Common Rental Scams: How Landlords Can Spot and Avoid Them

Imagine investing in a property that you plan on leasing out. You come across a tenant who seems nice enough, you get your deposit check, and everything seems good. Next thing you know, the check bounces or the next payments are just “crumbs.”

This can be quite troublesome, as many real estate investors rely on the rent income to pay for the mortgage.

This happens more often than you may think. Rental scams have been on the rise in recent years, and both new and experienced landlords are feeling the pressure. These schemes are becoming increasingly sophisticated, making it harder to spot red flags early. Even seasoned property owners can find themselves caught off guard — which is why it’s more important than ever to stay informed and proactive.

The good news is that you can protect yourself against fraud. All it takes is a little vigilance, and this article will tell you how you can do that. Read on to find out how to spot rental scams and avoid them before things come crashing down.

Common Tenant Scams to Watch Out For

Rental scammers are getting more and more creative, but there are also some common strategies that most of them use. Some of these housing rental scams include the following.

Fake Income or Employee Verification

Landlords need an income report to know whether or not tenants can afford their rent. Scammers work around this and submit fake bank statements or pay stubs. They even list a fake company as their current employer to pass your check.

This can be very dangerous because you can lease out to someone who can’t afford to pay rent. Many landlords find this out only after months of delayed payments, bringing them at a financial loss.

False or Stolen Identity

Tenants who wouldn’t normally pass the background check could use someone else’s identity or even stolen Social Security Numbers. This can be troublesome because if you do decide to evict them, you may not be able to. After all, you are evicting the person on that contract, and if their name is fake, it’s like trying to kick out a ghost. It could take a lot of legal action and cooperation from the police to get them out of the house.

Professional Tenants

Some tenants know exactly how to take advantage of local laws to delay eviction. For example, in places like Los Angeles, tenant protections can make it difficult to remove someone for several months. While laws vary by state, many areas have rules that professional tenants use to stay in the property without paying — leaving landlords stuck with the bill.

Partial Rent Payment

Eviction is within a landlord’s rights if the tenant doesn’t pay anything by the time the eviction comes. However, that process comes to a stop when the tenant gives a part rent amount.

The tenant could send $100 before the eviction process starts, and legally, you can’t do anything about it until next month (when you start the next eviction process). These rental house scams reset the eviction before the court hearing and drain you financially.

Unauthorized Subletting

It’s no secret that short-term rentals fetch higher prices than long-term ones. Some tenants can take advantage of that and sublet your property without authorization on Airbnb. Your “tenant” gets the money, and you lose control over who’s using your property.

This puts you at risk for damage and liability, especially if guests you never approved cause problems. In many cases, unauthorized subletting is a lease violation and can be grounds for eviction — but only if your lease clearly prohibits it and local laws support enforcement. That’s why it’s critical to include specific clauses against subletting in your rental agreements.

Forged References

Some problem tenants know they wouldn’t get good recommendations if they let the previous landlord do the talking. To “glow up” their image, they could have their friend or cousin pose as their previous landlord. They will give you a rehearsed review, and you believe them. When you find out the truth, it might already be too late, as you have lost resources.

Chargeback Fraud

Many tenants choose to pay their rent with a credit card. However, the sneakier ones could also dispute the transaction as being fraudulent. Chargeback sets in, tenants get their money back, and then proceed to miss payments. It could take months until you notice, and the eviction may just delay the process further.

Overpayment Scam

Imagine someone sends you a $3,000 check for your $2,000/month property. They ask for a refund, and since you’re all about fairness, you give $1,000 back. Later, when you try to cash the check, you realize that it’s fake or it bounces due to insufficient funds. These rental scams can be dangerous because you’re refunding money that never technically existed, putting you at a loss.

Urgency Tactics

A common scam to get into a property is to act desperate. They claim a divorce or a sudden job change, and they have to move right away. Since they give you cash upfront, it might get you to skip the background checks that could otherwise disqualify you. This is risky because skipping the screening could lead to you leasing out to a criminal or a serial evicted person.

Warning Signs of Rental Scams

Sometimes, tenant scams are obvious by the red flags they are accompanied by. Here are some things to look out for.

Tenant Insists on Moving Immediately

This is a common tactic to delay or skip paperwork altogether. They could claim they need the place now due to job relocation, and they’ll do the lease later. They pay in cash upfront but delay the rest, leaving you at a loss.

Documents Don’t Match

Forged applications could have inconsistent names and formatting errors that don’t match across documents. Bank statements could also show they’re not getting money from the company they’re supposedly working with. This suggests they’re not honest about their resources.

They Avoid Being Specific

If you screen tenants and they are being evasive, this could be a red flag. For instance, if you inquire about their current landlord, they could become defensive and say they’re not available. These are generally the ones that have something to hide.

They Offer to Pay More Months in Advance

While it might seem like a good thing, tenants sometimes do this to lower your guard. For instance, they can offer 3 months’ worth of cash to butter you up and skip the background check. This gives them quick access while putting you at risk.

They Refuse Credit or Background Checks

Sometimes, tenants pull the excuse that they don’t want their credit checked again because “it messes up their score.” This might be just a way for them to hide that they’ve been evicted before or even have a criminal record.

References Sound Scripted or Are Unverifiable

References that sound too positive or robotic, without being specific, have a good chance of being fake. For example, you may call the previous landlord, and they’re quick to shower them with praise. However, they stumble when you ask specific things about their lease.

Tips for Landlords to Protect Themselves from Rental House Scams

Rental apartment scams are everywhere, but you can protect yourself against them. Here are a few tips that might help.

Always Run Checks

It’s best to use a reliable screening service to get a full report on their credit score, criminal record, or past eviction. A potential tenant could seem like a good person on the outside, but these hidden offenses may show that they are just very good at pretending.

Check Employment Directly

When you call the company they’re employed at, use the public listing, not the number they wrote on the application. Fake pay stubs are the most common form of fraud, and this way, you can verify their work background.

Don’t Skip the ID Check

Stolen identities are becoming more and more of a concern, so don’t skip the ID check. Cross-check them with their tax forms, pay stubs, and even their social media profiles. Taking a closer look could offer an extra layer of precaution.

Have a Written Tenant Screening Process

Have clear written criteria when you set up the screening process, and make it accessible before they contact you. This way, tenants can’t say it’s “not your business.” Include an income-to-rent ratio, minimum credit score, and a clean history of evictions. Stick to it, because you’re more likely to get scammed if you fall to emotions.

Have Strong Lease Agreements

Protect yourself from letting things fall out of your control. Put down clear clauses for unauthorized occupants, subletting, and fraudulent activities. This will protect you and shorten the eviction process if you have to pursue legal action.

Know Your Local Laws

Scammers look to exploit loopholes to delay the eviction process. It’s best to review the laws of your city or state to prepare for them. Look into matters such as eviction steps, tenant rights, deposit handling, and every other legal matter.

Document Everything

Document everything about your interaction with them. This includes copies of applications, payment receipts, or messages between the two of you. This could help you if the case eventually goes to court.

The Bottom Line

Scams can happen to the best of us, but knowledge can serve as a reliable weapon. Slow down during the tenant screening process and always verify their background. If your gut tells you that something’s wrong, it probably is. By protecting yourself today, you spare yourself the headaches tomorrow.

Remember that aside from screening tenants, you have to ensure the rental property is a solid investment. Tools such as REI Lense can be very helpful in this case.