Scam That Targets Airbnb Hosts – Watch Out!
Airbnb has helped property owners make money by renting rooms and units. The company’s recent expansion into experiences provides homeowners with additional income streams. You can give guided tours of your city, lead morning yoga sessions, and create other experiences for your guests and people in the area.
Airbnb is a great resource for making extra income, and some people turn Airbnb into a full-time career. However, the success of this app has attracted many scammers. While scammers shouldn’t keep you away from platforms like Airbnb, it’s important to know the red flags and how these scammers work, so you can stay safe.
Airbnb investors should periodically check their credit reports and monitor their finances for suspicious activity.
The Latest Scam Involves Identity Theft
Airbnb investors make money from renting their units and rooms. They expect to collect rent from guests, but some guests burn the investors. If you aren’t careful, a criminal can steal your identity and use it to take out a mortgage loan while pretending to be you. Then, they attempt to run off without a trace.
Investigators with the Toronto Police Service (TPS) caught a criminal performing this scheme, and investigators believe that he is part of a larger syndicate. Criminals have been using Airbnb to get into people’s homes and accelerate the process. Once inside, these criminals have the home to themselves and can search desks, cabinets, and bedrooms for any form of identification.
A credit card bill, mortgage statement, cell phone bill, bank account statement, or Social Security card gives them the information they need. Criminals engaging in identity theft know what documents they need and can search through the home without anyone stopping them. They can use a real document to forge passports, driver’s licenses, and other critical ID documents.
How to Keep Yourself Safe from This Scam
This scam sounds scary and rightfully so. The criminal that investigators caught had five counts of fraud over $5,000 and tried to run off with $2.5 million after taking out loans against the victims’ homes. However, on the surface, it looks like few homes were impacted. Most Airbnb hosts don’t become identity theft victims and still generate cash flow from their properties and rooms.
It’s important to stay alert of how scammers dupe their victims, but a few bad actors shouldn’t intimidate you from pursuing a lucrative opportunity.
However, it is important to take all scams seriously, especially considering the ramifications of becoming a victim. Criminals utilizing this strategy must find physical copies of documents that they can use for identification purposes, such as account statements. If the property does not have any information about your identity, you are safe from this scam. Investors can comfortably expand their Airbnb portfolios and accommodate guests if important mail gets sent to another address.
If you only own your primary residence and rent a single room or your home for a few days, you have to be protective of important documents. Storing them in a hard-to-find location isn’t the best approach, as criminals will spend several days looking for the information. Scammers using this strategy don’t care about getting out of your house and touring the area. They only have one goal in mind. You can lock your personal information in a safe or cabinet, but some criminals can open those. Granted, if a criminal does break into a safe or cabinet, it’s easier to tell.
Receiving electronic bills and account statements minimizes the paper trail and makes it less likely that a scammer steals your identity. You can also check a guest’s history and social media profiles before letting them into your home. While this strategy can work, some criminals know how to deceive hosts with good social media profiles and a history of good stays at other Airbnb rentals. If there are no paper documents available, and none get mailed to the rental property’s address, you put yourself in a good position to avoid this scam.
Airbnb investors should periodically check their credit reports and monitor their finances for suspicious activity. It took several months for some victims to notice the criminals took out mortgages on their behalf. If you check your finances more frequently, you can respond to suspicious activity quicker, temporarily freeze your accounts, and contact the authorities.
Homeowners can also get title insurance, a policy that financially safeguards them from mortgage fraud. You can file a claim with your insurance company if you become the victim of this scam. You may never end up using title insurance if you follow protective measures, but an insurance policy is an extra line of defense.
Finding Profitable Airbnb Properties
It’s important to stay alert of how scammers dupe their victims, but a few bad actors shouldn’t intimidate you from pursuing a lucrative opportunity. Some Airbnb hosts make six figures every year with their rental units.
Airbnb investors should start small and scale their way up. Once you have a steady stream of guests covering the mortgage payments, it’s easier to acquire another property and expand.
Investors should start by setting budgets, so they don’t look for properties they cannot afford. Once you establish a reasonable budget, you should look for locations experiencing steady population growth. As more people occupy the same area, rent and housing prices go up. You can find a reasonably-priced home in your area to get started, but savvy investors expand their horizons and look for properties near cities. Airbnb investors must consider how much demand they can get from tourists since the platform specializes in short-term rentals.
Investors can use Property Onion’s property search if they want to buy properties near or in Miami. The city experienced 1.7% year-over-year population growth in 2022, making it the fourth fastest-growing city among the 50 biggest U.S. cities.
Investors must then analyze properties and choose which property makes sense for their objectives. Airbnb investors should focus on a property’s potential returns. A big city lets you access a large market, but the barrier to entry (i.e., high prices) can limit your returns on Airbnb investments. Some investors buy properties in areas just outside of the city to lower their costs and potentially achieve higher returns.
Airbnb investors should start small and scale their way up. Once you have a steady stream of guests covering the mortgage payments, it’s easier to acquire another property and expand. Real estate investors use leverage to build up their portfolios. Eventually, you will pay off the mortgages on your properties and reap higher cash flow. The real estate investing model still works wonders, and a few bad actors in the industry shouldn’t scare you away from a compelling opportunity.