10 Ways to Catch Fraudulent Applications

By Robert L. Cain, Copyright 2020 Cain Publications, Inc.

One in three rental applications contain some kind of fraud, reports snappt.com. in 2020, the company surveyed property managers and came up with that figure and others just as telling revealing the carefully generated fake documents landlords see on rental applications.  It’s usually income, but it can be far more devious than that. Of those who admit it, says the snappt.com report, two of every three property managers have been fooled at some time by phony documents.

It’s easy to create a phony document, one that will fool many people, including landlords anxious to get a unit rented.  Time was when tenants had to work harder to come up with doctored documents to prove their rent-worthiness.  Now all it takes is a visit to a website.

Get It Rented!: Little-known tricks and secrets of marketing rental property to attract good tenants in good times and bad by [Robert L. Cain]

I checked out a few of those websites.  Fakepaystubs.net, pay-stubs.com, and thepaystubs.com all promise quick and easy documents to prove whatever you want proved. Fakepaystubs.com, for example, provides instruction and services for

“How to edit my paycheck stub
How to get my check stub online
Create a pay stub
How to edit a scanned document
Online PDF Editor
PDF Editor Service for Paystubs
Editing Scanned Documents
The PDF Editor Service
Editing Fake Paystubs Service
Editor of Fake Paystubs Service”

In addition, beside fake paystubs, they will create bank statements, credit reports, utility bills, credit card statements, and tax returns, running the gamut of documents meant to fool the less than diligent landlord.   Of course, they insist that they are just for fun and should never be used in real life; “Services provided here are only for Novelty, Education and Entertainment purposes.”  Another site even offers two people pretending to be employers and previous landlords to answer calls from anyone checking the application.

All of this has become epidemic recently because of how easy it is to create documents online.  With due diligence, you can easily flush out fraudulent documents and applications. The most important point is: BELIEVE NOTHING ON A RENTAL APPLICATION UNTIL YOU HAVE VERIFIED IT.

Find out after they have completed their fraud and moved in, and you most certainly have the right to evict these tenants, assuming you can actually still evict where your property is.  The average eviction though, reported the Snappt.com survey, costs $7,685.  And that’s just for the cost of the actual eviction.  It doesn’t include the lost rent and property damage done by a bad tenant. Never allowing them move to in to begin with provides the best protection for your investment.

Here are 10 things to do to ferret out a fraudulent application and keep from renting to a lying tenant.

  1. Make sure the application is completely filled out, no exceptions.  If your applicant has a bad attitude about your insisting it’s completely filled out, simply reject the application.
  2. How do the documents your applicant submits look? Are the numbers, account numbers, phone numbers, income figures, everything  the same across all documents?  Look at formatting to see if it is consistent in documents from the same source.  For example, does a bank statement look like the actual bank statement from that bank? Check spelling and grammar. Spelling and grammar errors are a sure sign of fraudulent documents.
  3. Call the telephone numbers on the application and documents to make sure they are working numbers.  Then compare the phone numbers on the application with the phone number of the current and previous employers, the ones you find on the employers’ websites or in the phone book.  No website? Be extremely careful.
  4. Verify start and end dates with employers and landlords to make sure they match what’s on the application.  If they don’t, ask your applicant about missing periods of time. The answer had better be good. Check with the current and previous employers to verify income.  Don’t rely on possibly phony paystubs submitted by the applicant.
  5. Look at Facebook and LinkedIn pages and online databases such as opencorporation.com and sba.gov to make sure the applicant’s employer is real.
  6. Check the applicant’s credit report to see if the dates and addresses match up with what’s on the application.  Don’t rely on a credit report an applicant provides; pull the report yourself. 
  7. Do a Social Search to see if the Social Security information is the same as what’s on the rental application.  People using a phony Social Security Number will show up with different names, addresses and dates than those claimed on the application or not show up at all.
  8. Call previous landlords for references. Check to be sure the phone number you are calling actually belongs to the landlord or manager and not a friend posing as a property owner.  One suggestion I saw recommends calling the numbers of previous landlords and asking if they have a two-bedroom unit for rent.  If they answer that you have the wrong number, that waves a huge, spotlighted red flag. Check county tax records online to see if the name of the property owner is the same as the landlord’s listed on the rental application.
  9. If you still haven’t rejected an applicant after finding inconsistencies, ask the applicant to provide hard copies of the documents or to print out the documents in your office.
  10. Spend the time to do a proper screening job.  The Snappt.com survey reports that property managers spend between four and ten hours on each application. Whatever time spent will be worth it if you find a fraudulent application and spare yourself a bad tenant and an eviction.

You don’t have to check every application if you screen in the order the application is received.  The first acceptable one, the one that meets your strict rental standards and passes muster can be the one you accept. Just be sure to make your rental standards are so meticulous that anyone who meets them will be an acceptable tenant.

Bad tenants, tenants who have a spotty or horrible rental history, are not going to start being good little boys and girls.  They’ll keep up their tricks as long as the tricks work and will learn new ones when the old ones wear out.  They’ve worn out their welcomes everywhere they’ve lived.  Don’t let them add your property to the list.

Written for Zip Reports where they provide applicant screening services.

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Layoffs and Hiring Freezes Are Taking Their Tolls on the Economy

By Robert L. Cain, Copyright 2022, Cain Publications, Inc.

If they take $11 billion out of the economy, the effects will be less than pretty. They did and it isn’t pretty. As of November 18, 120,000 tech workers had been laid off in 2022. And the layoffs continue along with hiring freezes. Marc Weil, who has worked in tech since 2010, and one of the 120,000, was quoted in a Washington Post article, “Year after year goes by and the tech economy keeps getting bigger and bigger with no end in sight. Everyone in tech has been warned by people who lived through the last few decades that this will end. And so it ended.”

Just the tip of the iceberg, tech accounts for a small part of the US economy. But considering its influence on spending and business, its effects swallow a much larger piece of the economic pie than its perceived size. The average salary of a tech workers is a little more than $94,000 a year. Every dollar spent turns over seven times, advises the economic axiom. That means that one tech worker’s salary contributes more than $658,000 to the economy every year. Multiply that times 120,000 and you get more than $11 billion. Where does that money go? Much of it goes to the incomes of such small businesses as restaurants, coffee shops, gyms, movie theaters, professional services. Those businesses employ thousands of people, but may now employ fewer and fewer. The rest may well go to the government in taxes.

The layoffs and hiring freezes go beyond tech. According to a survey by LinkedIn, most industries’ hirings have plummeted with tech not even in first place.  Far and away in first, or maybe last, place are holding companies whose hiring year over year dropped 23.3 percent, followed by tech at 17.1 percent. Others follow closely such as entertainment providers (small businesses) at 14.2 percent, professional services (another small business industry) at 15.6 percent, and retail at 12.5 percent (much of that small business).

Winners stand out, though. Utilities hired at a 23.3 percent increase, so if you’re an electrician, for example, and want to work for a power company, or a plumber and want to work for the water company, you’ve most likely got a job.

Also increasing in recent months, after declining year over year, were government, education, construction, farming, and health care.

Jim Harrison, of the Utility Workers of America, AFL-CIO, quoted in Money magazine, explained about utilities, “It’s a recession-proof sector for the most part. People still have to have the essentials of modern-day life. They need to have light, heat, power and water and those kinds of things.” But they don’t have to have restaurants, hair dressers, and holding companies.

“Big picture,” though says Julia Pollak, chief economist for Zip Recruiter, “companies are very much preparing for the possibility of a downturn. They’re focusing on hiring rather than nice-to-have hiring. But many are still continuing to hire because they absolutely have to.”

And they don’t “absolutely have to” keep raising wages. Sure, hourly earnings keep going up but more slowly. In September, for example, they rose just 0.3 percent to $32.46 an hour. Companies figure they can attract workers without increasing pay much.

Even so, some economists discount the tech layoffs and less hiring by citing the Labor Department figures of the 261,000 jobs added in October. They claim that the tech layoffs have no effect on the economy saying that tech accounts for an infinitesimal part of unemployment.  They also point to consumer spending, which increased by 0.8 percent in October as proof that everything is all right. That increase has been skewed by the inflation that rose 0.7 percent for the month with much of the rest of it consisting of people having to catch up with their unmet needs such as buying gas and groceries and taking money out of savings, which decreased to 2.3 percent down from 2.4 percent in September.

Those laid-off tech workers will have to go job hunting with no guarantees that the jobs they get will come close to paying what they made at Facebook, Google, or Twitter. That’s a good thing, says Erik Brynjolfsson, a Stanford University economist, “I think the salaries in tech were unrealistic. Now there’s a bunch of really good coders and engineers for the rest of the economy where they are needed a lot more.” Might he have been forgetting about the effect that taking a good portion of the income they had earned out of the economy? Remember, you can’t do just one thing. The unpredictable ripples of layoffs and hiring freezes affect the economy cutting into hiring both for large and small businesses.

Layoffs don’t make up the whole problem. Jim McCoy of Manpower said, “They’re planning for uncertainty. Companies are slowing down replacing people so they don’t have to do layoffs next year.” He added that companies because of “economic uncertainty” have chosen not to hire for around one-third of the open positions. It costs money to lay off workers what with severance packages. But it costs nothing to not hire in the first place. Instead, may companies hire contractors. They may not cost less, but they are infinitely easier and cheaper to lay off.

Put the layoffs and hiring freezes together and the witches brew bubbles with a smell that bodes ill for the economy. In September, 6.1 million people got hired, the lowest level since February 2021. With job growth at 261,000, the lowest since April 2021.

The upside, if there is one, is that employers can be more selective when they actually do hire someone. They can screen thoroughly and set standards higher than they were able to before. Chad Leibundguth of Robert Half Staffing remarked in a USA Today article, that employers are “taking their time to identify the right person.” That’s if they look for new hires at all. Now is the time for businesses to describe their ideal applicant and wait for him or her to show up, which might be sooner than later.

Written for Zip Reports where they do employment and rental screening.

Contact Robert L. Cain at bob@cainpublications.com

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Buy Now Pay Later’s Impending Downside

By Robert L. Cain, Coopyright 2022, Cain Publications, Inc.

They took a market served by check-cashing and payday loan stores and offered credit to their customers. Buy Now Pay Later (BNPL) began as a way to reach an underserved or ill-served $3.9 trillion credit market seen as a giant money-making opportunity. Making money hasn’t been part of the planned equation though. So far so bad.

BNPL companies such as Klarna, Affirm, Afterpay, Zip, and Sezzle lose money on every transaction. It costs them more to market their services than they make from lending with the 2 percent to 8 percent discount retailers pay when those companies’ borrowers buy from one of their merchants. Customers pay no interest if they pay off their purchase within six weeks. After that, depending on the lender, the interest rate can vary between 25 percent and 36 percent. One company, Affirm, advertises that it doesn’t charge late fees, something other companies do, but charges an interest rate of 36 percent after the six-week grace period expires and their customers still owe on the loan.

Even with extra, added charges and interest, the industry profit margin sits at a minus 2.6 percent. Apparently, they figure they can make up the loss in volume with the, according to Reuters, 180 million loans they made in 2021, a 200 percent income increase from 2019. Most likely, it just increases their number of losses by the 200 percent range.

Check cashing stores and payday lenders whose customers the BNPL companies are trying to gobble up have built-in safeguards. Check-cashing stores discount checks after they verify the funds, so they have no risk. Payday loan stores always verify customers’ employment before they loan to their customers. Traditional lenders such as credit card companies won’t even accept a customer who doesn’t meet their credit standards and report to credit reporting companies. The BNPL industry has no such safeguards in place. Their loans don’t show up on credit reports, and since they don’t communicate with other BNPL companies, don’t know if one of their customers has outstanding loans with other companies. Gee, how might that go wrong?

BNPL companies are maybe less than forthright in their marketing. For example, read the reviews on all their websites. All seem to have been written by the same person: same sentence structure and same syntax, perfect spelling and grammar, even the negative reviews. In fact, the negative reviews it appears were used as sales pitches because they all promise some kind of compensation to the “injured” reviewer. That’s no financial damage to the companies because no real customer had a problem that they published, anyway.

With the somewhat tarnished shine coming off the Yugo business model, the wheels have begun to wobble. Delinquencies are up with a 2.39 percent charge off rate in 2021, or $109 billion compared to a 1.83 percent rate, or $70 billion in 2020. In contrast, charge off rates for credit cards amount to 1.8 percent.

BNPL companies make it easy to borrow money by users installing apps on their phones that they can use at POS terminals much like using credit cards. Trouble is, they only work for companies that accept BNPL payments, which isn’t close to every one of them.

It’s Buy Now Pay Much More Later if these companies expect to turn a decent profit, something they don’t expect to do until 2026 or 2027, says the rosy picture management paints after being in business since 2008. Amazon, in comparison, showed a profit in 2003 after being in business selling books out of Jeff Bezos garage in Bellevue, Washington since July 5, 1994, but they sold tangible merchandise that people wanted with a business model that invited and propelled growth. They also didn’t loan money to the unqualified unlike the BNPL companies that rely on people who are hanging on by their fingernails.

Trying all kinds of revenue generation techniques, BNPL companies pull out the revenue-generating playbook. One technique is accepting advertising.  Afterpay’s website is cluttered with ads. Whether those advertisers get a lower discount, Afterpay isn’t telling. Another idea is a “repeat user fee.” More than one BNPL company suggests that if borrowers borrow multiple times in a month, they’ll get hit with a fee for that. Of course, that would drive them to other BNPL companies where they could tack on more loans unbeknownst to any other BNPL company.

So what? Who cares if BNPL companies find themselves teetering on the edge of insolvency? If it only affected them, it would just add an item of interest. But it can and will affect the people who are supposed to be paying their loans back.  Already, just as credit card borrowers have, BNPL customers use BNPL loans to buy groceries and gas, possibly tacking loan upon loan just to keep food on the table and gas in the car to get to work. Credit card borrowers who have maxed out their cards might even find themselves needing to use BNPL to buy food and gas with inflation chewing up their incomes.

When the recession and layoffs expected to hit next year begin, the BNPL customer base could well find itself unable to pay back its accumulated loans. Since BNPL companies already paid the bill their customers ran up, if borrowers have no money to pay back the loans, the lending companies will have to eat the money they already paid.

The successful issuers of credit have the good sense to qualify their borrowers before they let them run up bills. BNPL companies loan and hope. They hope their borrowers are qualified, but can’t find out for sure before they lend. They hope their borrowers will be able to pay back the loans but have no way of qualifying them except their experiences after they make the loan. They hope the economy stays afloat and the inflation abates so debts can be paid back. They hope to come up with additional revenue sources so they actually make a profit, even though even they don’t expect it for at least four years. That’s a huge impending downside.

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How Liars Give Themselves Away

By Robert L. Cain, Copyright 2022, Cain Publications, Inc.

A boss  I had once gave away his lies with a gulp in his throat immediately before and after the lie exited his mouth. Once I heard the gulp, I dismissed any and everything that had followed or preceded it. 

Our last landlord, the one we had 40-plus years ago, gave herself away with the glazed look in her eyes, looking at empty air when she made up or otherwise embellished a story.  We always knew.

I knew one sleazy businessman who gave away his lies with a short “ha-ha” laugh.  Ask him a question and he after made up an answer he thought would please you, he added a “ha-ha” exclamation point onto the lie. 

Liars give obvious signs that what they are saying is not the entire truth, or maybe any of the truth. We all can identify them.

Most people, far from being “practiced at the art of deception,” have no idea they are giving away the fact they are lying through body language or vocal spasms.

Paul Eckman, of professor of psychology at the University of California in San Francisco, says that catching liars is an art almost anyone can learn.  People show tell-tale signs, he says, when they lie.  “Liars usually do not monitor, control, or disguise all their behavior.”

In the book The Art of Questioning: Thirty Maxims of Cross-Examination Peter Megargee relates this anecdote.

“Attorney Lloyd Paul Stryker was a keen observer.  He would watch carefully how the witness behaved in the courtroom and on the stand.  He would rivet his eyes on the quarry during direct examination. . . .  He looked for clues in the ways the individual expressed herself or himself.  He listened for variations in tone of voice caused by the tightening of vocal chords.  He noticed pauses.  He noted flashes of anxiety, dryness of mouth, moistening of lips, hesitations, discomfort, and uncalled-for repetitions of coached material.  He watched for stammer and for needless reference by the witness to counsel’s name. ‘I never was there, Mr. Prosecutor.’ Eyes were of particular interest.  How and when did pupils shift and dart?  When did eyes narrow or blink?  The giveaway laugh and wipe of forehead.  Hands wring, cling, scratch, and readjust.  Legs shuffle.  A hand touches the pocket with notes taken from his lawyers on what to avoid at all costs.”

We can’t be as accomplished at spotting liars as Lloyd Stryker was without years of practice, but let’s look at some of the obvious body language signs and vocal signals people make that give clues that they may not be telling you the entire truth.

When you ask a question, a “probing point,” just as Stryker did to a witness, watch your applicant or tenant carefully. A probing point may be evident when a word or phrase “touches a nerve” during a conversation.

Your question may elicit a lip-purse, a shoulder-shrug, or a throat-clear, for example.  Other signs may be stumbling over words, a higher voice pitch, or repeated swallowing.  However, Dr. Paul Eckman points out that “is no guarantee that a lie is being told, but it signifies a hot moment when something is going on you should follow up with interrogation.” The question has hit a sore spot.  Is it always something that will disqualify him or her? Of course not.  It could just be an unpleasant memory.  But you owe it to yourself to find out if it is important to you in your selection process and your decision whether to believe the person you are speaking with.

Body language expert John Mole provides the following list of body-language cues that could indicate someone is lying:

  • Touches face
  • Hand over mouth
  • Pulls ear
  • Eyes down
  • Glances at you
  • Shifts in seat
  • Looks down and to the left

How does it work on the field of battle with an applicant in front of you and his or her application in hand?  Here’s an example:

Finally! They look and talk like terrific people. They tour the property and pronounce it a “really nice place, someplace we could live forever.” They even talk about how close the unit is to the school their children attend and that they have friends just a couple of blocks away.

The prospect of them living there forever pleases you because the last three tenants have moved out after just a couple of months. Now here is someone who wants to stay a long time.

Hardly able to contain your excitement, you ask a simple question, “Do you think your last landlord will give you a good reference?”

“Oh, sure, no problem,” the wife says as she covers her face with her hand.

“Yeah, we got along—along fine, yeah, uh, fine,” says the husband while pulling his ear lobe.  “He’s uh, uh, uh, uh, going to sell the building.  That’s why we’re getting kic—, er,. Moving.” At that point, he stares at the ground, seemingly intensely interested in the bug crawling along the sidewalk and glances at you out of the corner of his eye.

Too bad.  And here you thought these folks looked promising. You wonder why they don’t just tattoo “LIAR” across their foreheads.  You vow to quiz their last landlord after making sure the number they gave you for him on their application is the actual phone number of their last landlord and not of their friends who “live just a couple of blocks away.”

Other things to watch for that indicate deception are pupil dilation and fast blinking rates.  Eckman observes that people make “fewer hand movements during deception compared to truth telling.”

No clue assures absolute proof that an applicant’s answers are fabrications. They do mean that the person is anxious or feeling stress. Liars though, other than the pathological subspecies, feel stress or anxiety when they spout their lies.

These cues should arouse suspicion about what they have told you.  Remember which question or at what point their body language or vocal quirks indicated deception, and be extra vigilant in checking out that spot on the application.  You are simply using your applicant’s body language to give you a better idea about where they might be trying to put one over on you.

Just pay close attention not to just what they say but how they say it.

Written for Zip Reports where they do employment and rental screening.

Contact Robert L. Cain at bob@cainpublications.com

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Regulation F Affects Both Collection Agencies and Creditors

By Robert L. Cain, Copyright 2022, Cain Publications, Inc.

“Deadbeat! Just wait until I put you on the deadbeat list that I’m going to show everybody! My law firm and I will hound you forever! I’m going to have you arrested, too! Did you get that court order I sent you? Just wait, deadbeat!”

There might have been a time when it was legal to say any and all that to a debtor, but now danger lurks. Already it was mostly illegal under 15 USC 1692 (d-f). But under the Fair Debt Collection Practices Act (FDCPA) with Regulation F added protections were implemented Nov. 30, 2021.

These updated regulations, aimed specifically at some less-than-ethical collection agencies, also apply in many cases to creditors themselves attempting to collect a past-due balance from a customer or tenant. Creditors include landlords owed rent when a tenant moved out one midnight and business owners owed a debt and who haven’t been paid for 90-plus days by a customer.

Time-Barred Debt

One trick some less-than-ethical collection agencies used was to buy up old debt, debt that aged out past the statute of limitations, and attempt to collect it. They’d sue the debtor and count on him or her not showing up in court, resulting in a summary judgment against the debtor. If the debtor showed up with evidence that the debt had passed the statute of limitations date, the judge would dismiss it. Most often, though, they just didn’t show up in court and the judge issued a summary judgment.

Under the new Regulation F, the collection agency must first prove the debt is current before it can sue.

Credit Reports

Some small debts take too much effort and time to try to collect. Collection agencies and some creditors would simply report the debt to the credit reporting agencies without the debtor knowing. When they pulled their own credit report, the debtor was in for a surprise. Under the new FDCPA regulations, the creditor must get in touch with the debtor by mail, email, or text to tell him or her the debt will be reported. Until that contact, the creditor may not report to the credit reporting agency.

The question arises, then, can a deadbeat tenant or customer hide out or just return mail as undeliverable, bounce a text, or have an email come back as undeliverable and avoid having the debt reported? The answer is a qualified no. After considerable comments from collection agencies, inserted in Regulation F came the provision that the creditor must wait 14 days for the letter, email or text to come back undeliverable before reporting the debt. They are entitled to make “judgment calls” regarding compliance with the FDCPA and hope their “judgment” meets with the approval of the federal authorities and courts. One method that requires no waiting period or contact with the debtor is reporting to a check verification company. How effective? It’s debatable.

Constant Phone Calls

Another annoying trick collection agencies used was the hourly phone calls, harassing the debtor at all times of the day and night to beat them down so they’d pay the debt. I don’t know how well that worked to collect what was owed, but it did hound the debtor. Under the new Regulation F provisions, a creditor can call, text, or email only seven times in seven days, and if the creditor has spoken to the debtor on the phone, the company must wait seven days before making another call to that person.

Debt Validation

Within five days of the first contact with the debtor, the collector, that’s either the creditor him or herself or the collection agency, must send the debtor a Notice of Debt. The collector needs to provide a Debt Validation Notice (available from consumerfinance.gov), which includes detailed information including one of five different dates such as the last statement date, the charge-off date, date of last payment, the judgment date, if there was one, or a couple more found on the form along with the name and address of the original creditor. That is supposed to ensure the debtor knows what the debt is for. The form also provides a way to dispute the debt, says under what circumstances the collector has to stop trying to collect, a way to ask for the name and address of the original creditor, and a way to ask about payment options.

Debt validation can throw a monkey wrench into the workings of collection agencies because they often don’t have the name and address of the original creditor. They may have bought the debt from another agency but without any original creditor information. They would have to get all that information from the original creditor who may not have any reason to provide it since the original creditor won’t get any of the money collected.

Creditor Responsibilities

If a company does its own collecting, the same provisions apply as those for collection agencies. Still required is supplying complete information to the debtor and following the same non-harassment rules. In addition, here’s one more vital concern. If they hire a collection agency and that agency violates any of the harassment or procedure rules, the creditor can and will be held responsible since the creditor is responsible for any and all actions of its agent. Thus, it pays to research any collection agency thoroughly before hiring them.

At least one technique survives. If a creditor gives up and figures the debt is uncollectable, it can let the IRS be its collection agency. No, there won’t be any money coming to the creditor, but it likely will result in an IRS audit of the debtor. Use the 1099-C form, forgiveness of debt if the debt is more than $600. Most likely the debtor won’t know it’s been filed and so won’t include it as income on his or her tax return. Come April 15, you can, albeit vicariously, imagine what the IRS will do to your debtor.

Debt collection just got more restrictive, but you can still get your money. Deadbeats are still on the hook for the debt. It just might be more complicated and maybe take a little longer to collect. Have a concern or question? Call an experienced regulatory attorney because some provisions of Regulation F might conflict with portions of the Fair Debt Collection Practices Act. Consumerfinance.gov warns that “substantial monetary penalties” await the unwary and indifferent violators of this regulation.

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Rich Guys Love Recessions. Here’s Why.

By Robert L. Cain, Copyright 2022, Cain Publications, Inc.

Warren Buffet said, “Be fearful when others are greedy, and be greedy when others are fearful.” In 2008, with other people’s fear in abundance, he bought $5 billion in “perpetual preferred shares in Goldman Sachs” that paid him 10 percent interest and had the option to buy additional Goldman Sachs shares. Goldman had the option to buy them back at a 10 percent premium, which they did.

He bought $3 billion in “perpetual preferred stock” of General Electric with an interest rate of 10 percent that GE could redeem in three years at a 10 percent premium. Likewise with shares in Swiss Re and Dow Chemical, both of which needed cash to get through the credit crisis. Buffet made billions of dollars for himself.

Jamie Dimon, CEO of JP Morgan who today expectantly predicts an “economic hurricane,” during the 2008 recession acquired Bear Stearns and Washington Mutual, both of which had been brought to their knees because of their betting on US housing. They bought Bear Stearns for $10 a share, about 15 percent of its value in early March 2008.  In September he scarfed up Washington Mutual at a price that was a fraction of its value earlier that year. Shares of JP Morgan’s value, because of this and other deals, tripled in 10 years, making shareholders and Dimon even richer.

Carl Icahn, who became famous for buying TWA and selling it for parts in 1988, remarked “Some people get rich studying artificial intelligence. Me, I make money studying natural stupidity.”  During the credit crisis, he bought the under-construction Fontainebleau in Las Vegas for about $155 million, around 4 percent of the cost to build the property, and sold the unfinished property for $600 million in 2017 earning him four times his original investment.

Rich guys love recessions. They make money because they knew opportunities when they saw them and could afford them, but mostly because they are rich. Rich guys have the cash to make more money where ordinary people don’t.  You can’t get rich during a recession but you can get richer. You need lots of convertible assets to take advantage of the “blood in the streets,” something the vast majority of regular folks don’t have. 

It takes cash, but that cash can come in the form of net worth from assets that are already cash or can be turned into cash either by selling or borrowing against them.

Income alone doesn’t make a person rich. Some people have high incomes but low net worths because they blow every penny they earn; witness professional athletes who, never having had so much money in their lives, spend it all on expensive cars, parties, luxurious houses, and jewelry and end up in bankruptcy. 

The incomes of the top 5 percent of earners aren’t so bad, with an average of $342,987 a year in 2020, but that doesn’t go far enough to take advantage of lucrative recession opportunities.  That income can get eaten up with mind-numbing house and car payments, putting kids through Ivy League schools, country-club memberships, donating huge sums to charity so they look good, and taking expensive vacations.

Penny Phillips, president and co-founder of Journey Strategic Wealth, said “A lot of people who are wealthy in this country are wealthy not because of income, but because they own assets, they have investments that appreciated, real estate or otherwise.”

Some people have high net worths but “low” income. They use their assets to buy other assets at bargain-basement prices. It doesn’t matter how much you earn but rather how much net worth you have and can convert into dollars to increase your net worth.

Who are those rich people who have the resources to become richer during a recession?  A Schwab study in 2021 said a net worth of $1.9 million qualifies a person as wealthy, down from the $2.6 million the 2020 study found. The average net worth of US households, though, comes in at less than half that. But that doesn’t tell the whole story. How much of that net worth can be used to take advantage of deals engendered by a recession? It doesn’t seem as if a little less than $2 million in assets would do that. At that level, they might have more fear than greed, afraid that they could lose it all. Still, $1.9 million looks to be a good starting point.

For the exceptionally wealthy, such as Warren Buffet, Carl Icahn, and Jamie Dimon, a billion here and a billion there doesn’t affect them. But a thousand here and a thousand there for regular people can mean the rent doesn’t get paid. The wealthy can be patient because they don’t depend on cash to pay their bills and keep the wolf from the door. As in the examples above, the profits on their investments came after at least a couple of years and often longer. They could afford to be patient.

For us fearful normal people, it seems that we save to not lose money rather than to get ahead. Socked away for retirement, we dare not risk our 401ks and SEPs. The key point is that the rich, those with assets, always think in terms of how to make more money. The rest of us think about how not to lose it.

Most people can’t take advantage of recession opportunities. And even if they have enough money to invest, it won’t help much since you have to already be rich in order to get richer.

Can ordinary folks love recessions? As Buffet, Dimon, and Icahn attest, they are filled with opportunities, less so for the not-so-rich, and fraught with peril for the poor living paycheck to paycheck. The rich hold a distinct advantage, other than just being rich; they have people whose job it is to study investment opportunities, entire staffs who do nothing but look out for their bosses’ interests.  The “experts” ordinary, not-so-rich people have to rely on are often not expert at all but salespeople who get a commission on the investments they sell. How, then, can we know if any investment we examine is worth spending our money on? It could be pure luck.

We need to make sure it’s not our “blood in the streets,” that our fear doesn’t lead to someone else’s greed, and that we don’t represent Carl Icahn’s “natural stupidity.” We need to be on the lookout for solid opportunities that arise in abundance during a recession and that we can bravely, but with careful examination, take advantage of.

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Seattle Loses More than 11,000 Units in a Year

How does a city manage to lose 11,521 rental units in a year? When you look at the city of Seattle, you understand how. The latest issue of Current, the publication of the Rental Housing Association of Washington suggests it is because of the “City Council’s repeated passage of ordinances that further increase the costs, risks, and onerous burdens on housing providers.” Typically, Current reports, these homes “become owner occupied rather than continuing as a rental.”

In case you haven’t heard about them, here are some of the onerous regulations instituted by the Seattle City Council.  Just three of them are those passed in June 2021, the school year eviction ban, which prohibits evictions during the school year; a prohibition of evictions for COVID debt; and mandatory lease renewal that must be offered 60 to 90 days before the lease expires. In addition, they cap move-in fees, pet deposits, and security deposits regardless of the qualifications of the applicant. They have a rental registration and inspection law and a requirement to rent to the “first qualified applicant.”

There’s more, in fact far more, that’s too much to list here. Suffice it to say that it raises the costs of owning and managing rental properties and makes it questionable whether a rental owner can even turn a profit on his or her investment.

The usual suspects think you can do just one thing. How ignorant and arrogant can you be? The effect has been the loss of rental housing in a city that already finds itself with a lack of rental housing, both affordable and market rate.

For more than 20 years, I have advised rental owners to sell their rental properties to owner-occupants in areas where government makes investing in real estate unprofitable and more difficult than in areas that welcome rental investment. Now Seattle rental owners seem to have had enough, and are getting the idea, and bailing out of the Seattle rental market. You have to wonder how their City Council will react. Figure, considering their past behavior, it will be more of the same driving more of “those evil landlords” to cities that welcome their business.

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As the Economy’s Wheels Wobble, Economists Speak Gleefully About How Great Everything Is

By Robert L. Cain, Copyright 2022 Cain Publications, Inc.

Retail sales beat inflation for the fourth straight month the Commerce Department reported in April. The gleeful report is wishing thinking at best, misleads at worse and misinforms at worst. Sure retail sales are higher than last year, but why they are makes for a worrisome picture. For example, Walmart reported that customers favor lower-cost store brands of lunch meat over the higher-priced national brands and buy half-gallons of milk rather than full gallons. Kohl’s department store reported its customers buy less on each shopping trip.

Other factors eat into company profits; a big one is that they have too much stuff going unsold. With supply chain issues apparently over and companies receiving goods “from overseas earlier than expected,” companies such as Costco, have 26 percent more inventory than a year ago, Gap 34 percent more, Walmart 32 percent more. Target 43 percent, Best Buy 9 percent more, and Macy’s 34 percent more. “Holding excess merchandise proves expensive as warehousing costs rise,” reported a May 27 Reuters article. And as they dump the merchandise, it cuts into profits on everything they sell.

The result: several retailers, including America’s largest retailer Walmart, lowered their full-year earnings forecasts blaming high inflation, ignoring the cost of excess merchandise sitting in warehouses. Reuters reported May 26 that “some economists believe the erosion of profits and falling share prices could force companies to pause hiring or start laying off workers.” The wheels haven’t fallen off yet, but their wobble makes for troubling news.

While companies’ wheels wobble, problems exacerbate the way consumers buy. People pay for this higher-than-last-year sales with credit cards because they don’t have the cash. Forty-nine percent of consumers depend on credit cards for essential living expenses. Getting worse, the Federal Reserve Bank of New York reported that credit card balances are $71 billion higher than the first quarter of 2021.  Household debt, they also reported, increased $266 billion or 1.7 percent above the first quarter of 2021. Non-housing balances increased by $1.7 billion.

The pain doesn’t fall equally across all economic groups. Sub-prime borrowers suffer most. Many households “are forced to choose between paying for necessities and paying a monthly loan,” the Wall Street Journal reported. In fact, almost half, 49 percent, depend on credit cards to cover essential living expenses with 57 percent having missed at least one credit card payment; almost one in three, 32 percent, used the unpaid credit card debt for food and groceries.

Experian posits that sub-prime borrowers, defined as those with a FICO score of 669 or lower, amount to 34.8 percent, about 90 million adults.

But Wells Fargo CEO Charlie Schaff said “We are still in the best credit environment we have ever seen in our lives.” The best credit environment, huh? Equifax reports that about 11 percent, more than one in 10, credit cards owned by sub-prime consumers were at least 60 day behind in their payments in March compared to 9.8 percent in 2021. Plus, car loan and lease delinquencies set a new record in February with 8.8 percent at least 60 days delinquent.

Fair Isaac reports that “Americans have significantly increased the amount of credit they have taken this year.” Capital One said that in the first quarter credit card delinquency rates were more than 30 days higher than in 2021. And the gloom goes on, except with the credit issuers, who call it “the best credit environment” they have seen.

That will work until the chickens come home to roost. With inflation rising faster than it has in 40-odd years, it’s only a matter of time before over one-third of the population, 90 million-odd adults, can’t pay their bills anymore.

A University of Michigan study reported by ABC News May 22, 2022 found that consumer sentiment dropped nearly 30 percent in the past year. Their spending outruns inflation. Economists at the University of Michigan say there has been a “historic disconnect’ between sentiment and actual consumer behavior. That connection may be re-established shortly when credit cards begin getting declined and inflation surpasses income even more.

It’s already started. Target’s CEO Brian Cornell said the chain “did not expect to see the dramatic shift” in spending away from TVs, appliances, and patio furniture. Instead people are spending money on restaurant gift cards and items reflecting people’s desire to get out and spend.

Some of it has to do with pandemic fatigue. For two years, people have been locked down and masked up afraid to venture out into the world and engage in normal activities. Now they’re maxing out their credit cards to get even. It will go on until it can’t anymore.

A false security prevails with wages rising some 6 percent in April. That looks impressive but lags behind inflation.  The national saving rate has dropped about 6 percent to below pre-pandemic levels and household debt rising 8.2 percent in the first three months of 2022 compared to the previous year because of increased use of credit cards, the biggest increase since early 2008 in the midst of the recession. Even so, economists looking through rose-colored glasses say debt hasn’t reached “problematic levels.” We still have some $2 trillion dollars to suck out of savings before everything collapses.

It falls hardest on some demographics with 61 percent of Gen Zers and 53 percent of Millennials having to use credit cards for living expenses, while only 26 percent of their parents’ generation have to.

Employers can’t keep raising wages to keep up with inflation without pricing themselves out of the market while having to dump costly excess inventory. Lacking significant increases in their incomes, which employers can’t realistically provide, employees can’t keep charging everything and skipping credit card payments and still be expected to be able to pay the rent, make the car payments, and buy food.  In spite of the rosy reports from banks and economists, danger lies patiently in wait, ready to knock the wheels off the economy.

Written for Zip Reports where they do employment and rental screening.

Contact Robert L. Cain at bob@cainpublications.com

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Pitfalls and Promise: Alternative Financing

By Robert L. Cain, Copyright 2022, Cain Publications, Inc.

“There’s a sucker born every minute,” PT Barnum didn’t say it, and we might be suckers for believing that he did say it. Ryo Mac wrote, “It seems that everyone believes things a little too eagerly, especially if they want to believe it.”  It was likely a banker named David Hannum from Syracuse, New York who actually said it.

The fact that it most likely came from the mouth of a banker provides us an entirely new slant on suckers considering that financial “experts” fool people far more often and more destructively than any circus impresario ever could. 

Some people seem immune from suckerdom. When they try something, they think it through to avoid potential problems. They think critically. People who will fall for about anything lack critical thinking ability, lack financial savvy, lack self-control, and lack the ability to see consequences and alternatives. A black cloud follows them around ready to rain on them every time they try to do anything to help themselves.

People who lack critical thinking often intone the mantra “it’s not fair,” but reflects the fact that they make little or no effort or ability to counteract unfairness. They blame bad luck rather than their own bad decisions and lack of common sense.

One of the biggest financial hits can come when buying property. The Pew Charitable Trusts studied alternative financing, one way suckers can get fooled, and reported that one in five people have at some time used alternative financing and one in fifteen, about 7 million US adults, are using it as you read this. Alternative financing includes land sale contracts, lease-purchase agreements, personal property loans, and seller-financed mortgages. Alternative financing can be an excellent way to finance property. But financial peril lurks for the unwary.

Science News explained in its August 24, 2018, issue. “Nearly a third of young adults in a recent study were found to be ‘financially precarious’ because they had poor financial literacy and lacked money management skills and income stability.” The dream of homeownership is just that for many of them until the opportunity arises for them to buy a property using financing other than from a bank or mortgage lender.

Alternative financing may be their only chance ever to buy a home. Their credit is in the cellar, they owe thousands in credit card debt, they have financed cars beyond their abilities to pay, and get trapped in low-paying jobs. Eluding them are the toys and trinkets of people who have college degrees, well-paying jobs, and critical thinking ability. “It’s not fair those people have them and I don’t,” they say.  Life isn’t fair, but putting oneself in crushing debt won’t make it fairer. What will give them a leg up is growing the ability to think critically, to be able to say “what if” to protect themselves the same way the people who don’t get fooled do.

It may simply be beyond their capabilities to spot a bad deal. They “aren’t good at math,” they believe experts, they get their information from TV news, which tends to reinforce the “not fair” scenarios, and they tend to believe people who, they believe, are smarter than they are. Chances are they aren’t any smarter, just more practiced at the art of deception. The fooled can’t afford or don’t even think to use a lawyer to look at the contract.

Most of the time nothing untoward happens using alternative financing to buy a home. But sometimes it does and usually for the same reason: they don’t read and understand well. The legalese is beyond their reading capabilities and thus the ramifications of agreements they sign. They may believe the people who drew up the contract who tell them what it all means. A vicious circle, they have poor credit, low-paying jobs, lack of financial education, and poor reading and math skills. Bad guys put their feet on their desks offering to “make them a deal.” The suckers born every minute.

They may be stuck buying low-end properties using alternative financing because it’s not worth it for conventional lenders to loan less than a specific amount, maybe $125,000, or on properties with habitability issues such as utility connections, unfinished kitchens and bathrooms, and manufactured homes sitting on rented land.

How do alternative financing contracts backfire? A few get caught in a trap written into the contract of sale that puts them at a disadvantage. For example, the law varying by state, bank-loaned mortgages carry legal requirements. Not so with alternative financing mortgages. Strict legal procedures require that bank-loaned mortgage require some four months to foreclose if the buyer can’t or doesn’t pay. The lender of a seller-financed property might foreclose in a month. Buyer doesn’t pay, seller forecloses and boots the buyer out, who loses everything he or she put into the property, all the principal and interest payments, all the improvements, and the down payment. But a buyer would also lose all that with a bank-financed mortgage. It just takes longer and the buyer may be able to sell the property before the sheriff comes to evict. With alternative financing, good luck. When the 30 days are up, the buyer is out, losing all rights to the property.

Manufactured housing presents another quandary. If the house is in a park and the manufactured housing owner rents the space, no conventional lender will touch it and the buyer must get a personal property loan. Conventional mortgage lenders loan only on fee simple property, that is, property where the buyer also owns the land where the housing sits. Say the park owner sells and the new owner triples the space rent. The buyer can’t pay the higher rent amount, can’t afford to move the house because of the major expense, find another place to put it, and loses everything just as with seller financing. Plus, the personal property loan remains owing. The park owner might offer to pay off the loan for the current balance owed, or the manufactured home buyer might simply default, destroying any credit he or she might have had.

Do alternative financing buyers know any of this? Do they think, as the lender promises, this is standard procedure? There is no such thing as “standard procedure” in a real estate contract.

With little or no financial savvy and critical thinking ability, they simply don’t know how the world works. The result is they are in constant financial trouble. They may be resentful of anyone doing better than they are. They often have collections and bankruptcies.

Written for Zip Reports where they do employment and rental screening.

Contact Robert L. Cain at bob@cainpublications.com

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Gig Workers and Applicant Screening

By Robert L. Cain, Copyright 2022, Cain Publications, Inc.

Fraught with possibilities for fraud is information on the rental application of a gig worker, especially one type of gig worker. With their inability to provide much credible information, it can be difficult for us to be confident about their qualifications. Many exist in a kind of an employment shadow world on the edge of society. But that world grows ever larger Many, possibly the majority, of them are renters.

Zippia Research reports that this segment of the economy grew by 33 percent in 2020, with some 59 million American adults having done gig work that year, amounting to at least 36 percent of the population. According to the research by Zippia Research, “16 percent of US adults earned money through an online gig platform at some point in their lives,” with 9 percent earning gig income in 2020. By 2023, figure 52 percent of American workers will have worked as gig workers.

They contributed $1.21 trillion to the economy in 2020, around 5.7 percent of the US GDP. If overall statistics apply to them, more than 40 percent of them are renters. That’s being conservative because becoming a homeowner with gig income verification presents problems that wage workers and even business owners don’t have. We’ll look at those in a minute.

Who are gig workers? The definition has expanded to include people whom we wouldn’t have thought of as gig workers in the past.  The definition includes of course Uber drivers, Door Dash drivers, etc., but now thrown in the mix are the people we normally think of as freelancers and contract workers such as writers, marketers, engineers, and professional photographers, people legitimately in business with that profession, and not just looking for side income. They present more uncertainty when verifying their rental qualifications.

Many people, especially with inflation running rampant, or wanting to save money maybe to buy a house, take gig jobs to work toward financial goals. They have verifiable work income with the gig money as an added attraction. A little more difficult to screen, they do have verifiable income.

Then there is the shadow world of gig workers whose primary income comes from Uber driving and delivering Door Dash food. It gets tougher to ensure that such an applicant is qualified and has told the truth on about income on an application. Add to that only four of the 10 verification steps might even work for screening them and only one offers even remotely dependable verification.

With a normal rental application, we can look at 10 items as evidence of adequate income.  The applicant may show up with W-2s, 1099s, pay stubs, a letter from an employer, or even an unemployment statement or workers’ comp statement. What a gig worker might have are tax returns, 1099s, a bank statement, and a Social Security statement, the only document that’s difficult to forge.

Since they are not employees, there’s no employer to supply paystubs. The gig worker to keeps track of his or her own income, taxes, and expenses. If a gig worker presents a paystub as evidence of income, look at that as a red flag. A paystub may well have been forged and could fool the unwary landlord.  If a gig worker presents a paystub and says he or she gets one from his “employer,” ask for an explanation from the applicant, but it will in most cases lack credibility. Chances are, we reject them out of hand. Even so, the company the gig worker contracts with may send a monthly statement, something easily forged, as well.

The three items they can present that could work to prove their worthiness to rent are a tax return, 1099s, and a bank statement. Each of those is so easy to forge they are unreliable for evidence. Here’s where we have to adopt the mantra, “doubt everything” and verify everything meticulously.

How then to verify the income entries on a rental application for the three types of gig workers? The first one, the workers who work as freelancers, contractors, artists, and such and whose work provides them with a livable income, is more reliable.  They keep books, have business bank accounts, can provide tax returns, and can show 1099s to show who paid them and how much. They also have business cards and maybe even brochures. Here we can confidently take their income statement as verifiable.  Just check landlord references, look up their business website, and call people they do business with.

The second category of gig worker is just about as easy. These folks have jobs or maybe businesses with verifiable income and just use gig income as extra money, say saving for a down payment. They have W2s, paystubs, and an employer with whom we can verify the information on the rental application. The gig income is a plus and needs to be verified thoroughly only if that income is required for them to income-qualify to rent a property.

The third one is people whose primary income is as an Uber, Door Dash driver, or something similar. Whatever evidence of income they state can only be considered risky.  The rule of thumb with all rental applications is that the person must prove to the landlord’s satisfaction that the application is honest and accurate. It’s not up to us to show it’s false.

First, as with all applicants, they must prove who they are with a driver’s license, passport, or some other form of government identification that can’t be forged. And as with all applicants, they must prove that what they claim as income is true. With it so easy to create phony documents and with so many companies, such as realcheckstubs.com, offering to provide official-looking documents that say whatever their customers want them to say, we need to question every item on the rental application.  Unfortunately, we don’t have any foolproof way to do that because the forgeries can look so real. Sure, look at bank statements, 1099s, and profit and loss statements. But those are so easily forged that we need to look at them with skepticism.  If inclined to rent to the applicant, landlord and personal references that we can verify as accurate are our most efficacious and possibly only line of defense.

With the number of gig workers growing apace, and considering most likely most of them are renters, they will be knocking on our doors trying to get us to rent to them. Should we?

Written for Zip Reports where they do employment and rental screening.

Contact Robert L. Cain at bob@cainpublications.com

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Amy Got Rejected and Andy Got Accepted: the Dangers of Sloppy Applicant Screening

By Robert L. Cain, Copyright 2022 Cain Publications, Inc.

Amy got rejected. The screener took one look at her Facebook page and said “no way.” Her page displayed a video of a wild party complete with trashing an apartment, people passed out, noise complaints, and police coming. Trouble was, Amy wasn’t even at that party and only knew a couple of people who were. She was well-known for being in bed by 10 every night, only going to parties at or from her work as a legal secretary, and saving money religiously. What happened was one of her “friends” had posted the video on Amy’s page as a joke for all the world to see. Some joke considering how it affected Amy’s reputation.

If the screener had looked farther, he would have seen that Amy was as close to an ideal tenant as you can get. Look in the dictionary for the definition of “ideal tenant” and Amy’s picture would be there; her apartment always neat and tidy, her rent always paid the first of the month on the dot, her behavior always respectful and friendly. Did that landlord ever miss out.

Andy got accepted. The screener took one look at his Facebook page and said “Wow! What a great-looking applicant!” and so only glanced at the information on his application. Andy’s Facebook page showed him hard at work at his job (more about that in a minute), him hiking in nature, and him passing out food to the homeless at Thanksgiving. Trouble was, every bit of that was completely made up. Andy had created his Facebook page to cover up that he far more closely matched Amy’s page.

The danger of relying on social media for a decision about anyone’s character is that it’s so easily doctored that nothing warrants its acceptance. To ensure everything is factual, verify and double-check it.

You see, Andy applied as Andrew Jerald Mason and had every kind of documentation anyone could ever ask for to prove his outstanding qualities. It was all fake. He had created or altered the documents he presented so that any landlord who would turn him down would simply lack common sense.  His new identity had excellent credit, work, and landlord references. Andy was thorough. Every document he looked too almost good to be true (until examined carefully). The landlord handed him the lease to sign and the keys.

Two months later the party boy found himself back on the street looking for a new landlord to victimize. He had lived Amy’s supposed Facebook party a couple of times a week. The cost of putting the apartment back into even close to rental condition figured in the thousands of dollars. Then, when the landlord went after Andy for payment of the damages, Andy was nowhere to be found. He didn’t exist anywhere.

Nothing beats effective applicant screening for protecting your property and your bottom line. But applicant screening is replete with holes and pitfalls to trip up and damage a rental owner’s property and bank account. How can you do it safely and effectively? Effectively means ensuring that your applicant is worth of renting from you. Safely means you know the data you use for your decision is accurate. Rely on questionable data and you could be in trouble. What you think is effective screening may not be at all. You might miss out on an excellent applicant and end up with Andy.

In Amy’s case, the screener was nothing less than sloppy. Social media is unreliable at best since it can easily be hacked. Had the screener had the good sense to ignore the Facebook post as unreliable and gone on to screen as he should, he would have recommended that the landlord welcome Amy with open arms as a valuable tenant.

With Andy’s application, the screener was nothing less than sloppy. He fell for documentation easily created online by anyone with halfway decent computer knowledge and by using companies whose business it is to create documentation that makes someone appear to be the ideal applicant. Andy used several ways to create a false identity.

He found a Social Security report for someone with a birthdate and other statistics closely approximating his own and did a good job of changing the name to match his with the typeface and spacing almost exactly like that on the Social Security report. If the screener had looked closely, he would have seen that the report wasn’t as neat and tidy as a document should look. The typeface differed just slightly, but noticeably, and the spacing was just a little off from a legitimate Social report.

Andy bought phony pay stubs and bank statements to show he had more than enough income and savings from a company that phonies up documentation.  The company Andy wrote that he worked for existed, but Andy was only part-time and had worked there for only a few months, not the five years he claimed. The screener never checked to see if Andy actually earned the income he claimed or that he had a bank account at the bank where his supposed money was stashed. Andy had bought official-looking templates from companies that sell such things including a driver’s license, Social Security Card, birth certificate, and Bachelor’s Degree from Stanford University.

Andy had arranged with friends to act as fake references, to answer the phone and pretend to be employers, former landlords, and people who would say they were confident that Andy was a model citizen. If the screener had checked the phone numbers against the supposed companies and landlords, he would have spotted the fraud immediately.

The screener took the credit report Andy supplied at face value rather than cross-checking it with a credit reporting company which would have immediately spotted the inconsistency. Of course, Andy would most likely have had an explanation for this “obvious error” that might have even sounded good. But no matter how good it looks, doubt everything and verify everything.

Andy had numerous evictions and former landlords eager to tell anyone who would listen about their unpleasant experiences with Andy.

Amy got rejected and Andy got accepted and two landlords paid the price for sloppy applicant screening. To ensure quality tenants, treat social media as untrustworthy and verify every item on a rental application.

No neither Amy nor Andy is real, but they may show up under different names as applicants for your rental property.

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