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5 Scams That Trick Landlords Into Accepting Less-Than-Stellar Tenants

May 19 2017

Tenant screening scams are everywhere. If you don’t believe that applicants will come to your table looking to scam their way into a home or apartment that they have no intention of treating reasonably, you haven’t been a landlord for very long. Here are a few common ways we’ve seen other landlords get taken in.

 

The False Credit Report

It can seem like a nice gesture — the tenant brings their application, a tidy little pile of supporting paperwork, and a copy of their credit report. You just saved yourself the credit report fee! Right? Hell no.

Here’s the deal: this is the era of technology. Any slacker with a $200 refurbished 2005 computer and a free afternoon can whip out a pirated copy of Photoshop and edit literally any document they have. If it gets a roof over their head, why wouldn’t they? After all, it only takes one edit and you can give the faked document to dozens or hundreds of landlords — it just takes one mistake (or a lazy landlord!) to get into a home knowing full well you can’t pay for it.

The Fabricated Proof of Residence and Employment

Did you know that there is a market for fake pay stubs and W-2s? It’s not even illegal to create and sell them to criminals intent on pulling tenant screening scams! Sure, the tenant risks being arrested if they use them, but one of the advantages of such fakery is that you never end up seeing their real name, address, or potentially even phone number, if they go so far as to buy a burner phone.

It’s up to you as the landlord to research these details — does that workplace even exist? When you attempt to call their previous landlord, ask for someone fictional. If they’re faking, they’ll generally tell you who they really are when asked if they’re a nonexistent business — but if you ask them, “Are you the landlord at Byron’s Apartments,” well, of course they’re going to say yes. They’re in on the scam, after all.

Cash Up Front for an Immediate Move-In

It can be extremely easy to say “yes” to someone who offers you six months’ rent up front for the opportunity to move in tomorrow — after all, if they have that kind of money, they’re going to keep having that kind of money, right? Yeah, right! Any attempt on the part of a tenant to convince you to skip the screening process should result in your immediate and instinctive slamming of the door in their face. It’s far too easy for a criminal, be they crook or con man, to come into a one-time pile of money and have zero plans for making more.

Oversized “Employer’s Checks”

This one is less common now than a decade ago, but it still happens often, particularly to businesses with a notable online presence. You’ll get an email from an applicant that seems entirely right, but they’ll note that they’re being moved by their employer, who will send you a check to cover all of the initial expenses. When you get the check, it will be over by some amount — sometimes there’s an extra zero on the end or sometimes it’s a reasonable-seeming “mistake,” like they doubled the security deposit. The person will ask you to cash it, use the portion you were asking for, and send the overage to someone.

Naturally, the check was never real, it will bounce, and you’ll be out whatever amount you sent away. You can avoid this by simply never cashing a check that isn’t for the correct amount or by cashing it and then waiting for the money to clear and show up in your account before you do anything with it. Of course, you may still have to deal with potential bounced check fees from your bank.

The Six Months’ Advance Sublet

This is a brutal scam because the tenant is the victim just as much as you are. You’ll be advertising a property, find a seemingly-perfect tenant, and get them moved in. The first month’s rent will come in on time, no problems — but the second or third month will be late. You’ll head over to knock on their door and encounter someone completely different living there. When you ask for the tenant by name, the person living there will have no idea what you’re talking about and explain that they already paid the first six months’ rent to the landlord, who is not you.

Essentially, you took in a scammer who turned around and advertised your property, filled the “vacancy” with a commitment of six months’ rent up front, and then vanished into the sunset, leaving you with a tenant you haven’t screened and who insists that they can’t afford to pay rent a second time. Again, rigorous examination of every detail of the application and supporting paperwork, expecting a scammer, is the only way to catch this before it begins.

In short, when it comes to avoiding tenant screening scams, be prepared to put in ALL the work, every tenant, every time.

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If you’ve ever considered investing in a few rental properties in Philadelphia or Bucks County, PA now might be a good time. Prices are still low in Philadelphia, but have been on the upswing. According to the National Association of Realtors, the median price of an existing home in a US metropolitan area grew 13.7% between July 2012 and July 2013, the latest in a 17-month streak of year-over-year price increases. 

New landlords can choose from properties that are likely to appreciate and a large pool of potential renters.Licensed realtor Pat Mueller cites a few reasons for this trend: “Many families have lost their homes to foreclosure and are entering the rentals market for the first time in years. Mortgages are also harder to get now, so fewer people are qualifying for a new one.”The more skills you bring to the table to get into Houses for Rent in Philadelphia Philadelphia or Bucks County, PA and the more time you have to devote to your properties, the faster you can make a return on your investment. 

But investing in rentals can also be disastrous (or too stressful to be worthwhile) without expertise. Here are three professionals you may consult about your new rental properties, and what you can do to mitigate how much they cost you:Handyman:  You may need to hire a specialist for some work on your rental. If you need new outlets or new pipes, for example, hire an electrician, plumber or licensed contractor. Handymen usually tackle smaller, more manageable tasks, like:

  • Painting and paint removal
  • Drywall repair
  • Minor appliance repairs (fixing a leaky toilet or faucet, among others)
  • Installing tiling or flooring, moldings, windows, doors
  • Refinishing decks, cabinets and other wood items

When You Could Skip It: You could do any (or all) of these projects yourself if you have the time and interest in learning. Of course, this only works if you live relatively close to your rentals and are flexible enough to service them on short notice. And if you’re willing to respond to the occasional 5 AM basement flooding.

Average Savings: Any base rates or costs-per-hour vary from location to location in Philadelphia or Bucks County, PA , but nationally, you can expect to spend an average of $60 to $85 per hour for repair costs. It general costs less to hire an individual handyman than a handyman employed by a company. Expect an additional charge if your job requires a trip to the store for materials.

Resident Property Manager As the owner of a handful of rental properties, you may be able to manage them yourself, but if you want help, a single resident manager would probably be more cost efficient than a property management company. Resident managers may:

  • Serve as a handyman
  • Advertise vacancies in your units
  • Show apartments to prospective tenants
  • Review rental applications
  • Collect rents

When You Could Skip It: Again, the closer you live to your properties and the more spare time you have, the less likely you are to need a manager. The obligations of being a boss will also cut into the time you save on maintenance.

Average Savings: The national median wage for residential managers is just over $25 per hour. Research the wages in your community and adjust according to how much responsibility your manager will take on. 

Real Estate Agent: Once you’ve gotten your financials in order and done your own research on the neighborhood(s) you’re considering, you might contact a realtor to show you potential properties. You can also arrange for a realtor in Philadelphia or Bucks County, PA to show rentals once they’re ready to rent.

When You Could Skip It: It depends. Even if you’re a local, or have thoroughly researched the neighborhood(s) you’re considering, a realtor is a great resource for a first-time rental buyer. Realtors have access to data and statistics not necessarily available to the general public and first-time buyers may not know all the right questions to ask. Using a realtor to fill your Houses for Rent vacancies is less of a no-brainer, depending on your other time commitments or whether you plan to hire a resident manager who could do the same thing.

Average Savings: As a buyer of rental properties, as when buying your own home, sellers typically pay most, if not all, of the buyer’s realtor fees. In this case, Mueller points out there’s little reason not to work with a realtor. For help in filling your units in Philadelphia or Bucks County, PA, the services of a realtor would set you back between 10-20% of the unit’s rent per month.  Mueller recommends interviewing with several brokers before making your final decision to invest into Houses for Rent .

The Bottom Line: As a new landlord, you can’t necessarily control the flexibility of your schedule or the amount (and cost) of unexpected repairs to your properties. Rentals are a long-term investment. However, to maximize profits from your Houses for Rent, new rentals, you can buy close to home and start small. It is best to begin with just one or two properties. This will allow you to maximize the time you spend on your properties’ needs, and minimize the amount you’ll have to pay anyone else.

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