Rental Fraud and an Idea on How to Prevent It - A Guide For All Property Owners
I have been reading many news reports lately on renal fraud where scammers are renting out other people properties, how different municipalities come after the Fraudsters and the consequences of such behavior. Rental fraud is becoming more and more popular and the consequences are horrible for everyone; for the defrauded tenants who become homeless; for landlords who now must re-claim their property and prove in court that the property belongs to them, and on top of all that, they still have to remove the illegal tenants from the property. There are more consequences in dealing with rental fraud, but today, I’ll try and go over a relatively simple solution that we have found to work for us.
We own manage about 65 SFR in the Atlanta area, and from the time we began purchasing investment properties, we came to the conclusion that we needed to install security monitoring systems in all the properties. When we began installing security systems, we did it not to prevent fraud, but to prevent vandalism. Back in 2008, 2009 and 2010, the economy sunk and people were desperate. Our properties were broken in to on a regular basis. We actually had one property that was broken into 11 times!
The idea with the security systems came to us rather slowly as we had to buy the systems (pricey, but not too bad) and keep it actively monitored. With no phone lines! Here come the first “Wireless” systems. Monitoring is about 30% higher on those, but we thought it’d be worth the price. Installed the systems into all the homes and the most brilliant idea we had, we made it mandatory for all of our tenants to pay for the monitoring. Kill two birds with one stone, tenants are protected and we are protected. Plus, we received a discount from our insurance carrier for having actively monitored systems. Nice we thought.
A few years go by, the wireless security systems became outdated! However, at this point we had over 60 properties. That’s a large account for a small security monitoring company and we were able to pre-negotiate a price for the systems and monitoring. New security systems are capable of having separate codes for different people and if your property is monitored, then a stranger just can’t get into the home easily or without your knowledge. Also, our subs have their own codes, so we always know who is at the property at what time. When they come, when they leave...a little knowledge goes a long way. The best part of having the ability to monitor activity is that we can monitor all that on our cell phones! Yes, all the properties, on our cell phones. Technology is great.
How does it help us prevent rental fraud?So, how does it help us prevent rental fraud? Simple, when a property is vacant, we have a master code that we hold, and all the contractors and leasing agents have their own codes…this way, we really know who is coming and going at a property at any given time. Having working alarm systems will greatly discourage rental fraud as you as the landlord will be able to dispatch the policy if an unauthorized person enters the house. People who try to make a living through rental fraud will not want to show up on a police radar. They’d probably choose a property that does not have an alarm system.
Perhaps this entire scenario sounds ridiculous and you are having a good chuckle, but as Investors and Property Managers, we know rental fraud is happening more often these days. We hear it from self-managed owners, from our Property Managers peers, read it in the papers, and know that trying to save a few dollars can ultimately cost the property owner more money, not to mention great stress. Therefore, we take the steps to “Protect Your Investment,” by insisting that your properties be outfitted with wireless security monitoring systems. ALH|Podland Rental Homes Property Management focuses on the safety of your properties, residents and profitability of your investments. For more innovative solutions on property management, give us a call at 404-937-1850 or visit our web site at www.alhpodland.com
Marina Shlomov, a managing partner at ALH|Podland Realty & Rental Homes Property Management is the author of many articles on Landlording, Property Management, and Real Estate Investing. A residential builder in the state of Georgia since 1999, Marina is an investor herself. Her property management company is intended “For Investors” and “By Investors” for a simple reason – she knows what investors’ goals are and she works hard to reach their goals. In her spare time, Marina likes to spend time with her family, friends, garden, read and travel. Check her out at www.alhpodland.com. You can find Marina’s articles and comments at @rentalhomesatl on Twitter, on Facebook, Google+, Blogger. and YouTube, Bigger Pockets and REI CLub and LinkedIn.