Full Guide to How to Avoid Rental Scams

Full Guide to How to Avoid Rental Scams

Many states suffer from overwhelming demand for places to rent and a scarcity of available rental properties. That kind of environment – where people are desperate for places to live – always breeds a certain result: scams.

Scams are rampant on popular classified websites like Craigslist and Zillow, but you don’t have to be a victim. As long as you know what to look for and can discern the red flags, you should be able to avoid rental scams and find legitimate landlords and rental property listings unscathed by the fraudsters and fakes.

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1. What is a Rental Scam?

On its face, a rental scam is like every other scam – it’s designed and optimized to do one thing: separate a person from their money.

In this case, rental scams are ads that have beautiful photos of amazing looking properties anyone would love to live in, with a catch. The monthly rental price is also amazing. Looks like you’ve fallen for a …

a) Security Deposit Scam

Any reasonable person would want to rent the home in the ad and that’s kind of the point. Of course, it’s too good to be true because as soon as you inquire, the scammers have you and they insist that you send a security deposit or first and last month’s rent right away – without having seen the place for rent or signing a lease.

If you’re one of the hapless would-be renters swayed by one of these ads, as soon as you send the money, the person you’ve been chatting with cuts off all communication and takes down the ad – so there’s no evidence that the home you were looking at ever existed for rent.

b) First and Last Month’s Rent Scam

A more elaborate version of the same scam is when the scammer arranges to meet the would-be renter outside the supposed house they are renting and says something like, “I can’t let you in because I have renters in there right now, but I can have it for you for the first of the month. All I need is first and last month’s rent and a damage deposit.”

Of course, the house they’re standing in front of is just a random house and not for rent at all.

2. Rental Scams on Craigslist and Zillow

Craigslist and Zillow have a particular brand of rental scams that you’ll see quite often. A scam on Craigslist and Zillow is characterized by the following things:

  • There are no photos
  • The landlord wants your personal information like credit card number, driver’s license or bank account number
  • The email address or domain connected to the ad look fishy
  • A beautiful home or unit for a really cheap rental price
  • No security deposit required or a month free
  • The person showing the home doesn’t actually own it
  • The owner is weirdly and conspicuously out of town
  • A credit check is requested before even seeing the property

If you think you’ve been a victim of a scam or a particular post looks like a scam, flag it on Craigslist or Zillow, contact law enforcement and file a police report.

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3. Red Flags of a Rental Scam

  • If you see a gem for a price that seems too low for what’s being offered, it could be a red flag that it’s a scam that should be avoided.
  • Once you engage with the person supposedly trying to rent the apartment, they will try to pressure you and rush you into giving them money.
  • You also may find landlords making weird excuses as to why they can’t meet you in person or let you in the house. If you find anything like this happening to you, run the other way.
  • Do a Google image search on the home you’re looking at. This is because many of the homes advertised as part of a rental scam are taken from the Multiple Listing Service [MLS] and are either currently for sale or recently sold.
  • If the supposed landlord only wants to deal in verbal agreements and doesn’t want to sign a lease, stop and run away.
  • If a landlord says they need money to do a background check, but the cost of this “background check” goes beyond $30 to $60 to some exorbitant amount, walk away.

4. How to Avoid a Rental Scam

Don’t rent a home without seeing it in-person first – This may seem obvious, but you should always go see an apartment or home you’re about to rent in person first before you sign a lease or give over money. If a landlord always comes up with excuses as to why you can’t see it or they won’t let you in when you come up to the actual location, be absolutely wary of them.

You should always be able to check out the condition of a home before you rent it, even if you are out of town or unable to be physically present. In that case, a friend, family member or some other trusted representative should be able to tour the premises and report back. If they can’t, it tells you this property should be avoided.

Sign a written lease with the actual owner’s name on it – Though verbal agreements are legal in some states, if there is a dispute, they are much harder to enforce, so always sign a written lease so there is a papertrail as to exactly what was agreed on. Also, make sure the name of the actual owner is written on the lease and their signature is present. Even if they have a representative, make sure that person has documentation proving that the person whose name is on the lease is the actual owner. This way, the home can be rented out legally.

In the event there are two owners, you should get written confirmation that the second owner is aware of the first owner and they are aware that the home is being rented out.

Verify the owner – Speaking of the above, before renting a home, you need to verify who the owner is by getting the title or deed to the property. There should be no barrier to doing this, especially if someone tells you they will give you proof of ownership after you sign the lease. If you hear that, this property should be avoided. The home should also be avoided, or extra caution should be used, if the name on the deed or title doesn’t match the landlord’s name.

Meet the Landlord in-person – This is a standard interaction, no legitimate land;ord would balk at and if they do, this could be a scam. Just because you can sign a lease and tour a property virtually doesn’t mean you shouldn’t meet your potential landlord in the flesh.

Do your research – Everything and everyone lives on the internet in one form or another, so once you have some basic details, start looking them up online. Make sure the property address is the actual property you’ve been looking at, make sure the person you’ve been dealing with actually exists. If you’re dealing with a rental company try to find reviews on them and see what they say. Verify the email address you have as coming from the person you’ve been talking to.

Some basic research can go a long way, but if you can’t find any of this, or if the reverse image search you run shows an apartment you’re about to go see in a different city – run away.

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What are some signs of a rental scam?

Rental scams can feature either no photos in a bid to get you to download them, but actually download a virus, or they have beautiful photos and rental price that’s way too good to be true. The landlord also wants money right away without you having seen the property or signed a lease.

How do I find legitimate tenants?

Legitimate tenants can be found by advertising near colleges or on real estate websites like Zillow or Rental.com, but you need good rental screening. Ask questions, do a background check, ask for references and check out your prospective renter on social media to see if they’re legit.

How do I avoid craigslist rental scams?

If the rental price on a beautiful home seems too good to be true, it probably is. If the ad seems to be rife with obvious grammatical errors and if the person you're engaging with wants money, but won’t let you see the place or let you into it, run the other way. These are signs of rental scams that you should avoid. Never ever give money without signing a lease or seeing a property.

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Financial Technology, Real Estate Investing, and Property Management, Accounting and Tax, Finance
Saad started his career as a Certified Public Accountant (CPA) working for a top-tier accounting firm. He was responsible for helping audit alternative investment funds. He later worked at a hedge fund where he was responsible for preparing financial statements and implementing new technology. He also ran a successful private tax practice for five years.

After completing his MBA at Duke, Saad joined The Boston Consulting Group to do management consulting. At BCG his experience spanned several industries and growth projects across Pharma, Retail, and Technology companies. His passion for democratizing finances led him to Plaid, a fintech, where he worked with large Banks and Financial Institutions to make finances and money easier for all.
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Full Guide to How to Avoid Rental Scams
Full Guide to How to Avoid Rental Scams