December 20, 2023

JF3394: How Renters Use TikTok to Defraud Landlords ft. Jarred Schenke




Welcome the the Best Ever midweek news brief, a new series where we will highlight the top headlines CRE investors should be paying attention to this week, followed by a deep dive on a larger news topic or trend alongside a CRE expert.


Today’s Headlines:

$4.5B Portfolio for Sale: Lennar has put a massive 11,000-unit multifamily portfolio up for sale. The portfolio is spread across 38 properties in 15 states and is valued at a staggering $4.5 billion. JLL has been tapped to manage the sale.

Bye Bye, Boom: Warehouse construction starts have plunged 48%, the steepest drop since 2009, all while industrial real estate sales at large fell by 45% in Q3, prompting the Wall Street Journal to declare that the Great American Warehouse Building Boom is over.

Retail’s Heating Up: Office real estate posted a third consecutive month of pricing gains while retail thrived, posting a fourth straight month of pricing gains and an average occupancy rate of nearly 86%, its highest since October 2022, according to Crexi data.

Today’s Guest: Jarred Schenke is a veteran commercial real estate journalist and currently writes for Bisnow. Recently, he researched and wrote a piece about how when it comes to multifamily, renter application fraud has gained significant momentum in 2023, largely due to three key factors:

  1. The ease with which renters can forge documentation in the digital application process — or apply using a stolen identity altogether.

  2. The accessibility on social media (like TikTok, Twitter, Reddit, and more) to information on how to forge such documents (or, in some cases, the ability to purchase fully fraudulent document packages directly).

  3. Law enforcement’s inability (and, let’s be real, unwillingness) to do anything about it.


He joined our host, Paul Mueller, to discuss his piece, the biggest surprises from his research, the overall trend of renter fraud, and how social media is enabling the troubling trend.



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Paul (00:05.91)
All right, joining me today to discuss this story is the veteran commercial real estate journalist who researched and wrote the story for, Jared Schenke. How are you doing today, Jared?

Jarred Schenke (00:15.36)
I'm well, how are you, sir?

Paul (00:17.246)
I'm doing well also. So, renter application fraud has become a growing nuisance for apartment owners, and that's what this piece is about. So why don't you start off by telling me what's happening right now with renter fraud, why it's on the rise, and what that looks like.

Jarred Schenke (01:11.416)
So I'll get into it how I came across even the story idea. It was not something I ever thought about before or considered. When you look online, when most things you're dealing with fraud are listing frauds, people putting fake listings on. That's a really popular topic online. It wasn't until I heard Rick Campo on his earnings call in the second quarter mention it, and specifically highlighting Atlanta about renter fraud, and it struck me and I thought that was really interesting.

And so I mentioned it to my editor and we're like, well, I mean, is it just something with Campo experience or is this really an industry epidemic?

By the third quarter, not only was Rick Campo talking about it, but another CEO of a multifamily company started talking about it on their earnings call. So at that point, we had a story. And as I started to dig into it, the breadth of this problem was just astounding.

Essentially, what you have is a, as experts tell me, is a cottage industry that's thriving on social media, people getting doctored documents, even whole fake identities in order to achieve or get approval to rent apartments. Oftentimes these are luxury apartments, perhaps above their means. And once they get in, they'll may never pay and they'll just stay there, banking on a eviction system that's clogged and slow anyway and stay in these apartments rent free until the last minute and then they often just disappear and do it again.

Paul (02:50.978)
So why is this such a growing trend right now? What are the factors that are enabling renters to do this at a higher clip?

Jarred Schenke (03:55.372)
Everybody has the question as to why this is happening. I think Daniel Berland, who's the CEO of Snappt, which is one of these screening companies that look for false documents in apartment applications, probably said it best, it's kind of like, it's a keeping up with the Joneses attitude that is just on hyperdrive through TikTok, through Instagram and other social media. It's you want to have this image of a lifestyle that is essentially fueling people to try to achieve something that they probably can't financially afford.

And in order to do it, they're going to fake maybe what their income really is, they're going to fake past problems in their rental history by trying to get rid of that they've been evicted before. And that, it's just the technology and the spread of it online, it just made it so easy now to be able to do this.

Paul (04:57.282)
So when you say the technology and the spread has made it so easy, what are those factors from a technology standpoint that are allowing this to spread and really enabling people to commit this kind of fraud?

Jarred Schenke (05:09.444)
Well, you think even 10, 15 years ago, what it would take to doctor a document sufficient enough to make it convincing. It would require a lot of skill that most people didn't have. You'd have to be really versed in Photoshop, editing techniques that the average person just didn't have. Well, Photoshop while it's still one of a primary tool, there are so many tools online now that you can just take documents, edit them, and they convincingly look real.

So that has made it almost democratized fraud in a weird way. And the know-how is also spread. I mean, YouTube channels, TikTok videos, there were websites on subreddits about basically how to do this at one point in Reddit too. So the information is out there. It's not hard to find. And if you're determined to do it...

Paul (06:15.666)
Yeah, I see so many of those videos in my Instagram feed about here's how you set up a YouTube channel without showing your face to make a million dollars, right? I'm sure it's the same thing when you said this is how you can commit. I'm sure it doesn't say this is how you can commit a renter fraud, but I'm sure that there are a lot of different channels that are featuring this kind of content and giving away these tips and tricks on how to doctor these documents.

Where do these live primarily? Where are people finding this information?

Jarred Schenke (06:51.525)
I didn't know that going into this story. It was pointed out to me by a lot of the executives I spoke to for the story that the finger pointing is on TikTok, Instagram, Reddit, just social media. Like you said, they don't necessarily say, hey, we're going to teach you how to defraud your landlord. It's, hey, you got a problem getting into an apartment. Let me teach you how to, let me show you a way how to get past the screeners. That's really what's coming down to is getting past the screening process to get approval. I also believe in fairness to maybe people who do this, I don't know if every person who does this, certainly I don't think has criminal intent.

I think you look at the spike in rents that we've experienced in the past 10 years. Affordability is a massive issue in most major cities. Atlanta, which has been kind of centered off by some experts as like the hot market for this kind of activity, especially affordability is now a crisis issue. If you're looking just for a place to live and you have black marks, poor credit, you've been evicted in the past, you're just wanting to get into a place, it may feel like a victimless crime. Hey, I'm just trying to get a place to live. I really intend to pay my rent and be in there. I need to get in there. So you take this step, you buy a package where you get fake documents, you get into the apartment. And maybe at some point you get in over your head too. I can't speak for what the ultimate outcome is in these situations.

You know, when you talk to the CEOs, it's eventually, you know, it's a great predictor. If they're using fake documents to get in, it's a seven-time predictor that they're going to defraud us. So they're going to go through an eviction process. But I do think that affordability has played a role in this. I do feel that the need for housing, particularly near jobs, and the urban centers is pushing people to choose basically, you know, choose, you know, illegal means essentially in order to get past the screening process and get into an apartment.

Now, from the landlord's perspective, it's not just that someone's in there not paying rent. I mean, that's already an issue enough because then you have to pass those costs on to the renters who are paying, legitimately, by raising rents around the university. But they also talk about problems where there are elements, criminal elements that come into these apartments that may be doing illegal activity that's bringing pressure onto the whole property.

It's groups you don't want in there doing activities you definitely don't want that got in, and would not have gotten in another way.

Paul (09:59.03)
Yeah, I think that makes sense. And one thing that really stood out in your piece was that apartment operators are moving to online leasing platforms more than ever, right? So that's a huge factor here. I mean, your piece cites some Zillow data that in 2022, 23% of renters took zero in-person tours before signing a lease. 69% submitted their applications online, and 36% signed their lease electronically. So renters rarely come face to face with a property manager or an operator at this point making it much easier to pass off fake IDs.

Jarred Schenke (10:32.621)
That is true.

And there is, by getting rid of that human element, it makes it easier to pass off fake documents. Would a person be as comfortable literally handing someone a document in person that they knowing was fake, then I'm just gonna submit this to a website and be done with it. And there's that element too, the digitization of the leasing process has definitely facilitated this.

Paul (11:04.674)
So when you look back at these online communities that are essentially allowing people to collaborate and share how they can commit fraud or even if their intent is not to commit fraud, get into an apartment without, you know, by hiding their rental history or by, you know, fudging these documents so it looks like they make more money and they can get into an apartment that they otherwise couldn't afford. What are the kinds of documents that people are doctoring the most to submit these fraudulent applications?

Jarred Schenke (11:36.336)
I'm not sure statistically which one's the most, but it seems the more common ones I hear about are pay stubs, our work verification letters, employment verification letters, bank statements that are doctored, and then in some cases, just wholesale whole identities. There's this one thing I discovered I didn't know about. It's not a not a social security number, but it's like a credit number people are using. That they can buy credit numbers online that give them kind of like a blank slate of looking like they have good credit scores.

That's another tool that seems to be used now. I'm not sure if on the, you know, I don't know how you detect that from the landlord side. Certainly as a person, you know, I don't know how you're trained enough to detect it. So you're using these screener services that have software that's supposed to be able to detect it. And for all I know that, you know, it's doing its job, but there's still stuff getting through clearly.

Paul (12:47.702)
Yeah, clearly, I'm actually looking that up right now. Credit, a credit number.

Jarred Schenke (12:52.709)
And you think about technology and you think about the exponential rate in which it improves. And you've got to think that these screening companies have got to be on the ball because what they can catch today, perhaps tomorrow, they're going to find a way around it.

Paul (13:15.486)
Right, yeah, as quickly as this seems to be evolving, staying ahead of it has probably got to be key for multi-family operators, property managers, et cetera.

Jarred Schenke (13:27.924)
Now, I will say that while my story highlighted on the Class A luxury side, since this story has run, I had gotten feedback from some readers that this is a problem universal in the multifamily industry. And it's not just the Class A apartments that are experiencing it. Couple of trends, it's even on the affordable side. People doctoring documents to be able to qualify for units say that are, you know, like reserved for people earning, you know, 80% AMI, which I thought was an interesting, you know, I thought it was interesting that, you know, you would think that you would need to do as much to get into an affordable apartment than you would into luxury.

But I think that again speaks to a lot of things, you know, maybe the desperation for housing on that end and the need to get into housing. And particularly if you have black marks on your credit report or in your background, you want to do what it can to get into someplace to live, particularly on the affordable side, you're willing to take these measures.

Paul (14:40.234)
The piece that you wrote is focused primarily on class A luxury multifamily. But you've seen this since the piece came out, you've seen that this has also been an issue across other asset classes down into the B and C classes. Would you say that the in the class A multifamily, that's where you're seeing the whole keeping up with the Joneses idea where people are going into this with the idea that they're going to commit fraud and they're covering their tracks by using these fake documents.

While on the other side, when it comes to more affordable housing, it's people really doing it out of necessity because they there it's so competitive in some of these markets and they have black marks on their record or they don't have the income that they might need to get into a house. So they're resorting to fudging some of these documents so that they can simply get into housing and have a place to live.

Jarred Schenke (16:09.312)
Yeah, I would probably agree with that, and that's certainly the indication it's been given to me from the people I interviewed. I would say it was explicitly stated certainly on the luxury side. On the affordable side, I'm making some assumptions perhaps reasoning on this, on why, but you know.

I mean, you can even look there could be situations like my peers in New York, a business out covers in New York. One of the interesting things that they told me about is the amount of people who, or the number of renters who have fixed rent places and fudged documents to stay, to qualify to stay in those.

Like they don't want their landlords to know they're making more money now that they don't qualify. And that may be the kind of what's going on with the affordability out here in the Sun Belt too. You know, that said, if you're in an apartment, you know, reserved for someone only earning 80 percent of the area, area median income, you know, all of a sudden you get a job promotion, but you don't want to have the additional expense by having to go to a more expensive unit. Well, let me just fudge the numbers here and claim I'm only making a certain amount. I can see that motivation. It's never been explicitly said to me. I don't have any proof of that, but that's one suspect, the suspect I have.

Paul (17:33.95)
So if you take the people who are doing this out of necessity, affordable housing, that sort of sector, if you take that out of the equation and you go back to focusing on that class A multifamily or even those people in New Yorker you're talking about who are intentionally fudging these documents so that they can either stay someplace or get someplace, how widespread is this?

Jarred Schenke (17:57.764)
It's widespread enough that, at least according to Snapptped, ultimately 40% of all documents they screened showed hallmarks of forgery. And that's across the country of all their clients. That's a really surprising statistic.

Jarred Schenke (18:23.32)
So we know it's widespread. We know it's big enough that major CEOs of major multifamily companies are mentioning it to their, on their earnings calls as it being a problem. I don't, you know, and it's something that even, you know, national multifamily groups are saying, yeah, our members are really raising this as an issue. And they're looking for answers on how to do it. Because the, it comes down to the enforcement side. There seems to be little interest in law enforcement or willingness in law enforcement to pursue the groups that do this, the people that do this. As one CEO told me, it's like, it's not really popular for politicians to say, hey, I'm gonna put more money into enforcing invictions, at least from a social standpoint, that's just not popular to say. So that there's no, to do it, even if you get caught by the landlord and you go through the eviction process, there's real still no consequence. You just move on to the next apartment.

Paul (19:45.578)
Right, and if you're already in a pattern of forging these documents and covering your tracks and getting rid of your bad history, one more black mark on your record in the form of an eviction isn't really gonna make much of a difference. You're just gonna be able to cover that track as well and then rinse and repeat.

So from a law enforcement side, I'm really glad you brought that up because that was one of the big topics that I wanted to hit on.

Why is it I completely understand why it's not popular to say I want to put more money from a politician standpoint. I want to put more money into enforcing evictions. I can see how that would be an unpopular opinion. But from a strictly from a law enforcement standpoint, I understand that there are huge backlogs in markets all across the country in terms of both evictions and really just in general in terms of the judicial backlog, especially from COVID. But in addition to that, other factors why are the authorities so reluctant to pursue this?

Jarred Schenke (20:44.3)
Yeah, that could be a whole, I mean, I know it's part of this story, but that could be a whole other story on its own, because it is kind of complicates, you know, who has the jurisdiction to pursue this and adjudicate this.

Do they have the resources? These are all questions that were coming up in my interviews with people. So, you know, I talked to the attorney general. Attorney generals don't have the power unless it's directly involving identity fraud. If someone's using their real identity but they're faking bank statements and attorney generals can't pursue that, that's local district attorneys.

And again, it may be, you know, I tried reaching out to those organizations and you don't, I didn't get anything back to hearing what their explanation is. I, so, resources, manpower, where you need to focus your attention, I think that all plays into this.

I wish I had a better answer, but that's kind of...

Paul (21:51.379)
Well, it's interesting because there seems to be a theme of sort of passing the buck down all the way up from the FBI level. Because the FBI, I think the FBI spokesperson that you mentioned in your piece said that the Bureau doesn't investigate these types of crimes. I'm going to assume that that's because these are just, the FBI has bigger fish to fry, right, than rent or fraud. And then you mentioned the attorney general is limited in what it can prosecute. If it's a case of stolen identity, then that's something that falls into their jurisdiction. But if it's not, they pass that down to, you know, local law enforcement or district attorneys, right? And...

Jarred Schenke (22:26.764)
turn up. Marshals, the magistrate court, the marshals, the magistrate court, you know, they're the ones that maybe should have power to, you know, pursue this. But, I mean, they're already backlogged with evictions and handling that.

Paul (22:39.884)

And then when it gets on a local law enforcement, I see a lot of local law enforcement saying that it's a civil matter. And so the buck just keeps getting passed down, down and down to the point where these apartment owners are just left kind of holding the buck here and saying, um, there's nothing we can do. All we have to do is focus on our operations, focus on our process and focus on our tenant screening and try to eliminate as many of these fraudulent applications as we can.

Jarred Schenke (23:08.172)
Yes, that's how I interpret it. That's exactly how it was told to me. Is it comes down to the screening process. And that interesting is then it comes to the question of, why, well, we're having to get better screening processes. We're having to use better vendors who have the better technology to detect this. That's more expensive. So that is gonna raise costs overall on being able to, we gotta pass that buck on to the renter in terms of fees and rents.

Paul (23:37.182)
Right, and in a world where operating expenses are already through the roof from insurance and taxes all the way down to lumber for repairs, adding another expense in the form of the screening process tech is not something that anybody is really keen to do right now.

You mentioned how widespread this is. Are there any specific markets that stand out that you've seen where this is more prevalent than others?

Jarred Schenke (25:43.596)
Yeah, and I've heard this from a couple sources, but I believe Snappt had it, and their statistics the best. It's not only Atlanta where this is really a problem. It's Houston, Charlotte, Los Angeles, and Dallas. And I don't have an explanation as to why.

I, as a reporter covering this industry, industry for as long as I have had some suspicion. At least if you think about Atlanta, Houston, Charlotte, and Dallas, those are the Sunbelt markets that have benefited greatly from an immigration of population this past decade from the West Coast and Northeast. Lots of people coming in, they're needing housing. Perhaps they had black marks or they just, you know, needed a race to find a place to live will prompt you to bend the rules and seek documents that are doctored in order to get into apartments. As for Los Angeles, I can't necessarily, it's not the same, I think, situations as other cities.

I think maybe because of the long-term eviction moratoriums, it made it more appealing to be able to, I mean, for someone to get into an apartment, a luxury apartment, and then can sit there for even longer because they weren't allowed to be evicted. And now that, because maybe that moratorium's lifted, process is still backed up.

Paul (27:02.859)
Yeah, I think that makes a lot of sense.

What was the most interesting fact or trend that you learned or uncovered while you were researching this piece?

Jarred Schenke (27:19.372)
That even is an issue was surprising to me to begin with. It's just not something I ever really even thought about. I'm, you know, of course I'm not a renter, I'm a homeowner so I don't go through this process on an annual basis like people who rent do. But the creativity of the people who offer these products and services, the way they can phrase and word their videos in ways that I think skirts the line of being flat out saying we're going to help you do something illegal but it makes enough implication to say, to basically imply this is how we're going to help you get an apartment.

It's a real gray area in terms of free speech and I think it struck me when we approach TikTok and we talk to TikTok, you know, TikTok came back, their spokesman came and said, yeah, definitely, you know, prohibit defrauding or scamming of members on the platform. But we make exceptions. And they were for documentary, educational and counter speech. Now, the spokesman didn't specify that any of these were in those three categories. But I wonder if perhaps maybe they could be considered as such.

Paul (28:45.214)
Right, that's some more creative language for you.

What did others who you reached out to say about how they're regulating this kind of content that's essentially teaching people how to defraud apartment owners and get into apartments using fraudulent means?

Jarred Schenke (29:04.184)
So we reached out to a number of the pages and services that were that Snappt provided us as saying these were the problems, specific websites, they mentioned. And we heard nothing back from.

Paul (29:19.842)
So TikTok was the only one that responded.

Jarred Schenke (29:20.093)
Uh, if that was the only one responded in this.

I will tell you that there was a subreddit on Reddit called Apartment Hacks that when you go to that subreddit, they have a specific warning on there now saying, there will be no talk about how to defraud landlords on here. You'll be banned about any talk about using fake pay stubs and all those stuff, which I thought was interesting. It seems like that was brought to their awareness and they're trying to crack down on.

Paul (31:27.082)
Jared, I appreciate you, not just for the work that you did and the research that you did and the diligence that you did in writing this piece and putting it together. It was a fascinating piece and definitely opened my eyes to a lot of different trends that are out there right now, but I also appreciate you taking the time today to come discuss it a little bit further. 

Jarred Schenke (36:22.86)
Well, it's been an honor and a pleasure to speak with you today.

Paul (36:29.258)
Yeah, I really appreciate it, Jared. Again, thanks for taking the time. Really appreciate your perspective and all the work that you did. Keep doing great work. I'm sure we'll have you back on at another point when you put out another one of these bangers. I love this kind of content, so really excited to talk to you about it, and I'm sure we'll talk again soon.

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