Renting a Home

Beware of These 4 Rental Scams

Whether you’re searching for your first rental or are a seasoned renter seeking a new place in a new city, beware that rental scams are all too common.

With vacancy rates dwindling and rents soaring in many markets, schemers see tenants as easy marks for their scams, which are often perpetrated on Craigslist and other sites. Fraudsters typically reel in their victims by advertising monthly rents that are well below market rates.

“If it sounds too good to be true, it probably is,” says Andrew Woo, director of growth and data science at San Francisco-based Apartment List.

Red For Rent Real Estate Sign in Front of Beautiful House.

Here are four common scams to watch out for as you hunt for a new home

1. The “I’ll-take-your-deposit-now” scam

This notorious scheme targets out-of-town renters moving to a new city. Scammers advertise a property on Craigslist or another site with a tantalizingly low rental rate.

The pitch is tempting. The bogus landlord claims to have a great deal on a rental property. He’ll hold the house for you, if only you send a deposit up front before you see the home and before you sign a lease.

In reality, the phony landlord doesn’t own the property. You lose your cash, and you’re no closer to having a place to live. “Never hand over money before you see a property and sign a lease,” Woo advises.

Warning signs: An unusually great deal on the monthly rent, and a landlord’s insistence that you send money before viewing the property.

2. The “I-just-want-to-steal-your-identity” scam

That listing on Craigslist sounds like your dream home, complete with professional photos. But do three-bedroom houses in your city really rent for just $800? And why is the landlord insisting on running a credit report before you even see the house?

Identity theft is big business, and your Social Security number is a valuable prize. Scammers use Craigslist ads for phantom properties to lure in their victims, sometimes copying entire ads from a realty company, changing the contact info and offering a suspiciously low rent. Unsuspecting renters don’t realize the listing is a scam until it’s too late.

Warning signs: A landlord requesting sensitive personal or financial information, such as your Social Security number, before showing you a property.

3. The “I-don’t-really-own-the-house” scam

This scheme is even bolder. A fraudster claims to own a vacant house and rents it to you. But after a few weeks or months, the real owner discovers you’re there. You’re kicked out, and your security deposit is gone.

These fraudsters can be quite sophisticated. In one case in Florida, a scammer was arrested after filing phony deeds on dozens of properties. That meant tenants who searched property records would have thought the criminal was the actual owner.

Another group of scammers was nabbed after collecting more than $300,000 in rent on dozens of homes they didn’t own. Federal prosecutors said the scammers targeted homes owned by a landlord’s corporation known as RHA 2 LLC. They then asked tenants to make out checks and money orders to the similarly named RHA Two LLC.

Warning signs: A landlord’s insistence on cash or money orders rather than payments by check or credit card.

4. The “rent-to-own” scam

In extreme cases, schemers will prey on renters’ desire to grab a piece of the American dream.

Since some renters don’t qualify for a mortgage right away, they might explore the rent-to-own option, in which they sign a contract to rent the home and eventually purchase it before or when the lease expires. A portion of the monthly rent payment is applied toward the home’s purchase price.

“Rent to own” is a legal program, but scammers have taken advantage of it. Perhaps the owner will jack up the asking price, telling you the $130,000 property is worth $180,000. After extracting a big down payment, he waits for you to miss the due date for a rent payment by just a few days. Then he quickly evicts you and claims you’ve forfeited your down payment by defaulting on your monthly rent.

Or a landlord might combine the “I-don’t-own-the-house” scam with the “rent-to-own” caper, in which case you pay big money to someone who doesn’t even own the house he’s pitching you.

Warning signs: Big down payments – sometimes in cash – and inflated property values.

Bottom line? Do your due diligence by using the property’s address to check local tax records at the county office and confirm the property’s owner. If a company is listed as the property owner, check with your state’s corporation commission to verify that the business is active and legit. You could also consult a local title company to conduct a search.

But if the rental offer sounds far-fetched, it might be best to keep scrolling.

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Jeff Ostrowski is a veteran journalist who has covered real estate and personal finance for more than 20 years, and contributes articles about mortgages at When it was time to replace his circuit panel, he hired an electrician. He can be reached at < ahref="">

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