A property manager's guide to avoiding rental scams and protecting their properties and clients
Most people imagine the potential tenant as the victim of a rental scam when they think of it. But property managers might also fall victim to fraud.
We'll look at three typical rental scams that prey on property managers and owners in this post, and we'll arm you with the knowledge you need to safeguard your owners.
Three Typical Rental Scams to Be Aware Of
Understanding what behaviors to watch out for from potential fraudsters is the first step in protecting yourself against rental scams. Here are three typical scams that you should be aware of as a property manager.
- Fraudulent Refund Scheme
In this scheme, a person will send you more money than they should by means of a fake cashier's check or money order. They will then get in touch with you and request a refund, frequently before the bank has a chance to recognise that the check is a phoney. Typically, the person will argue that their bank miscalculated the payment amount.
The proper course of action is to halt payment on the initial check, let the person know, and request funds in the appropriate amount rather than issuing a refund. Afterward, inform the bank that the initial payment might be fraudulent.
If you do give a refund, it's doubtful that you won't hear from the person again, especially if the transaction is related to an application fee, security deposit, or other comparable upfront payment made prior to moving in.
You may prevent these scams from happening in the first place by making online payments the norm for your company.
- An elaborate scam
When a con artist duplicates an internet ad and sells it for a significantly lesser price, it is considered a sort of scam. Using the duplicate listing, they hope to con tenants into paying the security deposit and other expenses.
You can be implicated in the fraud if one of your listings is utilized in it. It's also possible that your original listing will be marked as suspicious and removed. If things get out of hand, your account on that listing website can possibly be suspended.
Your greatest line of defense in this situation is to watermark your images so that scammers cannot use them.
- Suing Scam
As the term implies, litigation scams take place when a resident invents a fictitious reason to file a claim against the property management firm. Usually, these lawsuits are dismissed. However, it may take months, and during that period, the occupant is frequently permitted to live rent-free because the property management business is frequently not allowed to evict them.
The best course of action is to strive to keep the properties you manage in good order, even though it can be challenging to imagine all of the justifications that individuals might offer for a lawsuit. These claims frequently involve issues with health and safety, such as mold or dangerous stairs. It will be more difficult to demonstrate harm the better maintained your property is.
You may identify dependable tenants and forge lasting relationships with them by using a rigorous and effective tenant screening procedure. These tenants won't move into your property with any ulterior motivations.
Six strategies to protect tenants against rental scams
It's time to take action to safeguard your residents now that you are aware of some of the more prevalent scams out there. They are counting on you to give them a worry-free renting experience, after all. A part of that is being able to list their property without being conned.
- Create excellent listings
Unbelievable as it may seem, this approach begins with writing excellent listings. Too frequently, scammers' descriptions are filled with obvious mistakes. Renters are also taught to watch out for those mistakes as warning signs of a possible fraud. Potential residents will know that your business is reliable if your listings and descriptions are well-crafted.
- Implement a strict tenant screening procedure
The next step is to establish a thorough tenant screening procedure and to adhere to it for each candidate. The majority of con artists won't want to go through the hassle of making a phone call for pre-screening or getting their credit or background checked.
In light of this, adhering to established screening protocols is a wonderful method to weed out individuals who are not actually interested in renting the property and to establish credibility with those who are.
Once tenants move in, the screening procedure shouldn't always be finished. Conducting small, non-intrusive renewal checks in between lease terms is a useful practice to identify any warning signs or problems that may have emerged during the duration of the lease.
- Collect Security Deposits Safely
One of the most nerve-wracking aspects of being a tenant is giving a security deposit. Use a third-party application like Obligo rather than asking your tenants to mail you checks. It gives tenants peace of mind knowing their money is safe while relieving you of having to manage security deposits.
To keep transactions transparent and in line with local laws, technology should be a part of a bigger security deposit process.
- Inform Your Team and Your Owners
Often, knowledge is the first step in learning how to defend oneself against scams. Spend some time educating yourself and your staff on the warning signs that are frequently associated with rental scams. Once everyone is operating from the same information base, they will be able to watch out for prospective con artists.
Owners can be reassured that their properties are properly managed and always safeguarded if you share this knowledge with them and the instruments you have in place.
- Keep the appropriate insurance coverage
Almost all businesses require errors and omissions (E&O) insurance to defend themselves in court. Managing properties is not any different. You want to have that security on your side in case you are ever sued. To make sure you're adequately insured, it's a good idea to phone your provider and ask what your current policy covers.
- Use the appropriate technology
Finally, when proper application and lease processes—like tenant screening—aren't flawless, scams frequently occur. Things can slide between the cracks much more easily if your crew is overworked. With the help of property management software, you can automate some processes and keep an easily accessible record of your contacts with tenants, allowing you to identify any warning signs early on and largely steer clear of them.
The final word on preventing rental scams
The terrible fact of working in property management is having to deal with rental scams. However, you can lessen their impact on your daily operations if you take the time to educate yourself about these scams and take the proper precautions to prevent them. To get started, use the information above as a guide. With this information at your disposal, you ought to be a lot more knowledgeable about how to keep your residents and your possessions secure.