Rental application fraud has risen 9% month over month since COVID-19 hit, according to a report from real estate tech company Snappt.
Snappt surveyed 100 residential property managers who manage more than 1,000 units and found that 66% had been victimized by fraudulent applications.
Fraudulent applications often lead to evictions – more than 20% of the managers estimate almost one in three evictions are due to fraudulent applications. Evictions come with a heavy cost – averaging $7,685 for those surveyed.
“If someone understands the law, they can stop paying and live rent-free for six months while we work to evict them,” said Chad Vasquez, general manager of Circa LA.
A typical property manager reports 15% of their online rental applications show proof of obvious fraud, while the respondents estimated that an additional 10% of fraudulent applications get processed unnoticed.
“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,” said Daniel Berlind, CEO and co-founder of Snappt.
In addition to the costs associated with having to evict bad tenants, the top problems resulting from fraudulent rental applications include costs associated with physical damage to the property, missing out renting to good tenants, criminal activity at the property and loss of reputation.