June 25, 2019
Four Common Tenant Scams to Watch Out For
Ask any property manager who’s been in the business for a few years, and they’ve likely seen it all. While most tenants are good people, there are a few bad apples to be wary of. Here are four common tenant scans and how to avoid them.
The “Professional Tenant”
This is the tenant that looks great on paper and even in person, but they have no intention of ever paying a cent of rent. They appear charming, but they know how to game the system. You’re probably not the first landlord they’ve scammed. And, you won’t be their last.
Some red flags for these tenants include a convincing lie about why they need to move in quickly. Or, showing up with their own credit report so “you don’t have to run one.” If they’ve already moved in, expect a sob story about why they can’t pay their rent. The professional tenant has no qualms about playing on your empathy and will tell you anything. They have health problems and need surgery. They lost their job. They just got a divorce and lost everything.
So, how do you avoid this type of fraudster?
Start with your ads. Include a line about how applicants will be carefully screened. Then, follow through on your promise by running a credit check and checking ID and references—including former landlords. Make sure all information is captured consistently in your application. If they pass, do not accept cheques. Instead, use an online payment; this will improve timely payments and reduce the risk of bounced cheques.
The “Damaged Goods” Tenant
This person intentionally damages the property, removes safety features and then calls local inspectors or bylaw officers to say that the landlord is a slumlord who won’t make repairs or install fire detectors. They then use this as an excuse not to pay rent, which was their modus operandi all along.
To reduce this type of scam, follow the same advice as the “professional tenant.” Of course, ensure that your property is up to code, and in good condition. Make sure to perform a complete move-in inspection (that is signed by the tenant) as well as ongoing routine inspections to catch any repairs as they occur. Use an inspection solution that supports digital signatures and photos, and one that integrates with maintenance requests. Budget for and perform preventative maintenance.
The Tenant/Landlord “Switcheroo”
Another common scam is the tenant/landlord switcheroo. In this scenario, your new tenant has moved in, and everything seems good. But then, the rent doesn’t show up. What could possibly be wrong? You email. No answer. So, you show up at the door. The person who answers is not the person you rented to. It’s a bit of a shock for the two of you! The story unfolds that they “rented” the property from your tenant who was posing as the landlord. Not only did he advertise your property, and moved in new tenants, he also took the first and last month’s rent in advance in cash.
Just like the professional tenant, this guy is comfortable scamming people. He’s done it before, and that ID he showed was fake. So now, everyone can wave goodbye to their money.
So, how do you detect and prevent this slick scam? Again, upfront due diligence is key. Take the extra time to consistently check references, run credit reports, etc. Ask to see photo ID. (Note due to privacy issues, you may not take a photo of it, but you can ensure the person in the photo is the same person standing in front of you.)
The Reseller Tenant
This is the guy, or gal, who moves into your property with a little side-hustle in mind. To sell the stuff that comes with your property. We’ve heard landlord stories of washers and dryers gone missing, microwaves, fridge and stove – you name it. If it can be listed, it can be sold.
Sadly, experienced scammers know how to slip away without being caught. Similar to the “Damaged Goods” tenant, move-in inspections and regular online inspections can help show if or when appliances go missing.
The Importance of Tenant Screening
While you can’t prevent every fraudulent incident, you can sidestep most of them with a strict tenant screening protocol. Run a credit check and background check. Call the references. Interview them in person to see what kind of fit they would be. And, use screening technology. For instance, Property Vista’s system uses a state-of-the-art algorithm to analyze more than 30 points of interest, such as credit score and debt, income and required rent. You’ll eliminate applications that do not meet your approval without having to lift a finger. Get a demo and see pricing here.