Ultimate Guide: How to Avoid Rental Scams

Get the information you need to avoid scams, including spotting fraudulent listings and applicants, verifying owners and listings, and making safe renting decisions.

By
Nichole Stohler
|
Last Updated
October 5, 2023
Ultimate Guide: How to Avoid Rental Scams

Are you a prospective tenant or landlord concerned about potential rental scams? Don't be deceived. This guide will provide you with knowledge and practical strategies to protect yourself.

We'll examine common rental scams, red flags, and warning signs so you can identify fraudulent listings or applicants. You'll learn best practices to verify the actual property owner and listings, as well as ways to safeguard your interests.

Equip yourself with insights to recognize deceitful tactics and prevent financial losses. This article empowers tenants and landlords to make safe decisions, properly assess risks, and avoid becoming victims of scams.

What is a rental scam?

A rental scam is a fraudulent activity involving individuals posing as legitimate landlords or tenants to deceive and exploit victims, causing harm to tenants and landlords.

Rental scammers use a number of different tactics for their schemes. They usually create fake listings for rental properties, using stolen photos and descriptions to make them look legitimate. They may also use stolen identities or fake identification to secure a rental property.

Be aware of the signs of rental scams and take precautions to protect yourself when engaging in the rental application process.

Common rental scams

The ability to recognize rental scam types will help you protect yourself from falling victim to them in the future. Here are some of the most common rental scams and how to protect yourself from them:

Fake rental listing scams

A fake listing scam is a widespread type of online fraud. Scammers create fraudulent listings to trick and scam people searching for rentals, especially in popular areas. Their goal is to deceive victims into paying upfront fees or deposits for properties that don't exist or aren't available for rent. To protect yourself:

  • Research the listing: Conduct an online search using the property address, images, and description. If you see the same listing multiple times with varying contact details, this may indicate potential discrepancies or fraudulent activity.
  • Verify the landlord or property manager: Ask the landlord or real estate agent for their identification and contact information. Verify their identity by searching for their name or contacting the property management company directly.
  • Insist on a physical view: Visit and inspect the property before renting it. If the landlord refuses or comes up with excuses to prevent you from seeing the unit, consider it a warning sign.
  • Beware of lower-than-market rents: Be cautious of rental listings offering prices significantly below the market average.

Rental deposit fraud

Rental deposit fraud is a rental scam in which people pretend to be a landlord or property manager to trick those looking to rent. They deceive potential tenants into paying a fake rental deposit using untraceable payment methods like wire transfers. To protect yourself from this type of rental scam:

  • Research the supposed landlord or property manager: Before you make any payments, research the person who owns or manages the rental unit. Ask for identification documents to make sure they are who they say they are, and double-check their contact details independently.
  • Use secure payment methods: Make payments through secure and traceable payment methods like trusted online platforms that offer protection against fraud.
  • Beware of urgency and pressure tactics: Watch out for scammers who manipulate tenants by creating a sense of urgency and using pressure tactics to force hurried decisions. Exercise caution if they insist on immediate payment or mention other interested parties.

Impersonation scams

Impersonation scams trick people by pretending to be someone or something they trust. Scammers aim to get personal details, money, or sensitive data. Tips for your safety include:

  • Don't share personal information: Avoid sharing personal information like passwords or bank account details. Verify the legitimacy before sharing details.
  • Secure communication channels: When handling sensitive matters, use secure communication channels like official websites, verified phone numbers, or properly encrypted email addresses. Protect your information by choosing the proper means of communication.
  • Report suspected scams: If you've encountered an impersonation scam, inform your local law enforcement and relevant organizations. Examples include the Federal Trade Commission (FTC) or local consumer protection agency.

Lease fraud

Lease fraud is when people try to trick and take advantage of others during the leasing process. They might pretend to be renters using fake names and made-up personal details to get a lease. Follow these guidelines to avoid being a victim of a rental scam:

  • Verify tenant information: Take time to verify the tenant's information on their rental application is accurate. Fake information on a rental application is a common way scammers trick new landlords.
  • Avoid cash payments: Never accept cash for payments. It's harder to trace and provides an easy avenue for fraud.
  • Rental listing protection: Stay on top of potential fraud relating to your rental listings. Scammers often use the photos and information found in legitimate rental listings to trick potential tenants.

Eviction scams

Eviction scams are schemes where scammers take advantage of vulnerable tenants who are facing eviction or at risk of losing their homes. These scams target individuals in need of help or those who are not aware of their rights.

Scammers pretend to be landlords, lawyers, or housing advocates and trick victims by offering fake services or giving false information. To protect yourself:

  • Know your rights: To safeguard yourself, learn about your area's tenant rights and eviction laws. Familiarize yourself with the legal process and steps required for eviction.
  • Verify assistance programs: Look for eviction help by researching assistance programs and organizations. Check their legitimacy by visiting official websites, reading reviews, or contacting local housing authorities for recommendations.
  • Consult with legal professionals: If you get eviction notices or need legal guidance, contact trustworthy attorneys specializing in tenant rights and eviction matters.

Property damage scams

Property damage scams entail scammers deliberately causing harm to property or dishonestly claiming damage to extort money from the property owner or their insurance company. These rental scams occur in different situations, such as rental properties, home repairs, or car accidents.

Scammers use various tactics to take advantage of victims and trick them into paying for unnecessary repairs or exaggerated damage claims. To protect yourself against such deception, do the following:

  • Document property condition: For false damage claims, document the property's condition before renting or allowing repairs. Take detailed photos or videos as evidence. It will help protect your interests if there are any disputes later on.
  • Screen contractors: Conduct background checks and verify references of potential contractors before entering agreements. Seek out dependable individuals with a solid track record.
  • Obtain multiple repair quotes: When repairs are needed, ask for multiple quotes from trustworthy contractors. Compare the estimates to make sure they're reasonable and appropriate for the damage.

Fake background checks 

In this scam, people pretend to be background check providers. They claim to conduct screenings for rentals to extract personal information or money from victims. To protect yourself:

  • Research the provider: Before using any background check service, thoroughly research the provider. Find reputable companies with a strong track record, positive reviews, and a professional online presence.
  • Verify company credentials: Check if the background check provider is licensed, accredited, or affiliated with recognized industry organizations.
  • Cross-check information: Before relying on a background check report, verify the information with official sources whenever you can. Contact the relevant institutions or organizations to confirm the accuracy of the details.

Finding a legitimate rental property

If you're looking for a new rental property, here are some guidelines to safeguard yourself against scams:

Set a budget and identify your needs

Start by knowing how much you can spend on monthly rent based on your income and expenses. Then, list things you want in the property, like its location, amenities, and size.

Use online platforms and seek recommendations

Finding a rental property is easier with online platforms and recommendations. Real estate websites and rental listing apps offer different options based on your preferences. You can also ask friends, family, or local community groups for their suggestions.

Attend open houses or schedule viewings

Visit the property and assess its condition by attending open houses or scheduling viewings. Attending these events allows you to ask questions and gather information from the landlord.

Research the neighborhood

Gather information about the neighborhood before settling on a rental property. Check safety, amenities, distance to services, and overall environment of your prospective area.

Review lease terms

Review the lease to understand rent, duration, pet policies, maintenance responsibilities, and any additional fees or conditions that may affect your stay.

Consider additional costs

Beyond the monthly rent, you'll need to factor in expenses such as utilities, parking fees, maintenance, or other hidden charges.

Trust your instincts

If something feels off about a property or a landlord, listen to your instincts and explore other options that make you feel more at ease.

Lawful tenant rental application process

Here are the typical steps in a legitimate rental application process:

Find and view the property: This is the first step in your process. Search for suitable rental properties and arrange viewings.

Gather required documents: Before filling out an application, gather documents such as identification, proof of income, and references.

Complete the rental application: This involves providing your contact information, social security number, driver's license or state identification, and other required details.

Pay the application fee: Most landlords or property management companies charge application processing fees.

Undergo credit and background checks: Landlords typically conduct credit and background checks to assess your financial reliability and personal history.

Provide proof of income: The landlord will ask you to provide proof of stable income, such as pay stubs or tax returns, to make sure you can afford the rent.

Submit rental history and references: Past rental history and references from previous landlords can help demonstrate your reliability as a tenant.

Wait for application review: The landlord or property manager will review your application, which can take one to three business days.

Approval or rejection: The landlord or property manager will approve or reject your application based on the review.

Sign the lease: If approved, the final step is to sign the lease agreement, pay the deposit and first month's rent, and then move in.

Finding legitimate tenants

A legitimate process for landlords to find a suitable tenant includes:

Advertise the rental property: Advertise the rental property through various channels to attract potential renters. This includes creating an online listing, utilizing real estate agencies, posting classified ads, and spreading the word through networks.

Provide rental application: Provide interested tenants with a rental application form. The form collects personal details, employment history, income verification, references, and consent for background and credit checks.

Review applications: Review the submitted applications and screen tenants. We recommend cross-checking the provided information, conducting background checks and credit checks, and contacting references to evaluate the reliability and suitability of each applicant.

Schedule interviews or viewings: Conduct interviews or property viewings to assess applicants further. Confirm details and ask additional questions to gauge tenant and property compatibility.

Notify applicants: After reviewing the applications and conducting any necessary interviews, notify applicants about their approval or rejection.

  • If approved, detail the steps, such as signing a lease agreement and making move-in arrangements.
  • If rejected, provide a reason or suggest alternative options.

Prepare lease agreement: If an applicant is approved, the property manager prepares the lease agreement, indicating the terms and conditions, rent amount, security deposit, maintenance responsibilities, pet policies, and other relevant details. Both parties sign the contract before the tenant moves in.

Collect move-in funds: Before the tenant's move-in, collect the first month's rent and security deposit. Provide a receipt for these payments and process them according to local regulations.

Tenants and landlords must follow legal requirements and fair housing laws throughout the rental application process.

How to catch a rental scammer

With this guide, you can feel better about your ability to identify and call out a rental scam when you see one.

As a tenant or landlord, stay vigilant when searching listings and follow recommended verification steps. Conduct research, trust your instincts if something seems questionable, and always independently confirm details.

If you are the victim of a rental scammer, contact your local law enforcement agency to file a report. Then, report the scam to the Federal Trade Commission through their website or by calling 1-877-FTC-HELP. Finally, notify the website or platform where the fraud occurred so they can take action.

How to avoid rental scams FAQs

How do I spot a rental scammer on Craigslist?

Red flags that point to a rental scammer on Craigslist include rent being suspiciously low or the landlord unwilling to meet in person to show you the property. Additionally, if they ask for money before you've signed a lease or want payment through unconventional methods like wire transfers, this could indicate a scam.

Can there be scams on Zillow?

Yes, scams can occur on Zillow. These may include fraudulent listings, misrepresentation of property details, false pricing information, and requests to wire funds. Scammers may also copy legitimate rental listings and repost them as their own.

How do I make sure my sublet is legit?

To confirm your sublet is legit and not a rental scam, verify the identity of the person you're subletting from and their right to sublet the property. Check the lease agreement for any subletting clauses and get written permission from the landlord if necessary.

Visit the property in person or request a virtual tour if it's impossible to visit, and never pay any money until a contract is signed.

Nichole Stohler

Nichole co-founded Gateway Private Equity Group, with a history of investments in single-family and multi-family properties, and now a specialization in hotel real estate investments. She is also the creator of NicsGuide.com, a blog dedicated to real estate investing.

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