Updated: Jan 21
If you have moved through the entire process of purchasing a property, getting it ready to rent, showing it, screening tenants and are at the end of the process, ready to sign the lease and turn over the keys you are probably feeling very excited. After all, your new residents have brought you the first rent payment and deposit so after all you have been through you are finally going to get paid! Yea! I want to put a little damper on your enthusiasm here, though, and ask you to slow down. This can be a dangerous time for you, but we’ll get to that later.
First I want to ask you if you are aware of the digital term “Phishing”. This is where bad people send out emails with links to dangerous websites disguised as an urgent request. It may come across as a message from a bank, saying that your account has been frozen and you need to click the link and log into your account. When you click the link you are asked for sensitive account information that you normally would not disclose, but due to the urgent nature of the email content you disregard your normal sensibilities and comply with the request. You’ve been tricked! Sure, you know what “Phishing” is but you are wondering, what does this have to do with real estate?
Back to the keys. Keep in mind that when you turn over the keys to your new tenants you are taking on some risk. Of course, you have screened your tenants and are pretty sure they are solid folks, but there is always a chance that they are not who they appear to be. One way you are mitigating this risk is by collecting the first months rent and security deposit in guaranteed funds at the time of lease signing and before you turn over the keys. This is a pretty good test of your new tenants because this is no small amount of money for them and by showing up with the funds they are proving that they have some financial strength and should give you some assurance you have made a good decision in approving them for the unit.
But, what if they “phish” you? What if they have a very believable, compelling story for why they didn’t come with the guaranteed funds? Maybe it is Saturday evening when you are meeting with them, and they say they went to their bank to get the cash and didn’t know it closed at 12:00 on Saturdays so they couldn’t get the money? They are very sorry, but they have already moved their furniture into a moving truck and gave their current landlord the keys back. They need a place to stay tonight! What are you going to say with their entire family sitting there looking at you?
Don’t get Phished.