Management Series: Property Management Scams Owners Need To Be Aware Of

As a property owner, it’s important to be aware of any potential scams or frauds that you could be faced with while you own the property and know how to combat them. Before we dive into the specifics, we want to note how important it is to use consistent screening criteria (following fair housing guidelines) to make sure that only those who meet the proper qualifications are approved to move in. This is your first line of defense to ensure that the property runs smoothly for both you and the other tenants. 

Here are a few examples of scams to be on the lookout for.

Fraudulent credit score reports

Credit score reports are an easy way to glance into a potential resident’s financial history. But it’s important to make sure the reports you’re getting from said potential residents are legitimate. It’s very easy to print out a fraudulent credit score report, which is why it’s vital for landlords and owners to take matters into their own hands and gather their own credit report check. It may take some extra effort and time, but it’s the best way to know you’re receiving an accurate financial picture.

Fake documents

Requiring a potential resident to show proof of employment history, past payments, etc. is another great way to take a look at financial history. But they’re only as good as their verification status. Similar to checking a credit score, take the tip to reach out to the contact for each document. A simple phone call or email explaining that you’re verifying information for approval purposes should get you your answer.

The “being relocated for a job” resident

It’s important not to fall into a scam story trap. One of the most popular in the field is the story of a resident being relocated by their employer, reaching out, applying for the unit without even seeing it, and providing a check from their employer for much more than the deposit amount, requesting for you to return the difference. Once you send back the difference, the provided check will bounce and you could potentially lose thousands of dollars. It’s difficult to weed out the scammers, but it’s important to follow diligent screening processes to avoid this situation.

The resident who is actually a landlord

Although this is not as common as the previously mentioned scams, unapproved subleasing, or your approved resident renting out their unit to someone else, is another one to keep in mind. Depending on your practices, subleasing could be an agreeable term in your lease agreement. However, there is no acceptable situation where you rent to Jane Doe, but it’s actually John Smith inhabiting the unit, who pays his rent to Jane (typically at a higher rate than your monthly rent). This not only poses a liability issue, but if Jane Doe collected months of rent in advance and disappeared, you and your residents would be victims of theft. To combat this, be sure to collect proper identification and verify the forms to be able to track down the scammer.

Operating businesses 

Unless your building is zoned for business use, your residents cannot apply for and move into a unit for selling goods or services, or operating a business under the premise of using the unit as a home. This poses a security threat and a liability concern for the landlord or owner. 

Owning and renting out a building to residents can be an exciting and rewarding experience. But with any venture comes risk. Working with a property management company can help you avoid facing these scams alone. Reach out today to start working with us and keep your building scam-free.