Tenant scams can be a nightmare not only for newbie landlords - experienced landlords must establish effective strategies for dealing with scammers as well. The number of renters who make money off of rental properties is increasing, and scammers are becoming more inventive every year. You can't be a hundred percent certain that your potential renter isn't a master of fraudulent schemes. To know the difference between a trustworthy tenant and a potential scammer is crucial when renting to anyone.
Here are five common tenant scams a landlord shouldn't ignore:
1. Incorrect number of co-tenants.
When creating a lease, make sure your tenant relays the correct number of co-tenants in the lease agreement, as well as providing accurate information regarding their credit score and background details. The tenants might want to conceal certain information because of criminal or credit issues their roommates previously encountered. Any inaccurate data is considered a breach of tenancy and could be a serious reason for lease termination.
Obviously the more renters living in a rental, the more wear and tear. Plus, more renters means higher utilities, which can be a problem if utilities are paid by the landlord. Verify the number of tenants planning to occupy your rental before proceeding with the lease-creating process.
2. Fake credit report and inaccurate employment history.
Another common scam is a tenant lying about their credit and employment history. This method is popular among professional scammers. Generating a fake credit report and thinking up a good employment history is a piece of cake. But for landlords it's not that hard to double check data, either. Looking through payment history and reaching out directly to the company a tenant works for (or claims to work for) is a great solution to weed out potential scams. Running a thorough credit and background check is another way to prevent this type of scam. With a good property management system such as TenantCloud, the overall application process doesn't require much effort and time, while rental applications easily predict the future behavior of a tenant.
Another idea is to require references from the employer and verify former landlords of the tenant. Not only can this step prevent you from dealing with tenant scams, but you'll also be financially secure when it comes to possible financial fraud.
3. Providing a check larger than the rental amount.
This is such an old scam! First, a tenant asks you if it's okay to send you a check larger than the original rent amount. Then they want you to pay the difference. Under no circumstances should you deal with such a renter. They're probably a scammer trying to twist you around their finger by providing a bounced check. To avoid trouble, don't deal with overpayments, checks from overseas, or untraceable payments. Instead, take advantage of digital accounting to keep track of transactions.
4. Changing occupants without consent.
You've run a background check on a prospective renter, moved them in, and been receiving regular rent payments for a couple of months, but suddenly you find out that a different person is occupying your rental property. You have no idea who they are and why they live in your rental. First of all, keep in mind that regular property inspections might prevent such a scenario.
Another tip is to check a tenant's social media accounts prior to moving them in. It's crucial to know who you're dealing with when it comes to business relationships. Any misinformation or suspicious account activity is a red flag for you to consider before signing a lease.
5. Tenants selling appliances.
While some scammers have no intention to pay rent at all, others are trying to sell your appliances. Imagine you come to inspect a property and notice that the microwave has disappeared. Unfortunately, you've become the victim of a tenant scam. This scheme works pretty well, and experienced scammers know how to cover their tracks and make money off your goods.
Do you know how to deal with tenant scams? Share your advice by leaving comments below. We'd love to hear your thoughts. :)