Landlords Beware!

There's a new scam out there. If you're a landlord like me who advertises on Craigslist and VFlyer you should watch for this story: the so-called tenant will usually approach you by email saying they are from the UK or some other foreign country. They inquire about the property and the rent. (This should be the first red flag since both the property address and rent is clearly displayed in the rental advertisement.)

The rest of the story goes something like this: "Someone in the US owes me money, so they will pay you usually an amount much higher than the deposit and rent. You then have to deduct your amount and pay me the rest, so I can actually fly into the United States." Sound familiar?

It should. Here's what will probably happen: The check the person who owes them money will send you might look good, but will bounce. You will be required to wire money to the so-called tenant.

Why does this work? Because banks are required to make deposited funds available to you within 48 - 72 hours. You might think the check has cleared and be tempted to wire money out of it to the tenant. They might even come up with some story about how they need the money urgently. The actual money takes about a week or more to clear. In which case, you will have already wired the cash and the check will bounce.

In the world of scams, it might seem petty, but will still cost you about $2000 - $3000, plus bank fees for overdraft, bouncing checks, and so on.

So what can you do? For one thing, don't offer to take money from anyone but the person who is renting the place. Do not agree to any exchange of money - you're the landlord - you should be getting paid, not sending anyone anything. Secondly, you want to run a background check and credit check on anyone renting your home. Even if they say they don't have a social security number, you still want to take down their full name and details. Ask if you can mail them an application and charge an application fee. That will tell you how serious they are.

Be extremely careful with email only inquiries. If possible, set up an interview with the potential tenants. Listen to your gut. Remember you are renting an asset to them and you need assurance that they are real.