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young black woman in suit with open laptop that has scam alert label on top of laptop - How to Avoid Rental Scams

How to Avoid Rental Scams

Knowing how to avoid rental scams that target landlords can prevent you from becoming a victim.

Rental scams hurt both landlords and tenants. Tenant scams are frequently in the media, making landlords look like villains. Landlord scams make it difficult or impossible for landlords to recover financially or emotionally. But how can you avoid rental scams?

Here are some of the common schemes.

Overseas Tenant with Poor Math Skills & in a Rush to Rent

Typically, this scam involves a tenant living overseas who wants to rent your property unseen. . The story is that they live someplace with no access to the internet or phone, and they have a tight timeline to find a rental property in your country/city. They suggest sending a check or money order. Once it arrives, it’s more than the rent, and they ask you to refund the difference.

Are your spider senses tingling yet? They should.

Unfortunately, you’ve been scammed if you deposited the check and sent a refund because the check is bogus. If the check amount is wrong, send it back.

I’ve rented many times to tenants arriving from overseas who accepted a property sight unseen. Most often, they were referred through HR departments of reputable businesses and relocation companies, or they had a family member who lived in the city who met me and toured my property. But not always. That’s why a screening process is so useful.

When processing their applications, run credit checks and ask for letters from a bank manager/lawyer/accountant confirming there have adequate funds for rent. Communicate regularly and secure trackable payment.

Although tenants can have tight timelines, and be arriving from overseas, never skip your rental screening process steps. Take the time you need to complete a thorough screening.

Mysterious Employment References

Employment references are more credible and reliable than personal references. If they’re legitimate.

Verify the employment information by comparing the address and telephone number to what you find in your internet research. You can also cross-reference the employment references on social media. Ask for recent (30-day) pay stubs or a letter of employment directly from the employer and cross-reference the information with the application.

A year ago, I called a potential tenant’s employer from the number I found on the internet (not the cell number listed on the application). I was told that no one by that name had ever worked in that business. The person I spoke to had been a manager for five years and knew all the employees. The reference listed on the application was the scammer’s friend. Busted.

Fake Rental History

Rental history is a little trickier.

You can ask for the name/address of the apartment’s property manager, then look it up online to cross-reference the information. Although property management companies will give you an honest, FOIP-centric answer, what about people who rent from individual real estate investors like you?

In addition to running social media checks, I learned a little trick from Mike Butler’s book, Landlording on Autopilot..

Ask your tenant for the name of the home/condo owner, and then call them asking, “How much is the rent for the condo/house you’re leasing?” There’s a good chance you’ll catch the friend/relative off their guard, and they may say, “I don’t have a place for rent.” Gotcha!

Title searches are also an excellent method of verifying the property owner’s identity.

The title provides the identity of the property owner/owners. I’ve caught a few scammers using this technique. However, it’s not 100% foolproof because titles can be transferred, or the original owner may have gotten married and changed their last name.

Phony Credit History

Savvy scammers know how to fake reports. The only way to be assured the credit report is the real deal is by running it yourself. Always run your own credit reports. Tenantcube and Frontlobby offer speedy credit reports for reasonable prices. Credit reports are a wealth of information; they show employment history, residence history, and credit history. Don’t skip this step.

If you have $10 and a little time to spare,  take a trip to the Court of the King’s  Bench and run a judgment search. A judgment search pulls up all civil judgments, including tenancy and RTDRS.

Who is Living in your Property?

Scammers may sub-lease your property to someone else, giving you a whole new set of problems that make your life miserable. Although sub-leasing isn’t illegal, tenants must be aware of the rules and may require a few reminders.

The reason I’m a big fan of maintenance inspection reports is that your tenants know you are coming regularly to check in on the maintenance of the property. Maintenance inspections give you the opportunity to see if there are other human or pet lodgers or illegal activities.

Neighbors are another good source of information and can let you know about the residents and their activities.

The Best Defense is a Good Offense

In the end, the best defense is a good offense. If something feels off, it probably is. But don’t just use your gut check; find the evidence. A thorough screening process and regular maintenance inspection reports are your best ally when it comes to avoiding rental scams or scammers.

Have you had experience dealing with scammers? I’d love to hear about it [email protected]

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