In this week’s episode, Podcast Host, Andrew Schultz, discusses the topic of rental property scams. What do you do if someone swipes your property photos to create a fake listing? Find out.
Sometimes during the application process, you’ll come across applicants applying from out of state. If you’re accepting an out-of-state applicant, it’s important to make sure you follow the proper protocols to obtain a signed agreement and security deposit.
We’ll also chat about the industry’s best practices for late payments. When is it too late to accept a rent payment? Find out in this week’s episode.
Andrew Schultz: (00:01)
Hey everyone. Welcome back to another episode of the Rent Prep for Landlords podcast. This is episode number 372, and I’m your host, Andrew Schultz. On today’s episode, we’re gonna be talking about fake rental property listings out of state rental applicants and industry standards for late rent payments. We’ll get to all that right after this.
Voice Over: (00:23)
Welcome to the Rent Prep for Landlords podcast. Now your host Andrew Schultz.
Andrew Schultz: (00:28)
Before we jump into today’s episode, don’t forget to check out the Rent Prep for Landlords Facebook group. It’s a great free resource for you to network with housing providers from around the country. And if you have a question or a situation that you’ve never dealt with over 12,500 members, chances are someone in the group has been there before and can lend a helping hand we’re on the push for 13,000 members. So join us today over at facebook.com/groups/rentprep. Don’t forget to mention the podcast when answering the questions. So we know how you found us.
Voice Over: (01:03)
Forum quorum, where we scour the internet for ridiculous posts from landlords and tenants.
Andrew Schultz: (01:11)
This week’s forum quorum is an all too familiar topic. Unfortunately, for many of us, it’s all about fake rental property listings. Let’s go ahead and take a look here. This one came to us from the Rent Prep for Landlord’s Facebook group. Someone has created a scam using my rental property, who do I report it to? And what do I do about it? I have a listing for that house right now, and someone has stolen the pictures and the information and put it out as though it is their property. So we’ve unfortunately had this happen to us several times over the years, in one instance, unfortunately, someone did end up being scammed out security deposit due to someone stealing our listing photos off of one of our listings and using it on their own fake listing. Uh, essentially we had it up on Zillow. They took our photos and information from our listing and put it up on Craig’s list.
Andrew Schultz: (01:57)
Um, so after that happened, we got very, very serious about trying to prevent this from happening in the future. We’ve actually taken several steps to prevent this from half happening. Typically the way these scams will work is that they will take your listing photos and use ’em on another platform. Uh, but they’re gonna list the home for substantially lower than what you have it listed for. Like I had just mentioned, we had it on Zillow. We don’t use Craigslist. They put it on Craigslist at away, lower rent than what we had it actually listed for on the proper platforms. This entice people who otherwise may not be able to afford that home, to respond to the ad. And then that’s when the scammers try to get their hooks in by saying that, oh, I live out of the state or I live out of the country and I need to rent my house out.
Andrew Schultz: (02:36)
Uh, some of the scanners have gotten a little bit more sophisticated will actually go do the research to find out who owns the home. Um, or they’ll use the name of the person who has the original listing of if there’s a name listed on the ad or they’ll even email, you’ll have a scammer email, you find out your name and then use your name because they emailed you. Um, just to get that piece of information. And then they’ll just never talk to you again. Sometimes you just wind up with a random name. It really depends on how astute the scammer is. So usually it’ll be someone who has to remain outside of the country for work or school purposes, something along those lines. And that means that the whole process has to be done remotely. So sometimes they’ll ask you to fill out like a basic rental application, which may or may not include asking for your security number, but typically your social isn’t the main scam here.
Andrew Schultz: (03:22)
They’re looking for money. If they do get your social, they may sell it to somebody else or use it in a different scam. But really the goal in this scam is not to get your social security number. They just want pure cash, plain and simple either way. Once you complete the application, uh, magically, you’re gonna be approved no matter, uh, and they’ll want you to send them some sort of a security deposit after that, they say that they’re going to send you the keys. Typically they’re gonna want this deposit sent via a wire transfer, a Western union, something along those lines, some of the scammers are starting to use payment apps. I know that there’s one out there that does not allow you to reverse transactions, but honestly, I can’t remember which one it is typically. That would be the one that they’re going to use, obviously.
Andrew Schultz: (04:03)
So you have no recourse after you discover that you’ve been scammed. Uh, and then once the money is paid, obviously no key ever gets sent and the person just kind of disappears off the face of the planet. So you might say, why would someone give a security deposit before they’ve even had an opportunity to, to take a look at the property? Well, usually there’s some sort of an excuse, something along the lines of, oh, I’m working on hiring an agent. So I don’t have anyone there to show the house yet or something along those lines. It’s basically all about getting buy-in from whoever it is that they’re scamming. And if somebody’s hot enough on that property, they may fall for it. There’s also about a million different variations on this exact scam. And I’m covering just one of the more basic instances of it. I’ve heard of instances where locks have literally been changed to permit the scammers, to actually provide access to the property for showings.
Andrew Schultz: (04:52)
Like that’s next level. Usually, they’ll even have somebody put a lockbox on the doorknob, uh, and then they can have people come and go and look at the unit like that’s a next-level scam, you know, and it does happen out there. I’ve also heard of a few issues of very few issues with self showing lockboxes. That’s another topic for another day altogether. Um, but honestly this has been an ongoing scam for as long as I can remember. And I’ve been in the industry for, I think 13 plus years at this point, the best ways we’ve found combat at these types of scammers are to watermark your listing photos, be cautious about the information that you put in your ad, and hang signs inside the property, indicating who owns it and alert people to the possibility of scammers to get into that a little bit further, uh, with the listing photos, the easiest possible thing you can do is put a watermark across the photo with a phone number or, or your company’s names, something along those lines that would prevent the scammers from essentially using your photos on their listing, without it being blatantly obvious that the photos don’t belong to them, don’t use the property address that just reinforces the validity of the photos as the location is gonna match the watermark.
Andrew Schultz: (06:00)
So don’t use the property address, use something like your company name or a phone number, or, um, copyright twenty, twenty-two, you know, own Buffalo ink, something along those lines, such that it, doesn’t just, you’re not putting the property address right. On all of the photos. So how do you actually go about putting a watermark on a photo? Uh, generally speaking, it’s not as complicated as most people wanna make it. Any phone will have some sort of a basic photo editing application on it, where you can add text and that’s literally all you have to do. And it’s most basic, that’s it. That’s all you have to do is get text on the image to prevent somebody from being able to use that image on their own listing. Of course, you can sit and play around with the settings on the text like that and make it a little bit more transparent.
Andrew Schultz: (06:45)
So it’s not so obtrusive in the photo, but at the end of the day, the goal is to get the text on the photo. You can do it on a computer with pretty much any basic paint application. You can do it on pretty much any smartphone with the built-in editing software or that’s on every phone at this point. There’s really no reason not to be able to watermark your photos. There’s also apps and websites and things like that that you can use if you want to complicate the process a little bit further, but it’s really very basic at the end of the day, just edit the photo, throw some text on it and make sure that the text, um, is across the center of the image so that it can’t be cropped out. Uh, you don’t wanna stick your text in the corner of an image, or you’re just gonna wind up with crop photos of your property online as opposed to full-size photos, run it across the center of the image.
Andrew Schultz: (07:28)
That way it’s very, very difficult to remove the watermark or crop the image in such a way that it would still be usable at the core. Like I said, that’s the goal is just get that text on the image. That’s really what you’re trying to do there. I also mentioned hanging signs inside of the property. We started doing this after we had that scam occur at one of our properties. And essentially what we do is we use like a bright orange printer paper and print a basic sign that says, if you are not viewing or leasing this apartment directly from Own Buffalo, you are being scammed. Do not hand over any money or sign any lease, unless it was with a representative of Own Buffalo. If you suspect you were being scammed, please call the police followed by calling Own Buffalo at, and then at lists our office number.
Andrew Schultz: (08:12)
That’s literally the exact text from our signs. Feel free to use it. We put these up in a couple of different places. If it’s a first-floor unit, we will put one inside the front window so that it can be viewed from outside. We also place them inside the unit on whatever wall is opposite, the entrance that you walk in from. So it’s one of the first things that you see when you walk in. We also put one in the bathroom on the mirror. Um, and we do that such that in the event that you do wind up with a scammer that somehow gains access to your unit. The hope here is that maybe they don’t catch the last sign in the bathroom. Uh, and then when they send someone through to look at the apartment after the fact, we hope that they see the sign and hopefully they’re saved.
Andrew Schultz: (08:50)
I think it’s normal to be concerned about scammers in the market at this point, to be honest with you, especially when it comes to leasing your own properties, understand that there are always gonna be people looking to scam other people. And there are always gonna be people who will fall for those scams, no matter what you could take every safeguard in the world. And somebody is still gonna wind up getting scammed. Once in a while, everything that we’ve talked about here is a good preventative, but scammers keep getting more and more clever all the time. The worst part is that there’s very little recourse in this entire situation for the person who does wind up being scammed. And generally, those are the people that are most vulnerable and least able to recover from something like this. In many instances, taking a few steps on the front end could very well prevent somebody from being scammed. So thank you for thinking ahead. Thank you for thinking of other people, and best of luck in your search for a new tenant
Voice Over: (09:38)
Water cooler wisdom expert advice from real estate pros.
Andrew Schultz: (09:46)
In this segment of water-cooler wisdom, we are dealing with distance. Let’s go ahead and jump right in here. We are looking to rent a room of our house out to a person who moving here from out of state three-quarters of the way across the country to be exact. When we met her originally, she was here looking for places to rent, but she has since gone back home, how would you go about getting the rental agreement signed and collecting the security deposit? And this one comes to us via the Rent Prep for Landlord’s Facebook group. So there are actually a few different ways to handle this situation. Um, before we, jump into that, I do wanna mention that you should always get certified funds for your first month rent and for your security deposit, not getting certified funds for your security deposit. And first month’s rent could lead to a situation where a check bounces after a tenant’s in possession of the unit.
Andrew Schultz: (10:31)
And in pretty much any state that I’m aware of that is going to result in you having to go through the full eviction process. That’s gonna cost you time and money. Uh, so as a general good business practice always get certified funds for your security deposit. And the first month of rent, uh, moving on, there are several methods for handling the lease signing and the receiving of the security deposit funds. There’s always the tried and true method of mailing the lease to the tenant or emailing the, lease the tenant and having them print it and sign it and mail it back. Uh, they could mail their certified check back to you at the same time. Obviously, this is the slowest method. I don’t recommend this. Uh, the next best option would be sending the lease, have the tenant, print it, sign it, scan it, and email it back to you so that you can print it, sign it and scan it back in.
Andrew Schultz: (11:17)
It’s better than mail, but it’s still a lot of work, not the worst option, certainly better than a fax machine. Certainly gonna be higher quality than a fax machine. Um, but you do lose a lot of quality when you are printing, scanning, printing, scanning. So the recommendation I have here would be to use sites such as DocuSign or hello sign. I believe that those sites both offer free. And essentially what you would do is upload your doc file, um, or your PDF file to their website. You’re gonna add the names and email addresses of the people that need to sign it. And then you just drag and drop where they need to sign initial or date, uh, and send it off to their email. They digitally sign it and it comes back to your email. You digitally sign it, and then everybody receives a finalized copy.
Andrew Schultz: (11:59)
It’s gotta be the fastest and easiest way to get a lease signed in 2022. Most people at this point are pretty comfortable with doing some sort of electronic signature just from the last couple years. I mean, there’s been so much, that’s moved to digital in the last couple years that wasn’t before. I think a lot more people now are comfortable with doing the digital signature thing that maybe we’re not comfortable prior to this. Um, if you are going to use any of the payment apps to receive your payment, my recommendation would be that you review the terms and conditions prior to using those apps. Um, so when you’re talking about receiving that security deposit, some people are gonna use apps like PayPal or Venmo, um, Zelle. There’s a few of ’em out there. I’m sure I’m missing a bunch of them, but you need to understand the terms and conditions prior to using those apps.
Andrew Schultz: (12:47)
Some of those apps will allow for payments to be clawed back well after the payment has been made like 30, 60, 90 after payment has been made, uh, and that could put you in a real nasty situation if somebody claws back their security deposit, for instance. So some of the apps specifically state for personal purposes only and collecting rent is typically gonna be seen as a commercial transaction. So you may be outside of their terms of service just by collecting the payment altogether. Some of the apps charge fees, some of the apps take several days to get funds from the app to your bank account. So there are a lot of things to consider there when you’re talking about doing digital payments and things of that nature. Once you start to scale up and have multiple units, oftentimes it’ll make sense to get some sort of property management software.
Andrew Schultz: (13:31)
That’ll have some sort of an online portal that your tenant can log in and make their payment that way. Um, but again, that’s more of something that you’re gonna be looking at as you start to scale up. There’s a ton of recommendations out there in terms of, excuse me, a ton of options out there in terms of property management, software. That’s another topic for another day altogether, but at least you have a couple of different options here for how to go about getting that lease signed, and then how go about actually receiving the security deposit and receiving those funds early enough, that if you have to wait for a check to clear that you do have time for that check to clear, I think that we may do a deep dive into some of the payment platform apps in the future. Um, that is a question that we’ve actually had come in a couple of times now about the different apps, which one is the best.
Andrew Schultz: (14:13)
So we may actually do a deep dive on that sometime in the future. Let us know if you’re interested in seeing that by the way, drop us a comment either in the Rent Prep group on Facebook, or send us an email via the Rent Prep website. Um, the bottom line here is that you need to make sure that you have a fully signed lease and cleared funds for your security deposit and your first month’s rent prior to that tenant, moving in once that tenant moves in, you’re never, again, going to have the opportunity to get paperwork signed or get funds into an account, avoid a potential argument by having a good process in place to protect yourself. We’re gonna wrap it up this week with another water cooler wisdom. This one is on late payments. This one comes to us via the Rent Prep for andlords Facebook group.
Andrew Schultz: (14:54)
Let’s go ahead and jump right in here. What is the industry standard for late payments? How many times does a tenant have to pay rent late before they are considered undesirable tenants think they are doing well if they pay rent late frequently because the landlord did get the rent and the late charge, if a tenant is otherwise good, would you rent to them or renew their lease? If they paid rent late, say three times in 10 months, I’m scared. Every time the rent is late, this is the time that I will have to file for an eviction. Anyone else feel this way about late rent payments? And again, this one comes to us via the Rent Prep for Landlord’s Facebook group. So I don’t know, as though there’s so much an industry standard for late red payments, as there is state regulation with regards to late red payments in many states, if not most states at this point, uh, for instance, here in the state of New York, and I’m gonna preface this by saying, I’m not an attorney, um, obviously consultant attorney, if this is a situation you’re dealing with, uh, a residential lease here in the state of New York is bound by the state statute, which says that there’s a five day grace period for the payment of rent after that rent is due.
Andrew Schultz: (15:58)
So if your rent’s due on the first, it’s not technically late until after the fifth. And then there are further caps on your late fees and then there’s language in the law that discusses, when you can serve rate late rent notices, how they can be issued, how long of a timeframe the notice is have to provide the tenant to pay the rent, et cetera, et cetera, et cetera. There’s a lot of regulation in this state. I understand that New York state regulates things a lot more than some of the other states do, but pretty much every state is going to have some form of regulation as to how late rent, uh, late fees notices, things like that have to be processed. So my recommendation would be to start with your state law to determine what constraints you have to work with at that level. Um, if you manage or own property in a less restrictive state, I’m certainly a bit jealous of you.
Andrew Schultz: (16:44)
Things have gotten to the point here in New York, where there’s a lot of timelines that we have to adhere to, um, which in many instances, slow down the process. I mean, that’s another story for another day. Uh, we could go off on a rant on that for a good long time, but I would love it if we were a little bit less regulated, but I understand that we do have the regulation and we have to operate within it. If you’re in a state, that’s regulated, you have to do it too. So that’s really going to become what your standard is more so than an industry standard. If you want my, uh, my opinion on that one. Now, when it comes time for lease renewals, we obviously take a look at a tenant’s past rental history to see if they’re making their payments on time, or if they’re making late payments frequently.
Andrew Schultz: (17:23)
So generally speaking, once a tenant is made three or more late rent payments in a 12 month calendar year, they’re no longer going to be eligible for lease renewal with us. In addition to that, if they’ve entered our, if eviction avoidance program at any point within the past 12 months, that would also make them ineligible for lease renewal. Of course, I’m seeing all this right now through a lens that does not include good cause eviction here in the state of New York, which would prevent you from terminating a tenant’s lease at the end of the lease term for a variety of reasons. Uh, you hear more about that over on my YouTube channel, youtube.com/own Buffalo. There’s a couple videos on the topic. Good cause does still permit evictions for non-payment of rent, obviously, but it doesn’t sound like this is a long-term non-payment issue. It’s more of a short-term issue where your getting your rent, but probably in the same month that it’s due. It doesn’t sound like it’s rolling over more than 30 days in that instance, for the most part, you’re going to be dealing with whatever your state regulations are with regards to service of notice and things of that nature. Spend some time, find out what the regulations are in your area. And that way you’ll know that you’re safe, no matter what you’re doing,
Andrew Schultz: (18:29)
What is a rental judgment and how long do they stay on background checks? At Rent Prep’s latest guide we’ll go over everything you need to know, including the role judgment play in the tenant screening process, visit rentprep.com/blog today for more information. So that pretty much wraps things up for this episode of the Rent Prep for landlords podcast. Thank you all so much for, we truly do appreciate it. Our goal with the podcast is to help as many people as possible make educated decisions when it comes to real estate and you can help us to reach our goal. If you heard anything in this episode or any of our other episodes that will help someone, you know, please do us a favor and share it with them. If you’re looking to get in contact with me, I can be reached over at whatsdrewupto.com from there, you’ll find to everything going on with me over at Own Buffalo, as well as other projects that we’re taking a look at.
Andrew Schultz: (19:15)
Now, we try to keep politics out of the podcast as much as possible, but if you own rental property, anywhere in the state of New York, I do encourage you to learn more about good cause eviction. There are links to my videos on the topic as well as a petition over at whatsdrewupto.com. If you’re looking for top-tier tenant screening services, head on over to rentprep.com, there are multiple products to choose from including a tenant-paid option. If you’re over 50 doors ask about the enterprise-level programs and pricing, I’ve been an enterprise user of Rent Prep for years now, and it’s definitely changed the way that we screen our tenants. Check that out today, over at rentprep.com again, and thank you all so much for listening. We’ll be back in a couple weeks with an all-new episode you won’t wanna miss until then. I’m Andrew Schultz with ownbuffalo.com for rentprep.com and we’ll talk to you soon.
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