According to a new survey by Snappt, a Los Angeles-based real estate technology company, fraud has become more common in the residential rental industry. The “2020 Fraud in the Rental Industry Survey” shows that two-thirds, or 66%, of property managers say they have been victimized by fraudulent rental applications. In addition, this applicant fraud has increased 9% month over month since the COVID-19 pandemic has hit the nation.
The survey, conducted by Dallas-based ReRez Research, included 100 residential property managers who oversee more than 1,000 units. The typical property manager reports 15% of online rental applications exhibit fraudulent information with another 10% of fraudulent applications slipping through the cracks.
In addition, 41% of property managers have responded that fraudulent rental applications are somewhat to extremely common and report an annual eviction rate of 12%. Another 34% report annual eviction rates of 20% or higher.
“There are a number of factors that are fueling the increase in fraudulent rental applications,” said Daniel Berlind, CEO and co-founder of Snappt, in a statement. “The increasing number of self-employed applicants, a move to online rental applications, and the increasing availability of tools to fraudulently alter financial documentation all make the problem more common.”
According to Snappt, the biggest issue is spotting fraudulent documents. One in five of the property managers report it taking more than 10 hours to vet an application, and 58% say it’s a task that is somewhat to extremely challenging.
The top five problems caused by these tenants with fraudulent rental applications include costs associated with evictions, physical property damage, the missed opportunity to rent to good tenants, criminal activity, and loss of reputation.
Snappt recommends several best practices for property managers to deal with potential fraud, including ensuring that account numbers and transactional details are consistent and carry across documents, calling all telephone numbers and cross-checking that they are former employers, and utilizing technology to catch document manipulation.
