When a tenant falsifies information on their tenant screening, it immediately complicates the process. This is someone you are supposed to build a relationship with. You should be able to trust them to treat your property like it was theirs. That’s difficult to do if they can’t be truthful during the application process. A potential tenant choosing to lie on their application is a major red flag that will almost always end poorly for you. The best thing to do is catch a fraudulent tenant application during the tenant screening so you can deny the tenant before you accept them into the rental.
How Much Could a Fraudulent Tenant Application Cost You?
There are a variety of costs that can occur from accepting a fraudulent tenant. While you should have a clause in the lease that will protect you, you’ll still have to go through the eviction process. Between legal fees and a damage that they may cause, that could add up to thousands of dollars.
Eviction
Evicting a tenant isn’t as easy as telling them to leave. There are many steps involved on the legal and civil sides. The average cost to evict a tenant is a staggering $7,685. That does not include potentially months of unpaid rent during the eviction process.
Criminal Activity and Property Damage
If a tenant is willing to lie on their screening, there is likely a reason. One common reason is they have been kicked out of other rentals for criminal activity. Sometimes the activity itself can cause property damage. Other times, the tenant will cause property damage after being served with an eviction notice.
Loss of Reputation
If a string of bad tenants becomes known in the community it could lead to potential issues as well. If you have multiple units and it becomes known that you’ve allowed troublemakers to live there, others may move on to a different property.
How to Protect Yourself From a Fraudulent Tenant Application
While this is an unfortunate part of being a landlord, the good news is that there are ways to protect yourself.
Pay Close Attention to the Pay Stub
A recent pay stub is one of the many items that a landlord should ask for during the screening process. A tenant who is trying to commit fraud may alter or fabricate a pay stub to make them look more appealing. Look for clues like if the check number matches the pay stub, if the deductions add up correctly, and for any watermarks or lack thereof. Even if the pay stub is legitimate, it may offer other red flags. It can provide insight to if their income is insufficient to pay their rent.
Always Call References
If someone is trying to falsify their information, they won’t have any problem putting fake references. Often this is done by providing incorrect phone numbers in hopes that the landlord will not follow up. Always call if for no other reason than to ensure the number is legitimate.
Good Old Fashioned Background Checks
Most potentially troublesome tenants can be screened out by a traditional background check. You can do a standard background check online in many places, but not all of them cover every aspect you want to know about a potential tenant. A comprehensive background check like the one offered by Prisma covers ID verification, multi-state eviction history, credit report, criminal history, income insights, and so much more.
Better Safe Than Sorry
Since the COVID-19 pandemic, the frequency of rental fraud incidents has jumped by 50%. Luckily, most landlords can catch the fraud before the fraudulent tenants move in. However, residential rental companies still lose millions per year on fraudulent rental applications. Every tenant would be perfect in an ideal world, but we don’t live in that world, so it’s always better to be safe than sorry. No matter how trustworthy they seem, a comprehensive background check on every client is a worthwhile investment to protect yourself and your investment.
