What started as a regular day for property manager Jared Decker in Tampa, Florida, turned into a months-long real estate nightmare.
According to Business Insider, it all started when he got a call from a businessman he didn’t recognize. Someone who’d never lived in any of the properties Decker managed.
Must Read
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don’t have to deal with tenants or fix freezers. Here’s how
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and 3 simple steps to fix it ASAP
- Robert Kiyosaki says this 1 asset will surge 400% in a year — and he begs investors not to miss its ‘explosion’
Nonetheless, the businessman had just discovered $10,000 missing from his bank account — all directed in rent payments to Decker’s company Coastal Pioneer Realty. (1)
Decker realized both he and the businessman had been hit by a rental scam. Someone had stolen the businessman’s bank information and identity to rent one of the properties in Decker’s portfolio.
Unfortunately, it was the property’s actual owner — a small landlord with just a handful of rentals managed by Decker’s company — that paid the ultimate price.
The fallout included Decker’s company being wrapped up in eviction proceedings, being owed rent and facing thousands in legal fees — with the landlord eating most of the cost.
It’s a harrowing example of the growing challenges landlords face, one that may have some investors looking for safer ways to invest in real estate.
How scams are changing the face of the rental market
In a 2024 survey of its members, National Multifamily Housing Council, representing leading apartment owners, developers and managers, found 93% of respondents had experienced fraud in the past year. (2)
That same year, RealPage, a global provider of software analytics for the real estate industry, found that 75% of property managers in major cities (including Houston, Los Angeles and Atlanta) reported a surge in scams involving multifamily units. (3)
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
One executive with the property management giant Greystar said as many as half of all rental applications in some parts of Atlanta show signs of fraud.
One challenge? Since the pandemic, much of the rental process has moved online, whether it’s touring apartments or sending proof of income or ID.
It’s also easier to fake documents like pay stubs and bank documents. Some operations even mass-produce fake documentation through so-called “template farms”.
Rental housing consultant Jay Parsons told Business Insider said rental fraud is the “big thing no one outside the industry wants to talk about.”
But he stressed it should be recognized as an issue that is adding fuel to the housing crisis.
When scammers slip through the cracks, landlords end up covering lost rent, legal fees and months of vacancy while units are held up in eviction proceedings. Fraudsters may also use apartments for criminal activity.
To make up for their losses, landlords often have to raise prices or increase application fees.
According to Zillow, rents have already gone up more than 25% since 2020, so this is added pressure the market doesn’t need. (4)
If you’re a renter, all of this can mean higher costs and a harder time getting approved.
As landlords tighten their fraud filters, the screening process can now include longer applications, more verification hoops, and more automated systems making judgment calls.
Safer tips for investing in real estate
If cautionary tales like Decker’s make you wary of buying a rental property, there are other options.
Online platforms are making it easier than ever for everyday investors to buy into booming real estate portfolios.
Keep in mind, as always, that past performance doesn’t guarantee future results. Here’s how they work and what to know before diving in.
Crowdfunding
For just $10, you can invest with Fundrise, one of the best-known real estate crowdfunding platforms. It manages more than $1.2 billion through its Flagship Real Estate Fund. (5)
The fund portfolio includes residential and commercial properties across the U.S., including over 4,700 single-family homes and 2,500 multifamily units. Fundrise adds new properties over time, giving users institutional-level diversification without the headaches of direct ownership.
Lending vs owning
You can invest as little as $100 toward short-term, property-backed loans that finance home renovations and new builds through the Arrived Private Credit Fund.
Historically, the fund has paid around 8% annualized dividends, backed by real estate collateral.
Fractional ownership
Even if you can’t afford a six-figure down payment, platforms like Mogul, founded by former Goldman Sachs investors, can give you fractional ownership in high-quality single-family rentals. (6)
The company reports internal rates of return (IRRs) near 18.8% and average annual yields between 10%–12% on select deals.
Tap into home equity
There’s an estimated $34.9 trillion in home equity in the U.S. housing market, and some investors are finding ways to tap into it without buying homes outright.
Homeshare’s U.S. Home Equity Fund allows accredited investors to participate in what’s called a Home Equity Agreement (HEA).
Instead of lending money, the fund invests in future home appreciation. Homeowners get cash upfront without taking on debt, and investors share in the property’s future value.
Commercial real estate
While office towers have struggled since the pandemic, grocery-anchored shopping centers have stayed surprisingly strong. First National Realty Partners (FNRP) specializes in this niche and leases to retailers like Walmart, Whole Foods, and Kroger.
During the 2008 financial crisis, grocery-anchored centers maintained over 90% occupancy, according to VAC Development, a real estate investment company. (7) FNRP offers accredited investors access to these kinds of opportunities, with investments starting at $50,000. (8)
Whether you’re investing $10 or $100,000, today’s real estate landscape offers many more options if you’re not interested in being a landlord.
Remember that every investment carries risk, and real estate is no exception.
Always read the paperwork carefully, and make sure you understand how (and when) your money gets paid back.
You don’t need to be a landlord to profit from real estate, but for those who do manage rentals, take Decker’s scam story as a warning to keep your eyes open for fraud.
Article sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Business Insider (1); National Multifamily Housing Council (2); RealPage (3); Zillow (4); Fundrise (5); Mogul (6); VAC (7); FNRP (8)
What to read next
- Want to retire with an extra $1.3M? See how Dave Ramsey’s viral 7-step plan helps millions of Americans kill debt and build wealth — and how you can too
- I’m 49 years old and have nothing saved for retirement — what should I do? Don’t panic. Here are 6 of the easiest ways you can catch up (and fast)
- There’s still a 35% chance of a recession hitting the American economy this year — protect your retirement savings with these 5 essential money moves ASAP
- This tiny hot Costco item has skyrocketed 74% in price in under 2 years — but now the retail giant is restricting purchase. Here’s how to buy the coveted asset in bulk
Join 200,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.