Being a property manager often requires dealing with and solving a wide range of issues. One of the most common examples of this is illicit tenant activity. In fact, tenants scamming landlords is a common occurrence in real estate. Needless to say, being able to navigate these problems is an integral part of good property management. So what are some of the most common renter scams that property managers need to know about? And what should a property manager look for when dealing with suspicious tenants? If you’re thinking of becoming a property manager, understanding how these scams work is paramount. Here is our list of the most common rental scams that you should watch out for when running a property management company.
1- Faking rental verification
One of the most common renter scams that you will encounter when managing rental properties is false verification. This is when a tenant tries to bypass the rental verification process by having someone pretend to be the landlord of a rental property that they supposedly occupied in the past. Managers can avoid this scam by simply checking the credit record and requesting utility bills in the tenant’s name.
2- Providing fake employment documents
Verifying employment is an important step in the tenant screening process. In fact, a stable job is a good indicator of the tenant’s long-term reliability. This is precisely why many tenant scams revolve around providing false employment documents. Rental property owners and managers should not rely solely on these documents as they can easily be forged. The recommended approach is to always double-check that the potential tenant is employed by a legitimate business.
3- Submitting a fake credit report
One of the boldest tenant scams that rental property managers deal with on a regular basis is falsified credit reports. Once the lease is signed, the tenant will then occupy the property without the intention of making any rent payment. At that point, the only way to resolve the issue is to go through a tedious eviction process. To prevent this from happening, property managers should always run the credit report by a third party before finalizing the agreement.
4- Hiding the real number of guests
While not as egregious as some of the tenant scams that involve forgery, hiding the real number of guests is still a fraudulent scheme that property managers need to watch out for. Not declaring the real number of guests creates several inconveniences for the landlord. First and foremost, it depresses the real rental rate that the landlord should be charging. But additionally, it increases the likelihood of severe damage to rental property. The best way to spot this scam is to simply keep a close watch of who comes in and out of the property. Preferably, you should install a security camera at the entrance.
5- Subletting to other tenants
Illegal subletting is one of those renter scams that every property manager has encountered at some point in their career. In simple terms, this is when the tenant acts as a landlord and proceeds to sublet the rental property to another unsuspecting tenant. This is a fairly advanced scam that involves submitting a host of false documents, ranging from employment history to the tenant’s ID. The onus of preventing subletting renter scams falls on the property manager since law enforcement is limited in what they can do when it comes to pursuing fake identities. Proper due diligence and close inspection of each document is your best defense against these scams.
6- Deliberate delaying of the eviction process
This is a common scam that many novice landlords and property managers fall for. While the eviction process is long and tedious as it is, some bad tenants can complicate it even further. Delaying eviction is usually done via small payments that are only a fraction of the late rent that they owe. Once these payments are accepted, the eviction drags out even longer. Needless to say, you should never accept partial payments and anything less than full rental payment should not be considered.
7- Taking a mortgage on the rental property
This is one of the most serious renter scams that you need to watch out for. It might seem too audacious, but some tenants do in fact take mortgages on a landlord’s investment property. The emergence of this scam is due to the exceptional ease with which ownership information can be obtained these days. In fact, accessing the necessary paperwork through the land registry is fairly simple. Having said that, avoiding this fraud is even easier. Providing the land registry with proper contact info makes the scam virtually impossible.
8- Hiding property damage that they’re liable for
Depending on the rental agreement that you have in place, the tenant might be liable for several repairs on the property. Dishonest tenants will often try to avoid paying for such repairs by hiding various types of property damage. This includes everything from plumbing issues to peeling paint. As the property manager, you need to conduct a thorough inspection of the premises before the tenant moves out.
9- Turning the rental property into an illegal business
This is another illicit activity that can cause some serious consequences to your property management clients. Regardless of the goods that the tenant is selling, operating an unlicensed business will invariably result in hefty penalties for the landlord. Hiring doormen to keep an eye on the premises or installing a security system can go a long way in helping you avoid this scam.
10- Consistent late payments
While late rent payments are fairly common, there are a few patterns that should be seen as major red flags. Some tenants make a habit out of retarding rental payments, often resorting to a slew of excuses to justify the delays. This is why you must outline a clear process for handling monthly payments and never hesitate to remind the tenant of the ramifications of violating the agreement.
11- Damage reporting scams
Damage-related renter scams are a major cause of concern for residential property managers. Not only can they be costly, but they can also create legal headaches for landlords. A good example of such scams is when the tenant damages the rental property and reports it as landlord negligence. This can lead to fines from the Inspections Department and might create an opportunity for the tenant to delay payments. Proper tenant screening and regular inspections are the best ways to steer clear of these renter scams.
12- Stealing appliances
Stealing appliances is undoubtedly one of the most widespread renter scams. It’s not unusual for some essential appliances to simply disappear from the property once the tenant moves out. This is why a thorough property check is critical when managing a rental property.
13- Writing a bad check for a large amount
Many low-level renter scams involve writing bad checks. One particular scam is when the tenant writes a large check and then asks the manager to cover the difference in cash. The check will then bounce and the fraudulent tenant will make out with the cash that was wired to them. As a general rule, only accept checks for the appropriate amount.
14- Faking a doctor’s note for a service animal
Service animal renter scams are more common than you think. Tenants usually do this by forging a doctor’s note that allows them to have a service animal. To verify the legitimacy of the document, send a validation request to the doctor in question.
15- Letting another individual occupy the rental property
This scam occurs when the person with whom you signed the lease agreement is not the same one occupying the property. Pay close attention to who visits the rental property on a frequent basis and make sure to include clauses that clearly specify the identity of the occupant.
The Bottom Line
Being aware of common rental scams is essential for protecting the interest of your clients. After all, finding tenants that are trustworthy and reliable is an integral part of every good manager’s job.
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