How To Avoid Renting To Scammers

When it comes to scams, no one is immune. Although most of the focus is usually on protecting renters from fraudulent rental listings, the reality is that even landlords can be scammed. If you are new to landlording, you may not have as much experience navigating the most common scams landlords face. We are here to provide you with some tips about avoiding renting to scammers.

Recognizing Scams During The Tenant Screening Stage

Scams can begin early on in the rental application process. Most scammers will begin to show their true colors when you reach the tenant screening stage. During this stage, you will be asking for pertinent information, such as employment history, credit checks, background checks, eviction history, and references. Some of the most common scams to see during this stage include the following.

red flags in tenant screening

Red Flag #1

Providing Their Own Credit Reports:

It is important to access a credit report from a potential tenant. The credit report will allow you to see a glimpse into their ability to handle finances and will help you determine how much of a risk they will be for you as a tenant. However, if your applicant wants to provide you with a copy of their own credit report and refuses to let you run a credit report on your own, that should be a major red flag. With modern technology is extremely easy to create a fake credit report or to alter a legitimate credit report.

Prevention:

Your best course of action is to run your own credit and criminal background reports. Use a free software that only uses a soft inquiry, which will not affect the applicant’s credit score. If an applicant refuses to go through the screening process, it is wise to move on to a different applicant.

red flags in tenant screening

Red Flag #2

Forging Paystubs And W2’s:

Unfortunately, just like an applicant can easily devise a credit report online, there is a thriving business surrounding the forgery of paystubs and W2’s. Using online, inexpensive programs, applicants can quickly create paystubs vouching for employment they do not have.

Prevention:

One of the best ways to protect yourself from this type of forgery is to always double check employment history. Be sure to ask for references and follow through by reaching out to those references. A quick phone call can save you from renting to someone who has lied about their current employment and income.

red flags in tenant screening

Red Flag #3

Giving False References:

It is easy for an applicant to provide you with fake references. This can go one of two ways. Either a tenant can provide you with completely phony contact info or they can provide you with the contact info of a friend who will undoubtedly vouch for them.

Prevention:

The best way to prevent this scam is to ask for multiple references. It is harder to pull off a reference scam if you are required to provide your employer’s contact info, previous landlord info, and a character reference. Determining if the references are completely phony only requires you to call them and investigate on your own.

tenant screening scams

Recognizing Scams During The Payment Process

Once you have made it through the screening process, you may find yourself breathing a sigh of relief. Before you relax too much, take care you avoid the following red flags that can arise during the payment process.

red flags in tenant screening

Red Flag #1

“I can pay 6 months of rent upfront”

You might be thinking, what could be better than guaranteed rent? As good as this deal sounds, it’s possible that your tenant came into that money by less than reputable means and may not have a steady job to pay for rent for another six months.

Prevention:

Make sure you have done your due diligence and your applicant has a steady income that meets your income requirements.

red flags in tenant screening

Red Flag #2

“My employer is paying me to relocate, so I can give you a cashier’s check.”

The second part of this scam starts when you go to deposit that employer’s check. The amount won’t be quite right; it will be more than you requested. The applicant will ask you to send the extra amount to someone. Soon, you’ll discover that the check wasn’t real and that you just sent someone money that you’ll never see again.

Prevention:

Protect yourself by waiting for checks to clear and only taking checks in the correct amount.

The Switcheroo Scam

You finally filled that vacancy and have the first month’s rent safely in your account. The second month rolls around and the rent payment hasn’t shown up and you can’t seem to get a hold of your tenant. You go to the property and a stranger opens the door, with no idea who you are.

The first tenant was a scammer who turned around and leased your property out for six months, taking the second renters payments and pocketing them. The worst part of this scam is that both you and the second tenant lose money on the situation since they won’t be willing to pay another rent payment to you.

Prevention:

Checking in on your property and maintaining communication with your occupants can prevent this situation from happening. Proper screening can also help save you from this headache.

Takeaway Tips

If it sounds too good to be true, then it probably is. Trust your gut, and do a thorough tenant screening, including a tenant credit report, a criminal background check, and an eviction report. It can help prevent these scams and save you a headache in the long run.

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