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Avoiding Craigslist rental scams

The Consumerist posted five warning signs that a Craigslist rental listing is probably a scam. As a landlord looking on from that side of it, I generally agree with it. Here’s a landlord’s take on avoiding Craigslist rental scams.

The one piece that I disagree with–mildly–is saying that lack of an address is a total red flag. I’m a bit reluctant to post an address publicly due to copper theft. Call me paranoid, but I see a difference between putting a sign up in a middle-class neighborhood where the locals and passers-by will see it, and posting an address to Craigslist so that the entire metro area can see it. I’m willing to do the former; I don’t do the latter.

But I do give a general location. I always mention the school district it’s in (a good school district is a selling point), and I mention things that are close by. If the grocery store is two minutes away, to me, that’s worth mentioning. Someone who knows the area will get a pretty good idea where the house is. It’s when someone e-mails me and wants to see the house that I provide an address, the nearest major intersection, and whatever else they need to get them there.

Yes, there’s still risk involved with that, but less than posting an address where everyone in the world can see it passively.

But I do think the rest is pretty much spot-on.

Lack of photos is always a red flag. If you don’t like the kitchen, I want you to find that out right away, so that neither of us wastes our time. Like all small landlords, I have a regular job, so I don’t want to spend all day Saturday showing a house to people who aren’t going to be interested. Taking photos and posting them is a pain, but it takes less time than showing the house once, so a landlord is foolish not to do it.

But besides that, I won’t rent out a house that I wouldn’t be willing to live in myself. I happen to think I only rent out nice places. So I post photographs so that people can see that my house is nicer than the other ones available for rent, and they’ll e-mail me.

Let’s move on to the next red flag. No landlord pays for everything. Sometimes it’s easier for the landlord to pay certain utilities. The sewer company won’t let me change the sewer bill to a tenant’s name, so if the tenant doesn’t pay, I get the nasty letters and the credit hit. So I pay that bill, and raise the rent accordingly. I’m up front about that. I say that if I’m $50 higher than the other two houses for rent in the school district, that’s probably why. It’s one less bill for the tenant to pay, and it keeps me out of trouble, so I do that.

But the example provided says the landlord pays for lawn care service. On an $800/month house? Let’s get real. Lawn care service is expensive, and one way or another, the tenant will pay for it. I can’t find anyone to mow any of my lawns for less than $25 per cut. Assuming the mowing season is 8 months long, that’s $800 for the landlord to recover. So if a landlord pays for lawn care service, expect the rent to be $70 higher than one who doesn’t.

Remember, landlords aren’t in business to lose money. They have the costs of a mortgage, property taxes, and insurance to recover, plus maintenance costs. Interest rates are absurdly low right now, which gives landloards more margin than they had in recent decades, but if I were paying for all of the utilities and lawn care, I would struggle to break even. A good bit of personal sacrifice goes into being a part-time landlord, so landlords don’t go into it to break even.

Being overly flexible on the deposit is also a red flag. It’s not that hard for a tenant to do $1,000 worth of damage to a place and then walk away, and that’s why a landlord will want the deposit up front. Will a landlord be flexible on that if asked? Possibly. But don’t expect the landlord to volunteer that. Really, there’s no need to. The goal of an ad is to get the AAA tenant–if the landlord is fishing for a C-minus tenant from the get-go, either the landlord is desperate–a bad sign–or it’s a scam.

I would go so far as to say an ad like that is like a personal ad that states an outright expectation to be dumped in a week or two. It’s a sign of someone who’s really not ready for a relationship, or has really bad intentions. Whichever it is, you don’t want to find out.

But the most important thing is that you should never, ever have to fill anything out or pay anything before seeing the property. You shouldn’t have to take a hit to your credit score or pay something without seeing the property first. It’s not fair to you, and it’s not worth it. I screen, but I don’t check a thing until you’ve seen the property and you’re interested enough to fill out an application and return it. And while not every landlord does this, I always credit the application fee toward the first month’s rent. My fee is high due to the screening company I use, but that does two things. It tends to keep deadbeats away, and I remind people that if they have nothing to hide, it ends up not costing them anything in the end. I’m willing to eat that fee as the cost of getting a good tenant. Bad tenants are expensive, so it’s not fair to expect a good tenant to cost me nothing. And I’m up front about all that.

The closing advice that if it sounds too good to be true, it is, is very good. Here’s a little secret. Expect the monthly rent to be around 1% of what it would cost to buy a comparable house. If the houses in a given area cost $100,000, then the rentals will be around $1,000 per month. Those numbers will vary some, but if someone is offering a nice house for half that, be suspicious.

So do a little homework. Punch the zipcode into Zillow, and look around for comparable houses. See what Zillow says they’re worth, and what Zillow says they should rent for. Between the one-percent rule and Zillow’s rent estimate, now you have a couple of rough estimates to go by. Realtors hate Zillow, because its estimates can be off 20-30 percent, but it’s free and anyone can get to it, and it’s good enough for scam-busting. If someone is offering a property for half what Zillow says, something’s really wrong.

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