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rebeccahpedersen · 7 years ago

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Would You Lease To This Mystery-Tenant?

TorontoRealtyBlog

With new legislation continuing to favour tenants over landlords, a landlord has to make very sure that he or she wants to effectively be “partners” in a real estate investment, since a tenant is very hard to remove once the lease is signed and the key is in the door.

I’ve always been extremely diligent when evaluating candidacy for my investor-clients.

Last month, I received an offer on a rental property with a very mysterious tenant.

Let me tell the whole story, and you decide whether or not you’d have this person as your tenant…

Okay, maybe that photo is a bit overboard.

It’s not like we didn’t see the tenant’s face in the story I’m about to tell.

But even when you do meet the tenant, and even when he or she is nice, pleasant, says all the right things, and seems trustworthy, it can blow up in your face.

Last month, there was a story about a “professional scammer” in Liberty Village who had duped at least twelve landlords and/or roommates. Read the story HERE.

I’m also reminded of another story, this one from 2016, which is a classic “don’t judge a book by its cover” lesson.

As this article reads, a “well-dressed, professional-tenant” had been duping landlords in Yorkville, and gaming the system designed to protect both landlords and tenants. A 62-year-old man, seemingly-normal, wearing a suit, with tales of his career as a professional, had been moving into expensive condos, not paying the rent, and then forcing the landlords to chase him through the courts for eviction.

As I tell my investor-clients, the professional scammers usually stick to online ads, and don’t look to MLS for their prey. If they do, they’re looking for an absentee-landlord, with an absent-minded agent, and if and when they’re pressed on personal info, they’ll simply flee, and move on to an easier target.

Nonetheless, I try to be very diligent when looking for tenants for my investor-clients, while trying to avoid doing anything that could be construed as “discrimination.”

What actually is discrimination can change like the direction of the wind, and as the word gets softer, and a lot weirder as we wind down 2017, I think a lot of people would cry “discrimination” if they could.

This is why when rejecting a candidate, you simply say, “We’re going in another direction,” and not answer any follow-up questions, as was the case last month when my investor clients turned aside a rather mysterious tenant.

Mysterious might not be the right word, as I alluded to above.

But “sketchy” is fair. And I’m sure we could think up some other words to describe her.

But in the end, we just didn’t think she passed the “sniff test,” which is a very inexact science, but one that is often the most useful, nonetheless.

As is the case with many of my stories, I’m going to change some of the details to try to protect anonymity…

I had a listing for a 1-bed, 1-bath condo in the west end, up for lease for $1,995/month.

Surprisingly, it didn’t lease in the first 12 hours like most places in this red-hot Toronto rental market, and it actually sat for a full week!

On the eighth day of the listing, I received a phone call from a rather young agent who said he would be submitting an offer on behalf of his client, and that the client was a “Triple-A tenant with great income.”

He wasn’t wrong, on the latter part – at least not at face value.

Upon receiving the offer shortly thereafter, I scanned through the supporting documents. Those documents, for those of you that don’t know, are usually the following:

1) Rental Application (OREA document – name, DOB, address, last two places of residence, occupation, present and prior employment, financial obligations, personal references, etc).

2) Credit Check (I always ask for Equifax, full version, with the “FICO Score” and all debt as well as credit inquiries).

3) Employment Letter

Beyond these, however, I insist upon “proof” of employment, such as recent pay stubs, or a screenshot of a bank account showing deposits from the employer.

I also look up the tenant on LinkedIn (any business professional without LinkedIn is suspicious), Facebook (see how they act in their spare time), Instagram, Pinterest, and anything else I can find online.

So upon receiving these supporting documents, the first one I looked at was the employment letter.

That was the first red flag.

Wait, that’s not exactly true. The very first red flag was the very first thing you’d see on any rental application or offer: the tenant’s name.

Ruby Starr

Yes, this tenant’s name was Ruby Starr.

Now, I don’t think you have to be a regular visitor to websites that would crash your hard-drive to think that perhaps a name like “Ruby Starr” might be one you’d find in the world of adult entertainment.

The name was a bit odd, but I moved along regardless.

I got to the employment letter, and that’s when my spidey-sense really started tingling.

Ms. Ruby Starr, apparently, made $95,000 per year working at a sandwich shop.

But it wasn’t just any sandwich shop; it was one in Niagara Falls.

It really didn’t make any sense to me.

And the letter was on a blank, white, standard, 8 1/2 x 11 sheet of paper, typed in Times New Roman, and signed by a guy whose name was something out of The Sopranos.

I looked up the sandwich shop, and they did indeed exist. Not only that, they were quite well-known, with five locations in Niagara Falls.

The employment letter said that Ruby Starr was going to head up the expansion plan of this “family company” that sells sandwiches in Niagara Falls, as they look to open two locations in Toronto.

I called the gentleman who signed the letter, and he sounded somewhat legit. He said that Ms. Starr would be driving around to different suppliers, managing the new locations, overseeing the construction, etc., and it all sounded good until he sort of trailed off, like he was focused on something else but still trying to speak into the phone, and he just started muttering random words like, “direct suppliers…….bakery buns…….you know, cold cuts………like two locations………it’s all good……..salads too.”

I can’t quite explain it, but I felt as though the person I was speaking to wasn’t really all there on our phone call.

I followed up with the cooperating agent and asked for a few recent pay stubs, and he emailed them to me within five minutes.

That was either very helpful, and convenient, or it was suspicious – as in why didn’t he send these over with all the other supporting documentation before?

The “pay stubs” weren’t really stubs of any sort. They were basically two PDF’s, which contained deposit amounts and looked as though they were typed in Excel.

Anybody could have typed those up, clicked “Save as PDF,” and called them stubs.

But even more suspicious now was the fact that the address on the pay stubs didn’t match the address on the rental application, which upon further research, didn’t match the address on the driver’s license.

And I’m not sure if this matters, but that driver’s license had expired.

So we had three different mailing addresses, and none of them were in Niagara Falls where Ms. Starr apparently had worked for the past six months – according to her rental application.

Oh, wait, one more thing – the guy from The Sopranos said she had been working for him for over a year.

It was all pretty messy, if you ask me.

This girl made $90,000+ working for a family sandwich-chain, in Niagara Falls, having never lived there, and she had three different addresses.

And her name was Ruby Starr…

I looked her up online, and she had no LinkedIn profile.

I found her on Facebook, and she looked……..well……

….well, I asked one of the younger guys in my office, “Hey, what does this girl look like to you?”

He smiled, as though it were a trick question, and said, “I dunno, an escort?”

I asked him, “Come on, be serious. What do you think when you see this photo?”

He said, “I think that girl is probably at that club (in the photo) to meet rich men.”

He identified the club as Cabana from the background, and then we went through four or five other photos of her at clubs, which he identified.

I felt somewhat guilty, simply judging or labelling this girl because of how she looked. But the name! I couldn’t get over the name! The $95,000 salary too! It didn’t add up.

I discussed the situation with my landlord-clients, and they said they wanted to meet Ms. Starr.

So I told the cooperating agent that my landlord would be at the condo on Saturday, and she could drop by and say “hello.”

My clients Brad and Allison, called me after the meeting, and they were pretty coy.

“We’re not quite sure what to say,” Brad told me. “Something was…….off.”

“Yeah, something was off. That’s a good way to put it,” Allison said. “The girl just seemed so spaced out, and nervous! Oh my word, was she nervous! She wouldn’t look us in the eye, she kept staring at the floor, and she kept fidgeting.”

I asked for them to tell me a little more about her, and they said things like, “She was nice,” and “She seemed pleasant,” but it wasn’t really what I was getting at.

So I said, “Brad, I’m going to ask Allison this question so you don’t get in trouble. Allison, was this girl attractive?”

Allison said, “Yes.”

I asked, “Very?”

And Allison said, “She was a rocket, David! A rocket!”

Brad laughed, and said, “Yeah, look, I don’t know what she does for a living, and maybe part of me doesn’t care, but something seems off here.”

Brad then asked if her boss told me what she was doing, and I said yes, that he said she’d be driving around to different suppliers, the various locations they were opening, etc.

There was a pause, and then Allison said, “David that’s so odd, because we asked her if she wanted to see the parking space, and she said she didn’t have a car!”

That was strange.

But even stranger was when Ms. Starr also said she hadn’t seen the condo! She said, “My agent just made this offer for me; I haven’t seen this place yet.”

Everything that this girl said raised another red flag.

At one point, she said she didn’t know where the two new sandwich shop locations were going to be, and when pressed, she said, “I can’t tell you, we’re not telling people.”

Then somehow or other, her background came up, and she said, “I’m from Russia, but I was adopted by a very wealthy family.”

When asked about the three addresses she provided, she said that she had just broken up with her boyfriend, and the address on her pay stubs were from his place, but she was staying with her parents (the second address), and she simply “forgot” what she was doing when filling out the rental application with the third address, because she was “rushed.”

It didn’t add up.

She made almost $100K per year working for a sandwich shop in Niagara Falls, but had never lived in Niagara Falls.

She provided us with three different addresses.

Her only piece of ID was an expired driver’s license.

She had never seen the condo when the offer was made on her behalf.

Her employment letter was typed on a blank piece of paper, and her pay stubs were just PDF’s from Excel.

She had no car, but her boss said her job involved driving around.

She said she had worked at the sandwich shop for six months, but her boss said over a year.

Her boss was just as sketchy as she was.

She was apparently from Russia, but adopted by a “wealthy Canadian family.”

Her Facebook photos were all of her, very dressed up, at nightclubs.

And her name, was Ruby Starr.

It was just all way too convoluted, and there was no reason for the landlords to take the risk that this wasn’t some sort of scam.

I’m sorry, this girl could end up being the nicest human on the planet. I could be totally wrong in all of this. There could be logical explanations for every single red flag I’ve raised above. But in the end, there is always another renter out there, and with vacancy rates in Toronto at less than 1%, there’s no reason to work with this prospective tenant.

Of course, it helped that later that night – after the meeting between Ruby Starr and my clients, we received another offer on the condo.

This offer was from a 27-year-old who worked for RBC, and had 400 connections on his LinkedIn profile, with a dozen recommendations. He made $80,000 per year, had a credit score over 800, virtually no debt other than a small credit card balance, and was living in a condo on Fort York Boulevard that his landlord was selling.

He checked out, with ease. He was the very definition of a “Triple-A” tenant.

The final decision was up to my clients, of course. But I told them I’d advise them to reject the offer from Ruby Starr, and lease the condo to the young man who worked at RBC.

And that’s what they did.

They felt bad, as did I.

It sucks to have to “judge” somebody, but that’s what we’re doing when “evaluating candidacy.”

Real estate scams are not just something you read about in the newspaper – they’re very common, and I’ve seen agents in my own office lease to people who turned out not to be who they claimed.

I’ve seen friends and colleagues scammed as well.

So when you’re dealing with your own investment property, that you worked hard to purchase, and you’re working harder to look after, there’s nothing wrong with being diligent.

And if your “spidey-sense” is tingling with respect to a certain candidate, move on.

As I said, there’s always another prospective tenant waiting…

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