Rental Fraud: 15 Common Scams & How You Can Avoid Them

In an evolving digital landscape, rental fraud is no longer limited to simple scams—it’s now driven by sophisticated technologies such as AI and deepfakes. Real estate wire fraud is up 4x over the past five years, which is a scary thought for real estate agents and investors. As a real estate safety expert, former agent, and investor, I’ve seen firsthand the devastating consequences rental scams can have. I’ll review the top 15 scams targeting real estate investors and, most importantly, how to avoid you or your clients falling victim to them.

1. Wire Fraud

Imagine you’re closing on a million-dollar investment property deal, and a hacker intercepts wire instructions at the last moment. Before you know it, your $500,000 vanishes into a fraudulent account. In 2023, Business Email Compromise (BEC) scams accounted for $2.9 billion in reported losses via wire fraud, mainly in the real estate industry.

• How to spot it: So, how to catch a rent scammer? Beware of last-minute emails or phone calls that request changes to wire transfer details. Scammers are increasingly using AI to clone voices and mimic trusted contacts.
• Expert advice: Never rely solely on email for critical information. Companies like CertifID verify identity and detect rental fraud in real estate transactions, backing all wire transfers with insurance. This tool has helped recover $60 million in stolen funds​. Always confirm wire transfer details by phone with known contacts.
• Report it: Contact the FBI’s Internet Crime Complaint Center (IC3) immediately and notify your financial institution to attempt to freeze the funds

2. Squatting Scams

Squatters taking over your property while you’re unaware can cause legal nightmares. In many cases, squatters can forge ownership documents and list a vacant property on short-term rental platforms like Airbnb or websites like CraigsList and Facebook Marketplace, collecting rent from unsuspecting tenants​.

• How to spot it: If your listing or property is vacant, ask neighbors to monitor it. Utilize security cameras that don’t rely on Wi-Fi so that you or the owner can monitor it regardless of where you live. If they notice strange activity at the property or if you see it listed on platforms like Airbnb, act quickly.
• Expert advice: Use a service like PropertyShield, which offers real-time surveillance to detect unauthorized use of your property that will automatically delete the fraudulent listings. Regular inspections and establishing communication with neighbors can prevent such real estate scams. Set up Google Alerts for the property as a secondary step to address and catch unauthorized listings.
• Report it: Contact local law enforcement immediately. If a short-term rental platform is involved, report the fraudulent listing to Airbnb or the relevant platform.

3. Phishing & Email Hacking

Scammers send seemingly legitimate emails requesting sensitive information or changes to financial details. 3.4 billion phishing emails are sent out each day. Property owners click on these emails, and phishers can automatically access their accounts and data.

• How to spot it: Look for small inconsistencies in email addresses or strange phrasing. If you receive a request to change bank details, proceed with caution.
• Expert advice: Always enable multi-factor authentication (MFA) for your email accounts, especially those tied to financial transactions. Never click on links in suspicious emails. Cyber insurance is also a must for today’s investors. Companies like Pro Group International specialize in cyber insurance policies that allow investors to get broad coverage to protect against financial damage caused by cybercrimes, including phishing.
• Report it: Report phishing emails to the Federal Trade Commission (FTC) or your email provider and change your passwords immediately.

4. Rental Fraud on Short-term Platforms

Fraudsters create fake listings for properties they don’t own on platforms like Zillow or Airbnb. Investors lose rental income while rent scammers collect deposits from unsuspecting tenants​.

• How to spot it: Unauthorized listings of your property on short-term rental platforms should raise a red flag as a rent scam. Monitor rental platforms regularly for any signs of rental fraud, set up Google Alerts, or utilize a company like PropertyShield.
• Expert advice: Watermark all property photos so scammers can’t easily reuse them in apartment fraud listings. Tools like Google Alerts can help you spot fake listings. TetherRE can verify the legitimacy of tenants, preventing fake listings from exploiting your property.
• Report it: Contact the platform hosting the fraudulent listing (e.g., Airbnb, Zillow) and file a police report for identity theft.

5. Deepfake Document Creation

Scammers use AI to generate fake deeds, ID cards, and other documents that trick investors into believing a fraudulent transaction is legitimate.

• How to spot it: Check for inconsistencies in the paperwork. Always cross-check with public records and title companies to verify ownership before moving forward with any deal.
• Expert advice: Investors should use tools like Forewarn to verify the identity and financial details of potential tenants and buyers, including bankruptcies and foreclosures. When dealing with significant financial transactions, don’t rely on visual confirmation alone—ensure documents are verified through official channels.
• Report it: If you suspect you’ve been handed fraudulent documents, report the crime to your local law enforcement and reach out to your title insurance company so they can address housing scams.

6. No Intention of Paying Rent

Tenants pay the first month’s rent and deposit but then stop all payments, forcing you into lengthy eviction proceedings. If they pay by check, they may also request you refund the overpayment. Even if you confirm the balance at their financial institution, it could be a stolen check, and you will lose all the proceeds.

• How to spot it: Be cautious if a tenant offers more money upfront or tries to rush the process. This behavior could be a sign they intend to exploit your property without any intention of paying beyond the first month.
• Expert advice: Screen tenants thoroughly. Tenant screening tools like Avail can verify rental histories, employment, and creditworthiness, ensuring you work with trustworthy tenants.
• Report it: Initiate eviction proceedings early and document all communication for legal purposes.

Need a quick and efficient way to send rental applications and screen tenants? Check out the tools from Avail. Avail includes credit reports, rental history, and income verification as part of their screening process. These tools will allow you to find highly qualified tenants for your rental properties. Did we mention it’s free? 

7. Service Animal Fraud

Tenants use forged emotional support animal (ESA) letters to bypass no-pet policies, and landlords are left with damages caused by untrained animals.

• How to spot it: Be wary of tenants providing ESA documentation from questionable sources. Always verify the healthcare professional who signed off on the ESA letter. Do not trust the name in the document, but call the organization directly to confirm the documents.
• Expert advice: Know the laws surrounding the ability and legality of verifying service animals. Contact the healthcare provider directly to verify the authenticity of the ESA documentation. Validate such documents, ensuring the ESA claim is legitimate.
• Report it: If you’ve been scammed by false ESA documentation, consult with legal counsel about your rights as a property owner.

8. Unauthorized Subletting

Tenants sublet your property without permission, often collecting rent for months while you’re unaware.

• How to spot it: Sudden changes in behavior from your tenant or requests for early termination could be signs of unauthorized subletting—complaints from neighbors involving increased traffic or a steady stream of visitors.
• Expert advice: Include strict no-subletting clauses in your lease agreements and perform regular inspections and drive-bys to confirm compliance with lease terms. Check local laws regarding having external cameras to monitor the property. Ask neighbors to report any odd behavior to you.
• Report it: Address unauthorized subletting quickly by issuing a lease violation notice and pursuing eviction if necessary.

9. Deepfake Voice Calls

Scammers use AI to clone voices, impersonating property managers or real estate agents to convince investors to wire money or make other financial moves.

• How to spot it: Be cautious if a voice call comes with unusual urgency or if details don’t match previous communications. If in doubt, verify in person or through video.
• Expert advice: Always verify the authenticity of any significant request through a secondary channel—call back using a known number.
• Report it: Report fraudulent voice calls to local authorities and consult your bank to freeze unauthorized transactions.

10. Fractional Ownership Scams

Scammers present attractive fractional ownership deals, which means being a partial property owner with other investors, by luring investors with promises of high returns on properties they may not own. Once you’re in, it becomes nearly impossible to verify the ownership, and you’re left holding a worthless piece of the pie.

• How to spot it: Any deal that offers “too good to be true” returns and has vague or complex ownership structures should raise red flags. Always check the authenticity of the property ownership with a reliable title company.
• Expert advice: Conduct due diligence before committing to any fractional ownership deals. Research county property ownership and tax records to verify ownership details.
• Report it: Contact your title company and local law enforcement immediately if you suspect fraud. File a complaint with the FBI’s Internet Crime Complaint Center (IC3).

11. Fake Real Estate Investment Seminars

Fraudulent investment seminars push attendees into “can’t-miss” deals that require significant upfront payments. These events are often packed with fake testimonials and exaggerated success stories, leaving you with a massive hole in your wallet.

• How to spot it: Be wary of high-pressure sales tactics, unrealistic returns, or demands for hefty upfront fees. Legitimate investment opportunities won’t require you to make decisions on the spot.
• Expert advice: Research speakers, companies, and past seminar attendees. Seek independent reviews before committing to any deals pitched at seminars.
• Report it: Report fraudulent investment seminars to the FTC and local consumer protection agencies.

12. Fake Checks for Rent & Security

Tenants submit fake checks for their initial rent or security deposits, only for those checks to bounce after they’ve moved in. This scam leaves investors without the promised income and with a legal eviction process to manage.

• How to spot it: Be cautious of tenants eager to move in quickly and provide checks that seem too good to be true, such as those for higher-than-required amounts.
• Expert advice: Always verify funds before granting access to your property. Use trusted payment platforms that authenticate payments.
• Report it: If a check bounces, notify the tenant immediately in writing and consult a lawyer about starting eviction proceedings.

Many landlords are making life easy for themselves these days by collecting rent online. Baselane is a free resource for investors to get their money automatically every month. They also offer bookkeeping and tenant management tools to make your experience even more seamless.

13. Timeshare Scams

Scammers prey on real estate investors by offering attractive timeshare deals with promises of high returns or easy resale options. Once you commit, you may be left with a worthless timeshare or a resale that never materializes. In many cases, victims are charged upfront fees for properties that don’t exist or cannot be resold. The ongoing financial burden can also include hefty maintenance fees that investors pay without any actual benefit from the property.

• How to spot it: Timeshare scams typically involve unsolicited offers, high-pressure sales tactics, and requests for hefty upfront fees. Beware of any company promising quick sales or unrealistic returns on timeshares. Always be skeptical of unsolicited offers from unknown companies or individuals.

• High-pressure tactics: Scammers create urgency, telling you the deal is available only for a short period or is the “last opportunity.”
• Upfront tees: Legitimate companies will not request substantial payments before completing any sale.
• Too good to be true offers: Unrealistic promises of returns should raise red flags.

• Expert advice: Always conduct due diligence before entering any agreement to avoid falling victim to timeshare scams. Verify the company’s legitimacy through the Better Business Bureau (BBB) or consult a real estate attorney before signing any contracts. Use tools like CertifID to verify the identities of buyers and sellers and to secure wire transfers, ensuring that your money is protected from fraud​.

• Consult a real estate attorney: Having a lawyer review any contracts will ensure the deal is legitimate and can protect you from costly mistakes.
• Don’t rush: Take the time to research the company and the property. High-pressure sales tactics are a clear sign of a potential scam.

• Report it: If you suspect fraud, report the incident to the FBI’s Internet Crime Complaint Center (IC3) and file a complaint with the FTC. Additionally, notify your state’s Attorney General for local-level investigations and consult a fraud attorney for recovery options.

14. Lying About Co-tenants

Tenants fail to disclose additional people living on the property. This scam can lead to overcrowding, property damage, and difficulty enforcing the terms of the lease.

• How to spot it: Pay attention to tenants who seem secretive about who is living in the property. Regular inspections can also reveal unauthorized occupants and rent fraud.
• Expert advice: Include clear language about the maximum number of occupants allowed in your lease agreements. Real estate safety apps like TetherRE can help verify all occupants before lease signing.
• Report it: If you discover additional unauthorized tenants, send a formal violation notice and follow your local procedures for tenant disputes or evictions.

15. Social Engineering With Deepfakes

Fraudsters use AI-generated deepfakes—videos or images that convincingly impersonate real estate professionals or property owners—to trick you into sending funds or making key decisions under false pretenses.

• How to spot it: Look for inconsistencies between video or voice communications and previous interactions. If something feels off, trust your instincts and verify the person’s identity via in-person meetings or communication channels.
• Expert advice: Never make important financial decisions based on a single video or audio communication. Always verify through multiple channels. CertifID can help secure transactions involving significant amounts of money.
• Report it: Contact local law enforcement and file a report with the FBI’s Internet Crime Complaint Center (IC3).

Bringing It All Together

Real estate investment is all about building wealth and security. By staying informed and implementing these critical tools and practices, you will keep your investments safe from rent fraud and stay ahead of the scammers targeting your properties. Stay vigilant, stay protected, and keep growing your portfolio without fear of the unknown.