Famous last words, right?
I said, “Assuming that we can acknowledge that problem-tenants exist…”
But I don’t think we’re anywhere close to agreeing there.
After reading the comments on Friday’s blog, I’m amazed. I just had no idea that some of my own readers would feel that a landlord doesn’t have the right to expect a tenant to pay their rent on time, or at all. I’m turning 40-years-old this summer, and I went on TikTok the other day and had no clue what it was, or how to use it, so I recognize that the world is changing around me. But some of the comments about the concept of renting being “exploitive” were just amazing.
One reader had a comment about how the “Cancel Rent, Cancel Mortgage” movement had ramifications beyond the comprehension of Joe Public, and this is something I’ve discussed with friends and colleagues over and over. Do the members of that movement understand, as a reader commented, that if rent was “cancelled,” and a property owner had no rental income, that this person would lose their investment? The fallout from there, if it happens to everybody everywhere, destroys the economy, which destroys society. And I’m not over-stating this. If everybody out there had no income (in a world where the government doesn’t hand out money…), and thus had no ability to buy goods and services, than the people who work in those fields of goods and services would also be out of work, and also have no income, and so on, and so on. It’s a vicious circle.
This movement is insane, and it was invented by people that don’t understand economics, and whom, if you challenged them about, would likely reply with, “fuck that, man.”
Argue that tenants have rights. Argue that landlords should accept the risk, and shut up about it. But don’t argue that Santa Claus should “cancel rent and cancel mortgages” as though that’s a viable option in a world that exists outside of an acid trip.
So, for those of you who read Friday’s blog and do want to be a landlord, or who read Friday’s blog and don’t, but want to know what you can do to protect yourself, let’s discuss.
I described a situation at the onset where a colleague of mine was scammed, and a con artist ended up in his client’s unit. Blog reader Verbal Kint asked how in the world this could happen, especially as there was not one, but two licensed real estate agents involved!
The agent representing the tenant was a ‘name’ agent, but I feel he didn’t do his job, and didn’t care. He’s simply representing the tenant, who randomly found him online, and he’s trying to make a quick thousand bucks. When my colleague let this agent know that his “client” was actually a con artist, and asked the agent to repay the commission, he balked. “It’s not my fault,” the agent said. Yup. Gotta love it.
As for the supporting documentation, the pay stubs and employment letter were falsified, the references were in on the scam, and the employer that my colleague spoke to worked for a company that specialized in deceiving landlords.
I’m not making this up.
Another colleague of mine (as you can tell, I talk to a lot of agents from other brokerages…) walked me through a massive scam that she uncovered last month. She had a listing that clearly was targeted by scammers, since three successive prospective tenants turned out to be cons.
She called the supposed employer of the first tenant and he raved about the tenant. He was convincing. “Oh, thank goodness this call is for a reference for a rental! I thought you were looking for a reference because he’s looking for a new job! He’s so good at his job; he does the job of three people! I swear, I could never, ever replace him!”
My colleague in this situation said her spidey-sense was tingling, and it just didn’t feel right. She searched the internet for this employer, and found a different phone number for him, and called that one. This time, the real person picked up, and he was not happy.
“No, I’m not giving a reference for a tenant,” he said. “No, I don’t know this person. No, this isn’t a trick. No, no, no, honestly, I’m tired of this,” he said.
It seems that a few other agents had found his contact information and reached out to him, and he was fed up with the scam.
As two more offers to lease came in on this property, my colleague dove into an underground world of companies that specialize in falsifying documentation for fake tenants: employment letters, pay stubs, bank statements, commission cheques, and the like. Not only that, there are people you can hire at 1-800 numbers that will pretend to be a personal reference, an employer, or a past landlord, all for a fee.
My colleague does about forty rentals a year, so if anybody knows this side of the business inside and out, it’s her. And she said that scammers have never been more sophisticated, and they’ve never had more tools at their disposal.
Do you know what else she says?
That the tenants’ agents are complicit.
TREB, OREA, RECO – they’re not going to like what I’m about to say, but here goes.
My colleague, upon uncovering this massive fraud, called the first agent and told her. That agent didn’t seem surprised at all, and instead said, “But look at their credit score! It’s over 800! And the tenant makes $90,000 per year!”
My colleague said, “Didn’t you hear me? This is fraud! None of this checks out!” But the agent on the other end of the line just kept pushing the tenant.
This happened with the second and third offers as well.
That’s no coincidence. And word on the street is that sometimes these agents get a small kickback for helping with the fraud.
If this is true, then these agents should not just lose their real estate licenses; they should be in jail.
Then again, some folks out there want to CANCEL RENT and CANCEL MORTGAGES, so maybe they feel these agents should be placed atop a life-size cake or something.
So what can you do to protect yourself? What are the typical steps involved?
There are three things that need to accompany any Offer to Lease:
1) Credit Check
2) Employment Letter
3) OREA Rental Application
The credit check has to be from Equfiax or TransUnion. Hard stop there. It has to be a full credit report, every single page, not just the first page. This has to be a clean copy, downloaded in a PDF, unaltered. And even then, you proceed carefully.
Anybody can go onto the internet right now and save a company logo for Canadian Tire, or Cadillac Fairview, or CIBC, and then paste that into Microsoft Word, type out a letter, sign with a name you found on LinkedIn, and then save as a PDF. So when you, as a landlord, or an agent, receive an employment letter, you’re not only doing due diligence on the tenant, you’re doing it on the person who signed that letter.
Last month, I called the human resources manager listed on the employment letter for a prospective tenant, and I asked her if she was real. She laughed, but I was trying to break the ice with what came next. I was on her LinkedIn profile and asked here where she had previously worked. She said, “Are you serious?” I told her that I would appreciate the help. She rattled off the past two companies, which matched what was on LinkedIn, and while I know this could be faked too, it was a step in the right direction.
Then I called the phone number provided for the corporate headquarters and asked for this person, and they transferred me to her. “Me again,” I told her. “Just making sure, thanks!”
This all seems like overkill, but it’s not. It’s due diligence.
Make sure that employment letter is real, and make sure the person who signed it is a real person, and then make sure you’re actually talking to he or she.
The OREA rental application is really just a summary of the prospective tenant’s name, age, date of birth, last places of residence, job history, etc., but it’s a place where a scammer can slip up if this doesn’t match with what other documents and information they submit.
If personal references are given, then look them up too. Make sure they are real, and if you don’t trust them, then ask for other personal references, and/or business references.
Call the past employer and the past landlords, and undertake the same diligence as above.
Scammers will throw out multiple attempts at the same time. Quantity vs. quality, that’s the name of the game. So if they’ve gone to great lengths to hire a fake 1-800 number to pretend to be their current employer, do you think they did the same thing for their past two employers, two personal references, and past two landlords? Seven fake people created through 1-800 numbers? I highly doubt it.
You only need to snuff out one fake reference to spot the con.
Now, it doesn’t take a rigged United States election to tell us that social media profiles can be faked, but I think we all know the difference between the pretty girl who just moved to Toronto, has only six friends on Facebook, and for some reason has sent you a friend-request, versus the person with a complete profile that was launched in 2007, and who has 900 friends.
Facebook and Instagram are great places to search for the prospective tenant as well as the other people included on the application.
LinkedIn is harder to fake, and because business-people take it more seriously, many users will refuse to just click “accept” for anybody. So if a prospective tenant has 300 connections on LinkedIn, and five recommendations/testimonials from the last few years, then that adds credibility.
Last week, I received an application from a candidate who posted “lived with parents” as her second-to-last place of residence. So I looked up that property in Land Registry and matched the applicant’s last name to that of the people on title. Then I looked those people up on title too.
This applicant had a full LinkedIn profile, complete with jobs dating back to when she was 13-years-old. I found photos of her at the university she said she attended, as well as at two volunteer jobs. I also found her parents, who seem quite well off, so that’s always nice. Then I found that she had two Facebook friends in common with kids who I used to coach baseball, who are now grown men.
Suffice it to say, this was a real person, making a genuine application. Her credit was excellent and she had more than enough income at her very impressive job to carry this condo, and I told my client, “We’ve got ourselves a tenant.”
The truth is: you can usually tell when you need to do some more sleuthing. You just get that “feeling,” and hopefully, your concerns end up being for naught. But I’ve snuffed out scams before, and I’ve also found prospective tenants who have very different online personas from the ones they’re portraying in their application! Like the young lady who made $95,000 per year at a pizza joint, but had some pretty impressive online ads for services that had nothing to do with pizza…
If all else fails, you can always ask to meet the prospective tenant in person.
This opens the landlord up to a discrimination case, but I had clients once who were both lawyers (one is now a sitting judge) who had absolutely no issue with meeting the tenant in person. They said, “He’s perfect on paper and has nothing to worry about. Unless he shows up and is 65 instead of 25, or has gang-tattoos on his neck when none show in his driver’s license photo, then we’re fine.” They argued that both those somewhat facetious examples would represent misrepresentation on the part of the prospective tenant, and they also argued that, if push came to shove, they were fine to suffer whatever consequences came their way.
Many landlords are afraid to meet tenants for exactly this reason, and in today’s social climate, I don’t blame them. I would almost never advise a landlord do this, unless the tenant asked for the meeting, and the landlord was 99.9% certain that they were going to accept the tenant’s application. Hopefully that tenant doesn’t show up with three pit-bulls that weren’t disclosed on the application…
So for those of you who fear being a landlord, honestly, fear not.
It’s certainly not for everybody. I haven’t been a landlord in almost a decade.
But for those that do, heed my advice above. There is simply no such thing as “too much diligence.” Trust me on that…