You’re a good person and a hard worker. You don’t deserve to be on the receiving end of tenant scams. Unfortunately, these situations arise all-too often and can affect even the most undeserving of property managers. In order to keep yourself from losing money or suffering worse consequences because of a scam, you have to be able to recognize it, and then know how to deal with it.
How to Avoid Common Tenant Scams
“Every time you list a property as vacant, you risk attracting a scammer looking to take advantage of unsuspecting property managers.” The more properties you manage, then, the more at risk you will be. After all, it’s difficult to be vigilant with your screening process, however refined, if you are working tirelessly to manage hundreds of people. That makes it easy, sadly, for a single tenant who will pose a risk to “slip through.” So, how can you protect yourself and your business from these risks, even if you manage a lot of properties?
It really centers around being able to recognize the warning signs so that you can stop these problems in their tracks. Tenant scams may include people who never planned on paying you rent. They may move into the building and provide excuses for months on why they can’t give you the money. To prevent this from dragging on and costing you big, you should make a point of asking “renters to supply a credit score” or completing your “own quick background checks on renters.” This will allow you to catch sight of some of those warning signs before you’ve already lost a good amount of money.
Though it’s far less common these days, in our modern, online world, money wiring is another piece of tenant scams that you may still come across. It’s possible that you’ve already dealt with this issue in the past, if you’ve been working as a property manager for years, since this is a tactic that has existed for a long time. In short, the accepted ‘tenant’ wires money from overseas, but purposefully sends too large a check, and then asks for that extra money to be wired back to them. However, the initial payment will inevitably bounce, leaving you with nothing after having sent the person real money. Cut back on this danger by encouraging, or demanding, online-only rent payments.
It’s sadly too easy for people to fake information in these days of computers and Photoshop. This is where something like fake pay stubs comes into play. Proof of employment is important so that you can determine whether or not the individual will be able to afford regular rent payments, but they can falsify these documents online and provide you with a copy that isn’t at all indicative of their situation. Luckily, there is an easy fix to this: you ask for references so that you can contact their ’employer’ yourself to confirm the details.
Perhaps even worse than tenant scams that hurt you alone are ones that also involve a blameless third party. The fraudulent tenant might sign a lease with you and then fail to pay for months, after which you stop in for a visit only to find a completely different person there. That person would likely have been subletting from the original tenant and paying rent to them, though that money was not then being passed on to you. By the time everything has been figured out, it’s doubtful that you can get in touch with the original tenant to make them pay up. In the end, you and the person who was subletting are left short on money and frustrated, to say the least.
There is no completely foolproof way of preventing tenant scams, but you can make a point of carefully examining all applicants, looking into their financial and professional backgrounds, and meeting with them in person (if possible). If something seems suspicious to you, then at least run the situation by another manager or person that you trust and see what they think. A second opinion can’t hurt you, and may help to either reassure you of the situation’s validity or confirm the signs of a potential danger.
It’s a lot of work to screen tenants and to be on the lookout for problems like the above, so leave the rest of your day-to-day duties to SKYLINE Property Management and Accounting Software. This system can help to keep all of your business and tenant information in one place so that you can quickly consult it for anything you might need, financial or otherwise. With SKYLINE in your arsenal, you’re more likely to find success and less likely to get tripped up in scams than ever.