Tenants Scamming Landlords: 5 Scams to Look out For ?

By Jen D., September 10, 2018

Although there are plenty of online scams and in person, we can teach you how to be safe and prepared from tenants scamming landlords.

Worried that your next tenants might be trying to scam you? Renting your home or business to others requires a lot of prep work.

While hiring a realtor and property manager can reduce some of the risks, many landlords choose to lease the property themselves for convenience or to save money. From posting your rental listing to reviewing a lease and background information, knowing what to look for is imperative.

Tenants Scamming Landlords: What to Watch out For

Scam #1: Counterfeit Check Scams

Your future renters appear stellar on paper. They seem friendly in person. They give you a check, which you cash, but then invent an excuse as to why they can’t lease the property.

Trying to be considerate and fair, you issue them a refund. All seems well until their original check bounces, and you are out (potentially) thousands of dollars.

How to Avoid This Scam: Ask for the first month’s rent and deposit to be in the form of cash, cashier’s check, or money order. Verify this payment immediately by depositing it – in person – at your bank or (*preferred) their financial institution. Dependent on the laws in your area, do not issue any refunds until after you have checked that the money has cleared both your bank and the issuing bank.

Scam #2: Overpayment & Money Wiring Scams

A tenant paying you too much might seem like a good problem to have. They realize their error and ask for a correction. You send or wire them back the extra funds. Other times, you may receive an impassioned plea from a successful businessman or woman.

They claim to be moving to the area after a lengthy business trip overseas or for a job promotion. They need a home for themselves or their family. They say they can pay you immediately and sign the lease via email.

Then, one of several scams begins:

Either they ask for your bank account information to scam your identity and steal from you, or they send you a check. This initial check is fraudulent, but you won’t be aware of this for weeks until it bounces.

In the meantime, they have sent you an overpayment and will ask for the difference back via money wiring. Not only will you lose the wired funds to these scammers, but you’ll also be further delayed renting your property to legitimate paying renters!

How to Avoid This Scam: Only rent to people you or your agent(s) have met in person and verified the identity of (background check, driver’s license, leasing agreement, rental application). You should refuse to rent to a potential tenant 100% of the time if they are out of the area or want to pay by personal check or a suspicious payment form.

Even if they offer you extra money or claim they are desperate to secure housing, do not accept. Overseas scammers profit millions off money order scams annually.

Scam #3: Fake Information

The goal of this type of scammer may be financial or to hide their past. They might be unemployed, be wanted for a criminal matter, or have a little credit score or poor rental history.

How To Avoid This Scam: You can call a company and verify employment before you rent to a tenant. Also, consider asking for a few months of bank statements and check that the deposit history matches that of the pay stubs you have received.

Check that social security numbers match the name of all renters and that state-issued driver’s licenses match the names shown on credit reports. Do not allow tenants to bring a copy of their credit report or background check, as these can easily be edited or altered.

Run their credit report through a respected credit reporting agency. Perform a background check of their web trail, email address, and legal name through Social Catfish to help verify authenticity and online reputation.

Scam #4: Undeclared Renters or Illegal Sublets

This type of scam is harder to catch. Perhaps a friend of theirs is the one you meet with to view the property. For this type of fraud, the renters don’t have a good enough credit score to rent on their own. While the person on the lease will still be fiscally responsible, it can be very time to consume, stressful, and challenging to collect unpaid funds later.

Another scam of this variety is for renters to sublease the property to others or even list in on sites like Airbnb. If your tenants have a boyfriend or girlfriend, you might find that they stay at the property most of the time and even have undeclared pets without a pet deposit!

How to Avoid This Scam: Get to know the neighbors around your rental property. Give them your name and number, to contact you directly if they notice any problems. How you write your lease is essential. Be sure to list that any person(s) who stay at the property two nights or more (per month) be on the lease.

State whether you will allow animals and if animals are staying on the property, follow up and ask for a pet deposit. Schedule regular inspections of the property, based on the laws and statutes in your city or state.

Consider the length of leas: Do you want the security of a year-long lease, or would you prefer a month to month lease in case problems arise?

Scam #5: Problem Tenants

Often nicknamed ‘professional renters,’ these types of renters use and burn properties wherever they go. They don’t worry about respecting your property or paying rent, as they are used to being ousted or evicted for bad behavior. They might throw loud parties, ruin your carpet, not report fixable problems in time, or not pay you to rent.

How to Avoid This Type Scam: Look for the comments they make about their rental history. Do they blame past landlords for their persistent evictions? Although life events can happen to anyone (such as medical bills or a lost job), blaming their previous landlords is unnecessary. If they have a colorful tale to tell, consider this a red flag.

Once again, run an official credit report, verify driver’s license or I.D. for every adult, and search for the information a credit report can’t provide. You can discover online reputation clues from social media accounts by running an algorithm based background check on Social Catfish.

Make sure every question on the rental application is filled out. Contact past landlords and check the rental dates and if the terms of their lease were met.

While it can’t be guaranteed that your next renters cherish your property as much as you do or stay for years, you can prevent common mistakes. Stop tenant scams before they start by using the above web tools today.