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Landlord Fraud Prevention Tips

High Risk Tenants use landlords as a revolving line of credit. They never pay rent and often cause thousands of dollars worth of damage to one rental unit. These Tenants play the Fraud Rental Game and if you, the Landlord, do not conduct your due diligence or tenant screening, then you will lose.

There is no fear of consequence because rental fraud is considered to be a civil matter and in most instances civil remedies do not result in recouping financial losses.

If the Residential Rental Industry "networked" to identify High Risk Tenants, they would not be able to use landlords as a revolving line of credit and/or use the rental property for their own illicit purpose; i.e. Marijuana Grow Operations, Chop Shops, and various other criminal activities that result in thousands of dollars in damage to the rental property.

Tips that will help you win the Fraud Rental Game:

  • Always have the Prospective Tenant complete an application to rent form which can be obtained from www.TenantVerification.com, www.aTenantScreen.com or www.landlordeguide.com.

  • Make sure that the application has been completed in its ENTIRETY. If a Prospective Tenant only completes part of it, he/she may be hiding something or doesn't respect rules.

  • Don't believe anything that you are told and/or what is on the application. Obtain the Prospective Tenant's credit history; a credit history will verify some of the information that was given to you on the Application and you will be able to compare credit to application to determine truthfulness. A credit history will give you information with respect to pay patterns, and will be a good indicator of how you can expect to be paid. A good rental application that asks the right questions is a valuable tool. Generally speaking... Individuals with good credit histories are generally good tenants.

  • Check with two previous landlords. Be devious when conducting your interview to ensure that you are not talking to a friend, i.e. "So (Prospective Tenant) tells me that he rented a two bedroom suite. Is that true? (Prospective Tenant) tells me that he resided there for two years. Is that true? I don't like the idea of him having a dog; was the dog a nuisance at your building?" "Oh no Sir/Madam it was a great dog, no problem at all". If you can get this alleged Landlord to agree with what you are saying you probably are not dealing with a Landlord, but rather a friend because what you have just stated has been completely made up. The real Landlord will not agree with you and will tell you the type of accommodation, the length of tenancy and that the tenant never owned a dog. Friends who believe that they are helping out will tell you what they think you want to hear.

  • Some Landlords just want to get rid of their problem tenants and will therefore give good references. You may also have to be deceitful with them i.e. "Did you have any problems with this Tenant? He tells me that he didn't like some of the neighbors and had a couple of disagreements. What was the problem?" This may get the landlord to tell you that there was a problem and reveal things about your Prospective Tenant. Remember this is a game and how well you play will determine what kind of tenant you get via your due diligence.

  • Does the Prospective Tenant have a bank account? Every responsible mature employed Individual has a bank account. No bank account=red flag.

  • Check with the current Employer, the Human Resources Department may or may not give you the information that you are looking for; a Supervisor is more likely to answer your questions directly, so always attempt to get a Supervisor's name on the rental application. Ask…what is the Prospective Tenant's job description? Is the Prospective Tenant reliable? Ethical? Trustworthy? How does he/she get along with other employees?

  • Ask the Prospective Tenant for a pay stub, W2 (USA) or T-4 (CDN). This will show income and may have a name and address to compare to the application.

  • Ask for previous utility and telephone (including cell phone) bills and statements, and check if the name and address and other information matches the information on the application form. If not, why not?

  • What kind of car does the Prospective Tenant drive? Is it a beater? Is it extremely dirty or poorly maintained? This may be an indicator of the care he/she will take of the rental property. Is it a new car and if so does a loan show up on the credit report? OH YOU paid cash! And your bi-weekly income barely covers rent...hmmm. This may be a red flag as unless there was an inheritance, the prospective tenant may well be involved in criminal activity.

  • Many Landlords and almost all Property and Resident Managers have the Prospective Tenant complete the application to rent form. If the application is accepted, then a Tenancy or Lease Agreement form should be completed. This is an absolute essential for the landlord so that there can be no misunderstanding with respect to the terms of the rental and what is or is not expected of both Landlord and Tenant. This should include all of your criteria. The law in most States and Provinces dictates that an Agreement must be signed between Landlord and Tenant.

  • Always complete a Move in Form which can be found on www.TenantVerification.com, www.aTenantScreen.com or www.landlordeguide.com.

  • Review, review, review the current Residential Tenancy Laws as they apply to the State or Province in which you are a Landlord. Landlords should be very familiar with these laws; it will help you to be a better Landlord, Property or Resident Manager. Join a local landlord association as they are up to date on legal requirements and generally have the proper forms that you must use to comply with state or provincial laws.

  • We were all born with common sense and gut instinct; this can also be a valuable tool when deciding whether or not you want to rent to a Prospective Tenant.

  • Be there on the day that tenants move in and make observations about what is being moved in. Does the amount and type of furniture coincide with what is indicated on the application to rent form? i.e. single, married, pets, children, plants etc (yes those green plants that are used for medicinal or resale purposes).

  • Once you have a format with respect to your tenant screening process it will make choosing the right tenant much easier. Consider the alternative, the stress, hassles and income loss associated with high risk tenants, and the loss of your valuable time. This kind of due diligence will ensure that you don't lose the Fraud Rental Game and rental income.

For information on a Tenant Screening Resource which provides a due diligence service to Landlords, Property Managers and Resident Managers visit:

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