How do you lose money in a landlords’ market? Rent to one bad tenant.
The tighter the rental market, the more likely landlords will encounter tenant scams. Watch out for these costly tricks, and keep your rental property profitable:
Scam #1: Damaging the property, then blaming the landlord.
In this scam, a tenant causes property damage — overrun with pests, broken appliances, safety issues — and then calls bylaw officers to report the dangerous conditions. The endgame: an excuse for not paying the rent.
1. Only rent properties that are compliant with local building codes.
2. When screening tenants, pay special attention to rental history. Find out from previous landlords if the applicant has pulled this scam in the past.
3. Complete a condition inspection report when the tenant moves in.
4. Track repair requests, including the resolution of any problems.
5. Conduct routine property inspections to catch the problem early.
Scam #2: The tenant who doesn’t intend to pay rent.
High on the list of costly scams is the tenant who never intended to pay rent. This professional tenant has made living rent-free a way of life. It’s like having a full-time job — as a thief.
1. Watch for telltale signs of this scam when meeting and screening tenants:
Offers to pay more than the landlord is asking, or wants to pay in installments;
Sob story to justify request for rent incentives or special treatment;
Needs to move in right away (possibly being evicted);
Previous landlords, work references unavailable; or
No good reason why the person is moving.
2. Verify the information in the rental application carefully, including income.
3. Speak with current and former landlords.
4. Run a credit report to flag chronic late payments.
5. Check the database at LandlordCreditBureau.ca for reports from previous landlords.
Scam #3: Fake Qualifications
This category can cover a lot of territory, but the most common tenant fraud is lying on the rental application. Bad tenants use this scam if a tenant background check will reveal a bad rental history — prior property damage, not paying rent — or a bad credit history — chronic late payments, prior judgements.
1. Include the phrase “tenant background check required” in the rental ad to discourage scammers.
2. Prequalify applicants before moving forward.
3. Check a photo ID before allowing a property tour. Make sure the information matches what the applicant said during prequalification.
4. Require a completed rental application from every proposed adult occupant. Avoid online rental applications. Use your own vetted form.
5. Include a cover letter that warns the applicant that incomplete applications will be rejected, and that inaccurate or omitted information can lead to subsequent eviction and a charge of fraud.
6. Verify the information in the rental application independently of the applicant.
7. Scrutinize and independently verify supplemental documentation such as pay stubs.
8. Run a tenant credit check through TVS. Do not accept a hard copy credit report directly from the applicant.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
Click Here to Receive Landlord Credit Reports.
Disclaimer: The information provided in this post is not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.