Property managers can end up in a heap of trouble due to the dishonesty of their occupants more often than they may think. This blog addresses some of the common occupant scams that property managers should be aware of and prepare for.
When it comes to property management, no matter the area you’re in or the type of building that you oversee, one goal remains the same across the board: you want to decrease vacancies. This objective is so ingrained into your mindset that it may seem counterintuitive to show selectiveness when screening potential occupants or to question your current ones.
However, the truth is, there are some dishonest people out there. Ultimately, you don’t want these type of people as occupants- they’re bad for business and can potentially cost you a lot of money. Here are some of the most common hoaxes attempted by occupants for you to look out for.
Fake screening documentation
Most property managers know to check potential occupants’ criminal background, credit history, proof of employment, etc. before signing a lease. What less property managers are aware of, however, is that it isn’t too difficult for people to provide false credit scores, pay stubs, proof of employment and other documentation, especially with today’s technology.
In regards to the credit report, we recommend that you do not rely on documentation that a potential occupant provides you. Instead, run your own credit check on occupants using a trusted, outsourced company. (Also important to note: simply focusing on the potential occupant’s credit score alone is not always indicative of a person’s financial responsibility. Other factors, such as payment history should also be given importance. See Rentaluation’s advice on analyzing credit reports.)
As far as determining the authenticity of a paystub or other proof of employment, there is no quick, easy trick. The important thing here is to be aware that there are several ways for potential occupants to get their hands on documentation that does not belong to them, so you may want to do a little further investigative work than just seeing that the documentation exists. For instance, you may want to try to get in touch with the employer listed to ensure that your potential occupant is, in fact, an employee there.
Large upfront payments
It can be easy to want to accept potential occupants that offer you several month’s pay upfront. After all, clearly they have plenty of funds for future payments, right? Not always. This potential occupant could have just recently lucked into a lot of money, or even obtained the money through some sort of criminal activity, and may not always have a steady income in order to continue making payments.
As a rule of thumb, we would recommend not accepting cash payments, as you really can never have a real idea of where that money is coming from. You don’t necessarily need to turn down a large upfront payment in other forms, though- just be sure to receive proof of sufficient regular income through your typical screening processes.
Subletting for a profit
This type of hoax is particularly damaging. The way illegal subletting most commonly plays out goes as follows: after entering into a lease (most likely with a false identity), the original occupant poses as the property owner to a third party, offers to “rent it out” for a large sum of upfront money, then gets out of the picture, leaving you as the property manager and the third party renter none the wiser. The property manager typically doesn’t realize that there is an issue until a missed payment occurs and he or she tries to inquire upon payment. This is not only harmful to your business, but it also hurts the third party, and it can put a negative taste in their mouth regarding your property.
Again, prevention of this type of hoax all boils down to thorough initial screening. It is essential that you confirm that your potential occupant is who he or she says she is using multiple points of authentication. Additionally, this sheds some light upon the importance of attentiveness customer service on your end. In general, it is a best practice to stop by in person to check on your occupant once they have had a little bit of time to move in. Not only does this leave a positive impression on your occupant and allow them to address any concerns, but it also allows you to catch a disastrous hoax early on. Don’t recognize who you’re checking in on? This could be a red flag.
By being aware of the previously mentioned occupant hoaxes, you can take steps to prevent them from occurring and in turn, help to ensure you are filling your space with quality occupants. To learn more about how Kings III can help you with your property management needs, visit www.kingsiii.com.