When a tenant seems too good to be true, that’s probably because they have ill motives. When renting out your South Florida single-family home, you should be on the lookout for red flags that indicate that a tenant is actually a con artist. In this article, we’ll go over some of the most common rental scams, and what you can do to avoid them.
Tenant Scams in Single-Family Rental Properties
Explore the types of tenant scams in single-family rental properties. Learn how to protect your investment and tenants from deceptive practices.
#1 Concealing Co-Tenants
As a rule of thumb, all of your renters’ names should be included in the lease agreement. Only those whose names are contained in the rental contract can be responsible for rent – that is, of course, if they’re 18 or older. Unfortunately, it’s not uncommon for tenants to hide their intention to have a roommate move in with them. This is particularly true if the person has a poor credit score.
If your tenant intends to live with a co-tenant, they should state so prior to move-in. This will give you or your property management agents ample time to review the co-tenant’s background, criminal record, and the like. Even if that co-tenant is the tenant’s spouse, they should still add their name to the rental contract. If your tenant lies about this, they may be evicted immediately.
To make sure your tenants don’t conceal the identities of their co-tenants, state the repercussions in their contract. When they know about the punishment, they’ll be less likely to lie. Make it clear that you can terminate their contract at any time. Be sure to call your tenant’s old landlord to know more about their behavior, and if they’ve been evicted before.
#2 Not Disclosing Their Old Landlord’s Details
If your tenant doesn’t want you to know who their old landlord was, do not rent to that tenant. When tenants try to hide who their old landlord was, that’s probably ‘cause they did something that got them in trouble.
If they provide you with the property owners’ name, number, etc. double-check to make sure the details are correct. What if your tenant added a made-up name in their application? What if they never even rented the investment property at the address they provided? Make sure to check if the tenant is who they say they are. If you don’t have the time, your property management company can verify the information for you.
#3 Not Paying Rent
Although there are tenants that genuinely can’t pay their rent (e.g. they got laid off), there are also tenants that don’t plan to pay at all. After signing the lease agreement, they’ll tell you that they need more time to pay the rent, but that they’ll definitely pay for it “soon”. Unfortunately, to your tenants, “soon” can be as short as a day or as long as a decade.
To prevent this type of tenant scam, screen your tenants strictly. Consider partnering with a property management firm for this as checking your tenant’s background can be time-consuming. They can confirm if the tenant has the means to pay their rent month after month.
Have your tenants pay a month’s rent in advance. This can deter tenants that plan to live on your property rent-free for an indefinite period. You can also collect a security deposit, but be sure that it’s allowed by your state laws.
#4 Bouncing Checks
Double-check your tenant’s checks. One of the scams that real estate investors need to be aware of involves fake checks. It works like this – the tenant signs the lease agreement and swears to pay the initial rent, however, they can only pay it through check. The property owner allows this, but the moment they get the check, they see that the amount is more than the initial rent. The fake-shocked tenant then asks the landlord to wire the amount back to them.
The problem is that the landlord has no idea that they’ve been given a check that will bounce. By the time the check bounces, it’ll be too late as they’ve already sent the amount to the tenant.
If you plan to partner with property management services, make sure to ask how they collect their rent. If possible, they should collect rent payments on an online portal. That way, your tenants won’t be able to make use of the “bounced check” scam.
#5 The Landlord-Slash-Tenant
This is when a tenant poses as the property owner. When they’ve signed the lease agreement and the real owner leaves (e.g. they’re a long-distance landlord), they rent out the unit and tell their applicants that it’s theirs. They either collect more than the rent they’re paying the real property owner, or collect a deposit and disappear. This scam is also a “subset” of illegal subletting.
To avoid this scam, strictly screen your tenants. You should take the time to check if they’re who they say they are. You do not want to deal with a con artist. Keep in mind that your reputation is at stake.
If you allow subletting, be sure to remind them that you should be able to pre-screen their subtenants. This can be time-consuming, so it’s beneficial to partner up with a South Florida property management firm.
#6 Faking Their Pay Stubs
Tenants know that they need to prove they can pay their rent. Unfortunately, not all applicants can provide proof of employment. As a result, they resort to making fake payslips. They make up their employer’s name, number, and more to make it seem like they’re employed. As the landlord, you should do your due diligence and double-check the tenant’s details in their application. Call the employer to check if the tenant’s employment is true and if the employer is a real person. Be sure to get into the nitty-gritty, as your tenant may have written down their family member’s number on there. A real boss should be able to answer you without any trouble.
Conclusion
It’s important to screen your tenants strictly so you don’t tall for these scams. By partnering with Luxury Property Care, you can expertly avoid these tenant scams and protect your investment property. Call us at (561) 944 – 2992 or complete our contact form for more information.