Being a landlord comes with some added financial risks. Your property is your investment, and you want to fill it with people who are going to treat it as you would. That’s why choosing the right tenant can make all the difference. Although they aren’t very common, there are a few potential tenant scams out there. Luckily, there are some easy ways to avoid being scammed, so here’s what to keep an eye out for when screening tenants.
Overpaying is Not a Good Thing
You picked a tenant and they’re sending you first month’s rent and security deposit money. But, there’s one problem: they’ve overpaid you. You asked for one amount and they send you a check for a higher amount, giving some reasoning that doesn’t quite add up. They might ask you to wire them the amount of money they overpaid you. Beware of this potential rental scam, as there is no reason why your tenant should be paying you more than you asked or should never wire your tenant money.
…And Neither Are Bounced Checks
Adding to the overpayment issue are bad checks. Say you’ve received a check form your new tenant and it bounces when you go to cash it. Although this could simply be a misunderstanding or a timing issue on your tenant’s part, it could also be a bad sign. You’ll want to cash all checks before the move-in date so that you know your tenant is actually able to pay. Some landlords have fallen for this tenant scam: a tenant has already moved in before the first check bounces, they continue to pay with bad checks, and, essentially, they evade paying rent for months. It’s always best to verify that the check has gone through before allowing tenants to move into the property.
Don’t Stop at the Credit Score
As part of the tenant screening process, you know that the credit check is vital in determining an applicant’s ability to pay rent. Having a great score isn’t easy, but there are plenty of things tenants can do to improve their credit. It’s important to not only look at the applicant’s number, but to look through their payment history, too. Yes, having a good credit score is a great indicator that your potential tenant is financially responsible and will be able to keep up with rent payments, but you should also analyze their credit report to get some insight into their spending patterns. Are they constantly late on a certain payment? Do they have multiple accounts and credit cards that they use to pay off other cards? These are things that you’ll want to look out for in the credit report.
Additionally, a potential tenant might provide you with their own printed out credit report. Ultimately, it’s up to the landlord to decide whether to accept it or to run your own credit check, but the safest way to know you’re getting all the right information is to run the credit check yourself.
First Few Months’ Rent Upfront
You should take it as a red flag if a tenant tries to pay you the first few months’ rent upfront. Why would someone want to pay a large lump sum of money instead of paying the usual monthly rent? Is there a reason they wouldn’t be able to pay the rent in the coming months? Is the amount the tenant wants to pay more than they make in a their monthly salary? Consider their reasoning, but remain suspicious if a tenant wants to pay you multiple months’ worth of rent upfront.
Fake Pay Stubs and Work Authentication
This one isn’t all that common, but it’s still one to be aware of when screening tenants. There is, unfortunately, a market for fake pay stubs and W-2 forms. Be sure to do your due diligence and research the potential tenant’s company, call their employer and ask specific questions about the tenant’s job. If the tenant is legitimately employed by the company, the employer won’t have any trouble answering your questions.
Although it can happen, keep in mind that most tenants are not trying to scam you. Plus, there are ways to protect yourself from potentially being scammed, and precautions you can take to reduce your chances. Try out Zumper, a safe, reliable, and worry-free way to post your rental listings.
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