Finding responsible tenants who pay their rent on time every month is a top priority for landlords, so much so that landlords have named the loss of rental income as a primary concern. Unfortunately, rental scams could lead to some serious and expensive problems.
Tenant scams take advantage of unassuming landlords who fail to implement the right procedures for screening renters, writing contracts, and collecting payments. Although scams come in different forms, some of the most common are submitting false employment records, faking credit reports, forging checks and pay stubs, and hiding property damages. These scams cost landlords valuable time and risk their incomes and businesses.
Beyond the loss of rental income and the costly hassle of eviction, rental scams can lead to a whole slew of expenses, including property damage. If a tenant damages your property beyond normal wear and tear, then you may end up paying hundreds or even thousands of dollars in repairs. Plus, during the time it takes to fix the damage, your property may sit vacant, costing you even more in lost rent.
There are several red flags landlords should watch out for when finding and accepting new tenants.
False Rental Verifications
One of the most important parts of applicant qualification is being able to verify previous rental history. However, if a tenant has a poor history or had issues with a prior landlord, why would they want you to find out? Unfortunately, this leads some fraudulent tenants to have associates pose as prior landlords to provide a false reference.
Unofficial Credit Reports
Checking a prospective tenant’s credit report provides valuable insight into their financial health. Occasionally, a tenant may try and provide landlords with a credit report they have printed. While this may seem convenient at first, it should not be accepted. Remember that once the tenant has a signed lease and keys, removing them from the home requires a costly legal eviction. Therefore, owners must take great care in the qualification screening process. So, always obtain your own current reporting on all applicants.
Fraudulent Documents
A common scam tenants attempt is using fraudulent income verification documents. The danger of taking things at face value is if you approve someone based on incorrect information, the checks may start bouncing once they move in. So, take the time to call employers and verify both the legitimacy and information in the documents provided.
False Service Animal Letter
According to the Humane Society, About 72% of renters have pets, but a large number of pet owners have difficulty finding rental properties that will accept their furry friends. Many landlords choose to add a “No Pets Policy” to their lease terms due to concerns over property damage, higher insurance costs, or simply out of preference. A tenant may try to work around this provision and get their pet through your doors—despite your disapproval—with a false service animal service letter.
Not Disclosing Occupants
The signed lease agreement should list any tenants as well as additional occupants such as minor children. Therefore, these are the individuals allowed to live there per the legal lease agreement. However, some tenants do not disclose who or how many people they plan to move in. This can cause significant problems for the landlord s they may be occupants that did not go through the proper screening process. Furthermore, you may encounter a person who applied and signed the lease with no intention of ever living there. Instead, they rented the unit for someone else who perhaps would never qualify otherwise. Remember, as a landlord; you have a right to know who will occupy the property.
How Do I Make Sure My Renter Is Legit?
Determining whether or not a renter is legit is difficult at times and can feel intrusive, but it’s a necessary step if you want to keep your investments safe. Ideally, you will be able to avoid rental scams and keep fraudsters away by doing the following while screening tenants:
Request proof of employment
Verify and review any pay stubs or offer letters for validity
Run a thorough background check
Cross-check employment history with the rental application
Verify employment by calling the company
Utilize a professional screening company when possible
Taking time to do a detailed review of all information provided to you will reduce the chances of you working with a scammer. Scammers usually avoid landlords who pay attention to details as it is harder for them to commit their crimes with this type of oversight. By simply being attentive, you can protect your business.
How Property Management Helps Landlords Avoid Tenant Scams
Choosing to rent out your investment property comes with an inherent amount of risk. However, due diligence along with the right support and processes in place can significantly mitigate these risks. One of the best partners an investor can have is an experienced property management company on their side in the rental industry.
Overland Management understands the unique challenges rental investors face. Our tried, and true screening processes combined with a legal rental agreement help protect both owners and tenants. Overland Management will handle all day-to-day operations to provide owners with free time and peace of mind. Contact us today to find out how Overland Management can benefit your rental business.