How To Recognize And Avoid Rental Scams

Investing in a rental property is a great way to earn a stable cash flow while also growing your wealth over time. However, owning a rental comes with its risks, some of them being unpaid rent, property damage, and problematic tenants. Another major problem you as a landlord should be aware of is the rental scams.

Scammers take advantage of your listings and property in many ways. This includes sharing false information in their application form, forging checks, and even lying about other co-tenants occupying the property.

The experts at Limestone Country Properties have written this article to help you recognize the most popular rental scams and how to avoid them, keeping your investment safe.

1. Scammers Steal Your Rental Listing

Posting a rental listing online is one of the best ways to attract prospective tenants. However, doing this leaves you vulnerable to risks like scammers stealing your rental listing and posting it for a significantly lower monthly rent to attract unsuspecting renters.

In most cases, these scammers will ask their victims for a cash advance to secure the unit, only to stop all forms of contact once they get the money. This is the point when tenants realize they’ve been scammed.

Additionally, if things escalate, the scammers can take to social media to bash your reputation as a landlord and warn others from renting your property.

scammer-working-on-a-laptop

To avoid falling for this scam, you should include watermarks in all the photos on your listings. You can also do a reverse image search to ensure your photos or create a Google Alert for your property address to ensure that your information or photos are not used in any fake listings.

2. Tenant Submits Fake Information on Their Application

Requesting potential tenants to submit an application to rent your property can help you select qualified tenants for your property. However, some applicants might not be truthful in their application. Renters who know they might not be a good fit for your rental might try tricking you by falsifying the following information:

  • Pay stubs and employment records
  • Credit reports
  • References
  • Rental history

Falling for this scam can result in unpaid rent, property damage beyond normal wear and tear, theft, and even holdover tenancies. You can prevent all of this by conducting an effective tenant screening process.

By double-checking all the information applicants submit and conducting a background check, you can ensure only qualified tenants occupy your rental.

3. Check Scams

Over the years, the number of scams utilizing checks has grown exponentially becoming a major issue for landlords. It’s not uncommon for “interested renters” to provide fake checks to cover the cost of rent, security deposits, or even move-in fees.

a-person-handling-checks

In most cases, landlords realize too late that the checks are invalid. In addition to having to chase tenants to pay you the money can escalate into a holdover tenancy or even an eviction. Another popular check scam consists of tenants sending a check with a much higher amount than you initially agreed on.

After this, they’ll request you to refund the balance. Most landlords agree to the refund but by the time they realize that the check bounced, they’ve already sent funds back to the tenant. Ultimately, the landlord is left owing money to the bank and in loss.

You should know how to recognize fake checks to avoid falling for these scams. Whenever you receive a check, ensure it comes from a legitimate bank by paying close attention to the security features. You should ensure that all the information is correct and avoid or reject cashing checks with a higher amount than you requested.

4. Tenants Lying About Co-Tenants

Another rental scam you should be aware of is tenants lying about being the only one living on your property. While having an unofficial co-tenant might not seem like a big deal, it can lead to consequences such as property damage, nonpayment of rent, and squatters.

landlord-talking-to-a-tenant

Evicting an unauthorized tenant can be an incredibly challenging and long process, so it’s best to take preventive measures to avoid this scam. You should include the duration guests can stay before needing to become an official tenant in the lease.

Also, you can conduct regular property inspections to ensure that no one else is living on the property without your knowledge.

5. Tenant Using Your Property for Commercial Usage

The popularity of home-based businesses has grown exponentially in recent years. While running a small company from a home is not illegal, having tenants do so on your property comes with many risks.

For example, if your rental is not property-zoned for commercial activity, you could be penalized for allowing tenants to run a business from your property.

Additionally, if tenants are involved in potential illegal activities, they’ll put you and your investment at huge risk. Luckily, you can prevent tenants from utilizing your property for commercial usage by adding a clause to the lease agreement. This way, you can ban certain or all types of business activities from being operated out of your rental.

Bottom Line

Falling for a rental scam can lead to significant losses, property damage, and even legal disputes. Some of the most common scams landlords fall for include their rental listings being stolen, tenants submitting fake applications, and scams utilizing fake checks.

With the above mentioned points, you now know how to avoid these common scams. Moreover, you can ensure that your tenants are eligible and qualified by having a thorough screening process in place.

If you need help screening applicants, contact Limestone Country Properties today! With our effective tenant screening process, we’ll help you avoid scammers and keep your investment protected at all times.

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Thank you Limestone staff for managing our 4 properties over the past 7+ years. Your professional service, prompt communication and attention to detail is greatly appreciated to ensure our properties are well maintained throughout the years. We are very glad to refer our friends to Limestone and look forward to many more years of continued support

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