Popular Landlord and Tenant Rental Scams

A few years ago during the big mortgage meltdown, I became a homeowner for the first time.  Although I purchased my first home, it was not one that I planned on living in; I had made the decision to become a real estate investor.  Since then I have added one additional investment property bringing my current real estate holdings to two homes with three units.  My brother also purchased a rental property in the same area with three units.

Being an investor is not all about sitting at home collecting rental checks; nor is it about handing your property over to a management company to deal with.  My brother and I have had to learn, very quickly, how to spot issues before they become serious problems.  The most common issue that we have run into involves rental scams.

As a landlord, I tend to focus on scams that originate from renters, but after establishing the site, MyTenantFromHell.com, I have also seen complaints about landlord scams a well.  Today I would like to share with you the most common rental scams that I have seen online.

Renter Scams

  • Your tenant is not who they say they are
    Identity theft is a fact of life.  According to the Bureau of Justice Statistics, about 8.6 million households experienced identity theft in 2010.  How certain are you that the person who is renting your home is who they say that they are? Identity thieves do not care about ruining someone’s credit if they do not pay the rent because the consequences will be felt by the person whose identity has been stolen.  Be sure to verify the identity of the individual that you are renting to b requesting official identification, a credit report and payroll stubs.
  • Your tenant is a professional
    A professional tenant is one who moves from house to house taking advantage of eviction rules and housing laws to stay in apartments rent free.  This kind of tenant arms themselves with knowledge of the rules and exploits them to his/her advantage.  If you’re lucky, you may get the first month’s rent and security deposit from this tenant. If your potential tenant has multiple evictions in their background or needs to move into your apartment ASAP because of landlord issues, this can be a red flag that your tenant might be a professional. In this case Google or your favorite search engine can be your very best friend.
  • Moving from outside the country
    This scam is pretty popular.  You might receive a response to your rental listing from someone who claims to be moving to your area from outside the country.  The general scheme goes along the lines of the person’s employer paying the relocation expenses which will be mailed directly to the landlord.  The check will usually be for an amount far over and above the rental price.  The scammer will ask for the difference to be returned to them or forwarded to someone else.  This is just a new twist on scammers sending fake checks to get your real cash.  You can easily spot this one by its typically horrible grammar and spelling.
  • Extreme urgency
    If a tenant seems overly eager to move in immediately, this is a sign that something is wrong.  While this is not always an indication of a scam, especially if the potential tenant is viewing the apartment close to the end of the month, it might not give you enough time to do your due diligence.  Any tenant that you will want to rent to should be able to understand that you must have enough time to complete all background checks before they can move in.

Landlord Scams

  • The price is too good to be true
    Have you seen a listing for a perfect rental with a price that is too good to be true?  Chances are that this rental does not exist.   Well, the rental might exist, but that person might not own or manage the property.  This kind of ad will lead you down a rabbit hole of “supply me with your information” that can push you into the next two scams.
  • You must fill out an application first
    Some scammers aren’t trying to pry money out of your hands; instead they want something far more valuable – your information.  This happens most often online where scammers are trying to get you to supply as much information about yourself on a rental application and then use that information to steal your identity.  See your apartment in person before filling out any application.
  • I’m out of the country
    This scam starts with a listing that is too good to be true and ends with someone e-mailing you back saying that they are out of the country and would just like someone in the apartment so that nothing happens to it.  They will ask that you send the first month’s rent and they will send you the key. As consumers have gotten wiser, I have seen this scam evolve.  Now, scammers are offering to send the key via FedEx or USPS, but you must be at the apartment’s address to pick up the package because it will arrive as a cash on delivery (COD) item.  Since the shipper will not give you the package until you hand them the money, the delivery person will be gone by the time you open the package to find a key that does not work.
  • Pay a high application fee
    As a landlord I am very specific about what the application fee covers.  In fact, I use a third party provider that my potential tenant must pay directly.  Some landlords use application fees as a way of supplementing their rental income.  Beware of exorbitant application fees which has nothing to do with the rental process.  Application fees are typically a maximum of $50.  High end rentals might command slightly higher fees but should never be hundreds of dollars.
  • Send money now
    Any request for payment in the form of Western Union, wire transfer, cashier’s check, or any instant transfer system should immediately be treated as a scam.

Spotting a scam, whether you are a landlord or a tenant is pretty easy when you know what to look for.  Trusting your instincts is your first line of defense when confronted with a scam.  Also, doing your due diligence, even if it just involves doing a web search of the person who you are dealing with, will help as well.

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13 thoughts on “Popular Landlord and Tenant Rental Scams

  • I had an experience with a neighbor who did not pay for their rental ad before the landlord sends him out for eviction, he packed his things up and moved out… but not until he broke the faucet on the toilet and the washer on the laundry. He also took some decorative items, appliances, and few pieces of furniture.

    • The tenant I just evicted for my brother took the oven racks and burner tops on the brand new stove. They’re onto their 3rd rental in less than a year. Losers.

  • I’ve thought about buying rental properties, and on paper I think it could work as a wealth building tool, but a lot of the various points you make surrounding your tenants are things I could not deal well with. I don’t think I have the mental makeup to handle these challenges, so it’s probably best I stay out of that market.

  • Hi there, I never thought I’d be a landlord, and I am moving back into my house and try not to rent it out again. The reason why I rented my home out was because of job loss and only able to gain another job in a city 3 hours south. I was underemployed for 3 and a half years, now I am looking for a job in the city where my home is located and hoping that I find another job and move back into my house for a few more years. I tried to sell my home and it would not sell. I brought mine right before the housing bubble collapse. Had I not know that, I would not have brought a house until later. This article provides a lot of good information and I have no desire to rent my home out again, just to only sell it.

    • Hi Teshika,

      A lot of people are in the same situation that you’re in. It’s tough to be motivated, but I think that you made the right decision in moving for employment. Since you are moving back into the house, have you considered roommates? My buddy Mike Choi runs a blog called http://rentingoutrooms.com that is all about how he paid for college and paid of his 30 yer mortgage in six years through having roommates. It might work for you too. Good luck!

      • Thanks for the info Sandy. I am trying to stay positive but this is difficult. No one can give me motivation at this point.

  • We had a rental house for a short time. We had been given the priceless advice of getting a credit check and background check on potential renters. This truly was priceless advice, because a few of them did not pass our fairly low threshold.

    We had numerous people call about the property, asking questions such as “Can I run a daycare out of your house?” and “I have 5 dogs, is that a problem?” Um, no and yes.

    After they pass the background check (and thank you for the idea of getting photo ID – I never thought about that!) if your gut doesn’t feel right, pass on them. Better to have the property empty for one month, than trying to evict for 3-6 months.

  • There are some serious professional rental deadbeats out there. It’s good to arm yourself with tenant laws in your state, county, and municipality before becoming a landlord. I’m a big believer in 1st month, last month and full month security deposit up front for that very reason. I know it’s hard to obtain tenants that way, but I had to pay that with the last place I rented before buying a home and I was happy to have done so because the apartment was maintained an in excellent condition. Having last month’s rent plus a full month deposit ensures you have a large chunk of change in case you have to evict a tenant. The landlord also had us do a credit check for both me and my husband.

    Another tip I’d recommend as a landlord is have “actual rent” vs “preferential rent”. In NYC, your lease often has the actual rent which is much higher than the preferential rent you actually have to pay. But in the case of non-payment of rent, the landlord takes the tenant to court and if the landlord wins, the tenant must pay back missed months of the higher, actual rent. I don’t know the legalities of doing that everywhere, but it’s something I would recommend if you can.

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