It’s true, your landlord could be a complete crook, but if you didn’t take proper precautions, you could be just as guilty.
Falling prey to a rental scam won’t land you in jail, but it could leave you homeless, and put you out a serious amount of cash and valuable information about your identity. The recent housing crash brought about a new type of thief preying on vacant and foreclosed houses, and innocent renters and homeowners alike.
MSN Real Estate recently published an article about these new takes on an old scam that are flooding the housing market, the new twists the technological age has brought to the grifts, and the warning signs both genuine property managers or owners, and renters can look out for to avoid being taken in by these charlatans.
The plot is simple– find a vacant or foreclosed house, break in, change the locks, advertise it as a rental online, and then choose just how you’d like to swindle people. These crooks have several choices of just how to separate honest folks from their hard earned cash and some of them go like this:
1. Rent to unsuspecting tenants sans paper trail by asking for monthly payments in cash until someone finds out and then disappear.
2. Complete move in paperwork and collect the deposit for a home from multiple sets of tenants, and then leave them all to show up on moving day without keys, a place to live, or an explanation. This has also been done with real apartments that the con artist will use both vacant and occupied; all he or she needs is a set of keys and a passable collection of rental applications.
3. Find a property that’s been for sale for awhile, stash the “Sale” signs in the garage and rent the place out before anyone’s the wiser.
4. Even a real owner might try and rent out his or her house after it’s been foreclosed, keeping the rental checks and leaving the city to evict a second set of, this time, unsuspecting renters.
It’s not pretty out there in the rental market but there are things that can be done to protect yourself. If you are a potential renter, here are some highlights from MSN’s list:
1. Don’t pay in cash or wire money in advance; use only ways that can be tracked and confirmed, like cashiers checks, until you are comfortable with your rental agreement.
2. Do your research; if the rental price seems a little too much of a steal, look around for houses or apartments for rent in the same neighborhood and see what they are being rented for. If the price differs by more than a couple hundred dollars, you might just be stepping into a scam.
While you’re at it, check that the house is not in foreclosure; try a site like RentalForeclosure.com.
If you are suspicious, validate the identity of the person you’re dealing with. If he or she says they’re a property manager, ask to meet at their office. Check government sources like county property records if you’re dealing with the owner, or the Department of Real Estate if you’re dealing with an agent or property manager.
3. Be on the lookout for unusual behavior from the landlord–Why are they pressuring me to sign? Why are they asking for payments upfront in cash? Why are they so eager to have me rent this place and so defensive when I ask questions? Why did we come in the back door? Why is there a “for sale by owner” sign stashed in the closet?
4. Create your own paper trail; ask for copies of any checks, applications or documents that change hands. If you ensure the process is legitimate and regular, it will make it easier to spot unusual behavior.
5. Report anything that sounds even vaguely suspicious. As the MSN article says, if it seems to good to be true, it probably is.
For property owners and managers out there, here are some tips we came up with at PMN:
1. If you own an investment or vacation property, check on it regularly; don’t give criminals a chance to move in or ‘borrow’ your place. If, as an owner, you don’t have the time or resources to physically check on your property, consider hiring a property manager.
2. If you list on any online sources (like Craigslist.com or Backpage.com), monitor your listings regularly to ensure they don’t get hijacked and no one tries to post your listing for less rent. If you discover a duplicate posting, report it immediately.
3. If you have had the misfortune to be foreclosed on and must vacate your home, be sure to report your foreclosure to the city or appropriate organization. More and more cities have registries to prevent vacant homes falling into neglect–or the wrong hands.
4. Do not ask for or accept any payments in cash regardless of how pressed for time you are. Make sure there is an auditable paper trail on your end of the transaction as well as your potential renters. Also, take the time to do a property background check on your tenants. Not only will it protect you from bad renters, but it will demonstrate that you are serious about your property and your business.
5. Be transparent. If your house or apartment is at a lower rent than all the others in the neighborhood, be straight with your potential renters. Whether it is due to tough economic times, an older unit without updates or what have you, be honest with your future tenants.
Here at PMN, we’ve explored one previous scam, to read about it, click here.
