Top 5 Rental Scams Every Landlord in D.C. Should Know
October 18, 2022
October 18, 2022
The D.C. housing market is changing, forcing more people to hold onto their properties. If you are one of them, the idea of becoming a landlord and renting out your home might seem attractive. You can generate passive income and move onto the next chapter of your life while waiting for the housing market to improve.
However, being a landlord isn’t all fun and games. Here are some of the most common tenant scams you’ll want to be aware of as a landlord. This way, you can protect your investment and choose a qualified tenant to rent out your home in D.C.
Fake Checks for Rent and Security
Typically, written checks that appear to come from a reputable bank don’t raise a red flag. But when the landlord goes to cash them, they realize these funds are invalid. Now, they have to try and collect the money and/or evict the current tenant, both of which are not easy to do. To avoid this, the FDIC and BBB have listed several ways to spot fake checks.
If your soon-to-be tenant offers to pay more than what you asked, this is a red flag. Scammers overpay on purpose and then ask for a refund. On your end, it might look like the funds are available, but it can take a few days for the money to clear. If you refund the balance and then notice that the check didn’t clear, you’re now out the money. The best way to prevent this from happening is by not accepting rent overpayment.
False Employment Records
Always do your due diligence when qualifying a tenant. It’s not uncommon for tenants to provide a fraudulent employment history and ask friends or family to act as their employer. Tenants do this because they may not have steady income streams. Don’t just take their word for it – follow up with the employer and ask for other information to verify employment like pay stubs, bank statements and a letter of employment.
Fake Credit Reports
Another thing that some tenants will lie about is their credit score. While a good credit score can indicate financial responsibility, it’s still a good idea to dig deeper into the tenant’s payment history. Always conduct your own credit and background checks. Don’t take the tenant’s copy – this could be a fake.
Renting on Behalf of the Owner
Subleasing a property to a new third party isn’t illegal, providing it’s allowed within the terms of your lease. However, your tenant must notify you of this. Otherwise, they might collect months of payment upfront from the third party and never transfer the funds to you. By the time you find out and go to collect the money, the new tenant is there and has already paid their rent to the leaseholder.
Unfortunately, this is not an exhaustive list of scams that happen to landlords. There are many things that can turn your investment strategy into a headache – and a money pit. If you’re on the fence about renting out your D.C. property, contact 4 Brothers Buy Houses. We’ll provide you with a free cash offer, and you can choose which path is right for you!