You do your best to find quality tenants for your rental property through proper screening, but there will always be scammers who try to “work the system”. Though larger multi-unit properties are not immune, rental scammers tend to target individual landlords.
Scammers know many DIY landlords have loose requirements & screenings, and feel confident they can talk landlords into their scams. Implementing strict procedures and being aware of common scams will help you avoid frustration, court costs, and loss of rental income.
Be Aware Of These Common Tenant Scams
The Wire Scam
This one is an oldie but a goodie, its use is not limited to landlords. After the application is approved, the renter “mistakenly” sends a check for more than the required amount and asks for the excess to be wired back to them. Of course, the original check is bogus but will take time to bounce. By that time, the bank notifies the landlord, the money has been wired, the recipient has received his “refund,” and the landlord is out the cash.
Fake Pay Stubs
You can buy anything online. Nowadays, the internet is an incredible source for counterfeit documents. Also, with today’s technology, it can be difficult to recognize falsified documentation. Always make sure to verify employment as part of your screening process. Lookup the employer online and call the number you find for them. An applicant may not make enough money to qualify or doesn’t have a job at all. Either way, you’ll have problems collecting the rent through the lease term.
This one is as old as the telephone. The prospective tenant provides bogus contact information, so when you call to verify, you’re actually talking to an accomplice in on the scam. If you’re calling to check employment, don’t assume the information is correct, cross-reference the number with a quick internet search. If the applicant has provided a cell phone, call the business directly and ask to speak to someone in human resources. Same goes for verifying rent payments with current &previous landlords.
Falsified Credit Reports
Similar to faking pay stubs, an applicant may attempt to provide you with a faked copy of their credit report. Often these are cut & paste hack jobs that are relatively easy to spot if you’ve seen actual credit reports in the past. It’s always better to obtain an applicant’s credit report via your own resources, than accept one they provide.
The Illegal Sublet
This bit of deceit is unique in the fact that it not only affects the landlord, but an innocent third party as well. The original renter sublets to another person, without telling the landlord. They collect rent from this sublettee, often for months in advance, and pocket it instead of paying the landlord. The landlord is then stuck having to evict the scammed sublettee, who often takes their frustrations out on the innocent landlord.
There are a couple of ways to execute this one. First, the tenant makes partial payments for past rent due after the eviction process has been initiated. By accepting money from the tenant, you may need to restart the eviction process anew giving the scammer more time in your unit. Second, on the day of eviction, the tenant will ask for a little more time to get their things out. By allowing a “little bit of time” after a legal move out time was set, a landlord may be inadvertently resetting the clock on the eviction process.
The Tenant Swap
This list of tenant scams is by no means complete, as shysters are always coming up with ways to hoodwink an unsuspecting landlord. The best way to avoid falling victim to tenant scams is to implement a comprehensive screening process. If you sense that something is amiss, double-check information and don’t allow the applicant to sign a lease until you’ve been able to eliminate any doubt. Even when it’s not a matter of trust, it’s just good business.