Rental Scams Rip Off Property Owners
As a MULTIfamily property owner, you can become a victim of rent scammers.
These sleazy criminals can damage your reputation, diminish the attractiveness of your property to prospective renters, and cost you money.
What is a rent scammer?
You can refer to a person who preys on property owners by submitting fraudulent applications as a rent scammer. For instance, they misidentify themselves, lie about service dog status, or fabricate employment or wage information.
These people are often incredibly good at their illicit craft and therefore hard to catch unless you use a reputable property management company to screen your applicants.
The rent scammers we’re discussing in this article prey on innocent people who are looking for a place to rent. But that doesn’t mean you’re off the hook as a property owner.
Who do rent scammers victimize?
Last year, more than five million renters fell prey to rent scammers.
The greatest percentage of victims were in two categories: the young, because they are inexperienced, and the desperate, because they have been struggling to find or qualify for a place to rent. Both groups are prone to leap before they look.
The median amount lost by victims of rent scammers was $400, but almost a third of the victims lost more than $1,000.
Property owners are not immune when scammers strike. Read on to learn the ways that owners of MULTIfamily rental property can be harmed by rent scammers, and what you can do to protect yourself.
How does a rent scam work?
These are the two most common scams:
Hijacked ads.
This can work several ways, but always involves the manipulation of a legitimate ad for a rental unit. The scammer will copy a picture of your property and paste it over fabricated information. Sometimes the scammer only changes the contact email address or phone number, but it’s enough to lure an unsuspecting prospective renter into contacting the scammer instead of you while they believe that they’re dealing with the real property owner.
Phantom ads.
This is much like the hijacked ad scam, but in this case the property in the picture might not be for rent or might not even exist.
In each instance, the scammer will manipulate the hopeful renter into paying a fee, a month’s rent, or a security deposit before they meet in person, or before they allow the renter to see the property, or before they ask them to sign a lease.
The most sophisticated rent scammers will manage to show the property and may even present a legitimate-looking lease for signature before collecting money from the renter.
What are the signs of a rent scam?
Common signals that a renter is dealing with a scammer are:
- The scammer asks for a wire transfer of funds. Wire transfers are the same as cash and cannot be recaptured when the renter figures out that they had been ripped off.
- The scammer asks for a security deposit or rent payment before meeting the renter or signing a lease.
- The scammer claims to be out of the country but says that an attorney or agent will meet the renter or collect money. The scammer will often ask for a “good faith” wire transfer. Sometimes these sleazeballs even send fake keys to the victim.
How is a property owner harmed by rent scammers?
As a property owner, your kneejerk reaction when learning about scammers might be to empathize with the victims, but otherwise shrug. It’s not your money.
Rethink this one. Sure, the prospective renter loses money, but you might take a hit, too.
- The reputations of you and your property. Word of the scam will get out, and prospective renters will be leery about considering your property for fear of being scammed. The crime report will be public and will show up in crime statistics for the property. These will diminish the value of your investment.
- You just lost a renter you never knew. Your property is still empty and non-productive.
In some cases, the innocent, duped renter moves in before you or they know what’s happened. Now you have serious issues:
- Confrontation with a scammed squatter.
- The cost of eviction proceedings.
- The potential for costly property damage.
- The irritation and disdain of other tenants.
- Your loss of income while all these issues are being resolved.
- Finding another renter.
What can a property owner do to protect against rent scammers?
You aren’t defenseless.
You can personally perform background checks on every prospective renter, and you can show every rental unit yourself. These actions will help you intervene if your property is presented in a hijacked ad.
Or you can accept that some scammers are as skilled as they are oily, and that you’re ill-equipped to prevent them. The most effective defense is to hire an experienced, reputable property manager.
The best property management companies will offer business practices that mitigate against scammers.
Three layers of protection against rent scammers
get MULTIfamily Property Management offers three effective measures to protect you from rent scammers.
- Every picture of your property that get MULTIfamily Property Management advertises is watermarked to prevent hijacking. Any modifications to the contact information will be obvious.
- A tasteful sign on your property that warns prospective renters about rental scammers. It explains who should be showing the property and outlines the legitimate means by which a rental transaction is conducted. It also identifies the property management company and provides contact information.
- A secure system for entering any rental he premises. It entails screening to acquire a timed entry code. Obtaining the code, which is good for a specific, limited time, involves placing a small deposit against a credit card and placing a driver’s license on file.
Informed, aware renters who see the sign are less likely to fall victim to attempts by rent scammers.
Scammers are leery of the series of obstacles that they must navigate to scam on your property, and so they will be inclined to attack lower hanging fruit that is available at other properties.
And your tenants appreciate knowing that their building is more secure.
Conclusion
Rent scammers are a severe problem that affects millions of renters and property owners every year.
MULTIfamily property owners may suffer damaged reputations, pay for costly repairs, and incur legal expenses when scammers attack their property. They also suffer having unrented units for longer periods of time.
get MULTIfamily Property Management is a reputable, experienced company that can help MULTIfamily property owners protect their tenants and themselves against rent scammers.
Looking for MULTIfamily investment opportunities? If you’re a first-time investor or already an investor looking to expand your portfolio, you’ll find exceptional opportunities at getMULTIfamily.com.