Last modified on February 6th, 2017
By Rachel Jefferson

Every time you list a property as vacant, you risk attracting a scammer looking to take advantage of unsuspecting property managers. When you manage hundreds of units without efficient processes in place for screening renters and collecting rent, a tenant with a bad rental history can slip through the cracks. Brush up on your knowledge of the most common tenant scams so you can spot them coming a mile away, and save yourself time, money, and the frustration of dealing with dishonest renters.

4 Tenant Scams to Recognize & Avoid

1. Tenants who have no intention of paying their rent

In property management, you may have come across the renter who is consistently unable to pay their rent on time. Maybe they have a legitimate explanation, such as high medical bills or loss of a job. While good renters can experience cash flow problems sometimes, there are renters who move into properties with no intention of paying rent on time, if ever. Such renters anticipate that you’ll take a few months to catch on to the fact that they’re not paying and plan to live rent-free until you evict them.

Property managers who simply ask renters to supply a credit score or who complete their own quick background checks on renters are more likely to fall victim to this scam. You need to have a thorough tenant screening process, including doing a background (and/or criminal history) check, payment history, and references. Following up with current and prior employers and landlords to ascertain the trustworthiness of renters is also a good idea.

By knowing what to watch out for, you can fill open units with desirable renters who want to live in your apartment, and keep the property running smoothly.

2. Money Wiring Scams

This is an old trick, so many property managers are already aware of it. In this scheme, property managers receive a rental application from overseas. If the renter is accepted, they’ll send a certified check. However, they will send more money than they need and then request that the overpayment be wired back as soon as possible. The initial certified check provided is fraudulent, but will often take weeks to bounce. In the meantime, property managers risk losing money they’ve wired overseas. Cutting down on paper checks and requiring that all renters pay rent online through an online portal ensures you get your payments every month, rather than the wool pulled over your eyes.

3. Falsified Pay Stubs Scam

If you ask for proof of employment and a prospective renter shows you pay stubs, would you ever suspect they were forged? This scam flies under the radar of many otherwise savvy property managers. A tenant can purchase fake pay stubs online, then pawn them off on an unsuspecting landlord as proof of employment. The renter may be unemployed or underemployed, and not have the means to pay the full rent. If you request pay stubs, also ask for employment references. Then call the reference number to verify the renter actually works there.

4. Illegal Sublets to Third Parties

This last scam negatively affects both property managers and innocent third parties, who find themselves victims of a hustler. In this scam, someone rents your apartments, pays rent for the first couple of month, then fails to pay. When you stop by the apartment to inquire about the late rent, you’ll find a different person living there who has paid 6 months’ rent for a short-term sublet. By the time you both figure out what has happened, the original grifter is long gone with money to finance their next scam. The illegal subletter is out a large chunk of change, and may be disinclined to keep paying for the apartment. While you can have a no-sublet clause in your lease agreement, those won’t stop someone from pulling this fast one.

While nothing is 100% foolproof, if you have the right process in place to screen prospective renters, and an automatic way to ensure rent is paid consistently and on-time by every tenant, the likelihood you will be taken advantage of is significantly lower. When you’re too busy to notice is when dishonest renters can put your properties at risk.