bill Details, you'll find dates/descriptions/amounts and more:

Portal Bill Details

You can also communicate with your Account Manager through the portal:

Owner Portal Communication Tools

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

Net Distribution

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.