Today I want to talk about rental scams. There are two main types of scams. Scammers pretending to be owners and scammers pretending to be tenants.
I did a bit more digging and found out these scams are pretty common. According to as study conducted by the Better Business Bureau in 2019, 43% of renters looking online encounter fake ads and Canadians lost $1.4 Million to rental scams in the first 6 months of 2019.
The goal of these scams is to take your cash and disappear.
Let’s start with the more common one which is the scammer impersonating an owner.
The scammers typically clone an ad from a rental site and change the contact info. So the property actually exists but they don’t own it. Here a few red flags to look out for:
- The price is too good. If the price seems too good to be true, it probably is. Go on rental sites like rentfaster, rentboard, zumper, Facebook Marketplace to get an idea what rents are going for in the area the property is listed.
- They don’t want to meet you in person. They may say they’re out of country or in the military to avoid too many prying questions.
- They want you to send in a security deposit before ever signing a lease or seeing the property. Never do this under any circumstances.
- The ads usually contain bad punctuation or grammar
- They don’t ask you any screening questions. Any good rental housing provider will ask some questions to get to know their prospective tenant better. If they don’t, even if they are legit, they may not be someone you want to work with anyway, or it’s a scam.
One way that landlords can prevent their ad from being cloned is to not have the full address on the site. Wait until a tenant contacts you before you give them the full address. Without that information, the scammers don’t have enough information to create a convincing ad so they may go for easier prey.
I actually found out about these type of scams because my Kijiji account got hacked a while back and the hackers were using my account to post these fake rental ads. The ad had photos of a beautiful house and a price that was way too low for something of that calibre. It was something like a brand new detached 1900 sq ft home for $1500/month. It looked like a crazy good deal and people were inquiring in droves. I ended up deleting my Kijiji account because it was compromised but just in one day, there were close to a hundred inquiries. It was nuts.
Now for renters trying to scam landlords. So there are a few different type of tenant scams. I’ve talked about professional tenants in a previous video and there’s the whole Freeman on the Land movement that I’ll cover in a later video. Here I’m just going to talk specifically about those trying to make a quick buck off the owner and disappearing.
The most common tenant scam involves them giving the owner a cheque or money order that is more than the requested amount. They then ask the owner to deposit the cheque and just e-transfer or wire them back the difference. The owner gets screwed here when they send that money before realizing that the cheque doesn’t clear.
If you ever encounter something like this, do not send them back money. Instead, do the following:
- Complete your tenant screening due diligence if you haven’t already
- Contact your bank to verify that money is in your account
- If it was an honest mistake, say that you can apply that money to their next month’s rent
- If they live out of country, DO NOT give them your banking information. Have them wire payment or e-transfer to an account or email set up specifically for this purpose.
To sum up, if you’re a tenant, do not send money if you haven’t met the person, or seen the property and signed a lease. If you’re an owner, don’t send the tenant back any money because they “overpaid”. Lastly, just follow your gut. If something feels off, that is your subconscious telling you that something is wrong and you should just walk away. There will always be the next property or the next tenant.
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– Phil Wong