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. These Tenants play the Fraud Rental
Game and if you, the Landlord, do not conduct your due diligence or let them know that you report rent
payments and damage to rental property, then you will lose.
Let them know... I'm watching you! 
Report rent payments to credit bureaus: Good tenants' benefit, bad tenants don't.
There is no fear of consequence because in many jurisdictions, rental fraud is considered a civil matter, and civil remedies do not result in recouping financial losses with high risk tenants. Kind of like closing the barn door after the horse is out.
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 wreck the rental property.
The Landlord Credit Bureau networks the Residential Rental Industry in Canada and the U.S. to identify high and low risk. Bad and good tenants. If every landlord and property manager reported rent payments, there would be less rental income loss, and bad tenants would change rent habits.
Tips that will help you win the Fraud Rental Game and mitigate rental income loss:
- Make sure that the rent 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.
- Add these clauses to your rent application and lease agreement.
- Don't believe anything that you are told and/or what is on the rent application. Obtain the Prospective Tenant's credit history; landlordcreditbureau.ca (CDN) landlordcreditbureau.com (U.S.) A credit report will verify information provided on the rent application and determine truthfulness regards… name, DOB and address, sometimes employer, and previous address. Credit report provides information with respect to pay patterns and is a good indicator of how you can expect to be paid. Keep in mind that a bad consumer credit history is not always indicative of a good renter. A good renter should have a reasonable explanation regards a bad credit history. If a bad pay pattern to date, then that’s a red flag. If recent good pay pattern, then verify good rent status in addition to. Search for rent report at the Landlord Credit Bureau. No rent history, then …
- Check with current and/or previous landlord. Be devious when conducting your interview to ensure that you are not talking to a friend, EG. So, Joe Tenant tells me that he rented a two-bedroom suite. Is that true? Joe 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, 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 will tell you what they think you want to hear. And there will be long pauses, vague answers, and not forthcoming. You will know.
- Some Landlords want to get rid of problem tenants and will give good references. You may have to be deceitful with them EG. Did you have any problems with this Tenant? He tells me that he had a problem with you, what? 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 Joe Tenant. And one more thing Mr. previous Landlord...what is the address that he was renting at? Ahh ahh, I don't have that in front of me right now.
- Remember this is a game and how well you play will determine what kind of tenant you get via your due diligence. Be a good Detective.
- Does the Prospective Tenant have a bank account? No bank account=red flag.
- Check with the current Employer, a Supervisor is more likely to answer your questions directly, so always attempt to get a Supervisor's name on the rent application. Ask...what is Joe Tenant's job description? Is he reliable? Ethical? Trustworthy? How does he get along with other employees? What's the address of the business? Ahh it's in the city somewhere.
- Ask Joe Tenant for a pay stub, W2 (USA) or T-4 (CDN). This will show income, is it more than 40% of the rent? What's your criteria for income to rent ratio? Can he afford your rent? Or will he move in and stay for awhile at your expense? Until you can have him evicted.
- Ask for previous utility and cell phone statements, and check if the name and address match the information on the application form. If not, why not?
- If the rent application is accepted, then a Tenancy or Lease Agreement should be completed which goes without saying. The lease should list your criteria that includes a site inspection every 6-8 weeks. (protect your valuable investment). The biggest faux pas landlords make is to never check the property to ensure it's being looked after. Do it!
- Always complete a Move in Form so there can be no argument about condition of the rental at Move out.
- Review, review, review the current Residential Tenancy Laws as they apply to the State or Province in which you are a Landlord. It will help you to be a better Landlord. Know your Rights & Responsibilities. Know the Tenant's Rights & Responsibilities. Join a local landlord association as they are up to date on tenancy law 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 you want to rent to a Prospective Tenant. If you have a bad feeling about a prospective tenant don't rent. EG bad attitude, negative commentary, demanding.
- Once you have a format and criteria with respect to a tenant screening process, it will make choosing the right tenant much easier. No tenant screening? Well...the tenant from H E L L is looking for you. Be wise, be prepared, and mitigate risk of rental income loss.
- One more thing: Do not be afraid of offending a prospective tenant with your rules and enforcing them! My house, my rules if you don't like them, don't rent. So often landlords say, I don't want to offend them. Think about this...you know what happens when children have no rules or boundaries, when they aren't monitored. Well...tenants who don't respect rules are much worse, because it costs a lot more money to collect unpaid rent, to fix damaged rental property, and to evict. Your choice.
