appear you’ve recreated the truth.”
TENANT BACKGROUND CHECKS 101: Four Crucial Tips for Detecting Fraud
For many landlords, “fraud” is a four-letter word. That’s because they know it spells getting ripped off, with precious little recourse to collect the bad tenant debt. Unfortunately, a significant number of rental applications are completely fabricated, from the applicants name and social security number to job, bank and personal references. Many delinquent tenants are better at writing fiction than holding down a job!
Learn to recognize some common-and some not so common-signs of fraud:
The bolder forms of fraud involve stolen or fake ID and often are used by professional con artists. Always meet face-to-face with prospects to improve the odds you’ll notice discrepancies – for example, a noticeable difference in appearance from the ID. People reveal themselves through common conversation. If they claim to be 50 years old, but don’t remember Elvis, that’s a red flag!
Do a full background check, so you can cross-reference many reports. Is their bank account older than they are? Are there gaps in their rental history? Do they have a blank credit report? The false information is likely blended with some truth. Often, if you check out multiple sources, including references, the inconsistencies will be glaring.
An applicant may reveal an attitude of fraud. Look for transposed numbers or omitted information. Was it an honest mistake or an attempt to defraud the property owner? Study how the prospect responds when you ask. Is he nervous? Evasive? Arrogant?
Take a tip from law enforcement – every suspect they interview was bringing gifts to the orphanage or helping a widow cross the street. But ask questions out of chronological order, and inconsistencies emerge. As Mark Twain once said, if truth is stranger than fiction, it’s because fiction has to make sense. When a person has a chance to think about their story, it often sounds too contrived.
American Apartment Owners Association offers discounts on products and services related to apartment management, including tenant debt collection, tenant background checks, technology, insurance and financing. Find out more at www.joinaaoa.org.
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For more information on Tenant Background Checks, see our interview with Fidelity Information Corporation CEO Jeff Cronrod,TENANT BACKGROUND CHECKS: LITTLE KNOWN WAYS TO AVOID COSTLY MISTAKES. This exclusive interview is included on the American Apartment Owners Associations CD series, Real Estate Investment Secrets, twelve exclusive interviews with industry experts that will supercharge your ability to locate the best investment properties and manage or sell them for maximum profit.
Real Estate Investment Secrets is available exclusively through the American Apartment Owners Association. To purchase a copy, visit www.joinaaoa.org. Join as a PremiumPlus member, receive all the benefits of membership, and this CD series is our gift to you.
For tips on how your tenant background check can affect your chances for recovery of unpaid rent, check out our series on the blog Seven Vital Tips to Help You Collect Your Tenant Debt.
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