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How to Spot Fraudulent Rental Applications

March 17, 2022

Spotting Fraudulent Rental Applications

When the stakes are high for renters to capture a rental in an ultralow vacancy market, some renters may embellish their rental application data. Others may be more sinister.

It is the difficulty and unfairness of the tight rental market with its criteria (income, non-gig employment, credit ratings, and other criteria) that make successful apartment or house hunting a tough task for more renters today. You can be lenient in your decision about who to rent to, but applicant deceit is hardly a good footing for a long term relationship with a tenant.

Not all rental applicants have nefarious intent, however are they really able to sustainably pay their rising rent price and meet the requirements of a long term lease?  For property managers, great tenants need to be screened in. That’s the best way to ensure fraud doesn’t visit your business.

The threat can be more severe than the average landlord realizes. For instance, in the UK there are reports of renters selling the unit. In one case, the duped buyer of the unit lost 1.3 million pounds and the UK’s HM Land Registry has apparently stopped 50 similar property hijackings in the past financial year. Let’s hope you never see this level of fraud.

Why Do Applicants Misrepresent?

Why helps you understand where the fraud will occur, and where serious problems are lurking if you’re unwary. For instance, fudging earnings/pay info means their income might be a question mark. After the terrible pandemic period, tenants might really be financial challenged, underemployed, psychologically stressed, in severe debt, owing on their back rent due, or have serious personal behavioral or drug use issues that would make them a risky tenant.

Of course, spotting fraudulent rental applications isn’t always easy. Building your spotting skills is wise.

Property managers can provide a substantial value add by being thorough and professional in how they advertise to fill vacancies and screen renters.

The Flood of Rental Applications

Landlords and property managers both, receive endless numbers of applications and may be duped by fake applications or misrepresentation. To control the possibility of losses and troublesome tenants for the rental property owner, we’ve compiled a few things you should be on the lookout for when processing applications.

The best way to decrease the likelihood of fraud is advertise your apartments or rental houses in the right places online, and then use your own optimized screening process to ensure you acquire a quality tenant. Advertise in the wrong places, and these types of renters will find you and fill out your application.

 

How you write your rental ad determines whether a fraudster feels they could dupe you.

 

What is Rental Application Fraud?

Application fraud (and lease fraud) is the intentional, sometimes systematic misrepresentation of important information on the rental application and in related documents and declarations. Given digital tools such as photo editing software and document editing packages which can scan and then reproduce a fake version, misrepresentation is easier than it seems.

In the tenant screening post, we outlined some of the items to cover as you assess the background and intent of the applicant below. You’ll be looking at rent payment history, any past evictions, property damage and reported information from former landlords, lease violations, credit history, along with criminal records.

Bad tenants can use the property for purposes other than a living space for them (drug manufacturing, drug sales, hideouts for criminals/terrorists).

Before we get too suspicious of prospective renters, let’s keep in mind that many qualified, high quality tenants are also desperate for somewhere to live as well. With zero vacancy, all renters are nervous about their ability to capture one of the available units. Homelessness is a big fear.  However, under pressure, many will try to dress up their applications and use other techniques (such as paying higher rent price and several months rent up front) to capture your rental unit.  Corners get cut and rules broken.

However, given how tough it is to evict, or force rent payments, knowing what to look for can save you and owners significant misery in future.  If you’re a property manager, it’s expected that you’re an expert on tenant selection and screening.

Watch Out for the Rental Scam

Illegal subletting and short term rental scams are common now. For instance, the renter you leased to suddenly rents out the unit to an unsavory or non paying tenant. They may have even took 6 months rent payment in advance from the duped renter, and that person may now sue you for the loss and damage the unit in anger.

How Can Applicants Scam You?

  • altering documents such as credit reports
  • using fake photos and stolen ID
  • using friends or family to pose as current or former employers or as personal references
  • not telling you information you’re legally required to have
  • misstating income
  • all documents forwarded are new or created recently (passport, drivers license)
  • has no proof of employment or self-employed customers
  • has no social media visibility or presence on publicly accessible websites
  • documents come from another country and can’t be verified
  • applicant can’t or won’t meet in person, only via Zoom
  • applicant asks to move in right away
  • applicant provides paper pay stubs that seem odd or low quality for a credible company

Fraud will lead to an eviction which could raise your costs and risks considerably.

From writing great rental ads, advertising on the right rental listing sites, choosing the best criteria for selecting a tenant (e.g., long term renting rather than highest income/credit rating), screening application information for inconsistencies and claims that just don’t see believable, and engaging with top candidates to validate information and the candidate, there’s a lot you can do to attract quality, reliable, long leased tenants.

Reconsider using templates to take applications and design your own legally compliant application to ensure you’re able to cull out signals of deception.

Use your property management software platform to collect and orchestrate your applications, and do more than rely on outsourced screening services to choose who will be the source of your business revenue.  The detailed information you collect in your documents will be important in any future legal action.  Learn more about evicting tenants.

Manage Your Rental Applications in ManageCasa

ManageCasa offers you a complete cloud property management in an easy, affordable subscription model. Migrate your data easily and begin making quick work of your laborious administrative tasks. Grow your profit margins and begin improving your work/life balance.

Learn more about how ManageCasa fulfills your complete tenant lifecycle and how it streamlines and automates the tasks that take away your valuable time.  Property managers, investors and contractors, keep up on this year’s property management conventions and trade shows. See the latest cloud software and services in person.

 

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