Who says you actually need to own a house to rent it out? Apparently the law, for one.
That didn’t seem to stop Yoandry Leiva of Naples, Florida, who’s been arrested on charges that he's collecting rent money from tenants in vacant homes, even though he doesn't own them, NBC 2 reports. Leiva was first arrested in April when police found a list of foreclosed properties where he was allegedly collecting rent money for an unidentified person.
Leiva was arrested again on June 19, when further cases revealed a pattern of showing vacant foreclosed properties to tenants after advertising them on handwritten signs at gas stations.
With 8.7 million U.S. homes facing foreclosure between January 2007 and last month, Leiva’s scam isn’t unique. Another Florida man posed as a real estate agent in order to rent out vacant homes, even going so far as to hire employees and host entire open houses at the properties. Similarly, a Seattle man claimed he was helping the community by renting out homes that weren’t his in order to keep property values high, Komo News reports.
A month before, a California real estate agent, who was actually licensed, faced nine felony charges after he allegedly rented out properties he wasn't authorized to let, according to CBS San Francisco.
But the strategy is just one of several that fraudsters have used to take advantage of the foreclosure crisis. As of March, mortgage scams, such as promising fake mortgage debt relief, have spiked 60 percent this year.
Renting foreclosed properties may be especially attractive to schemers given the sector’s huge potential as a legitimate money-maker. Hedge funds and private equity firms are already spending hundreds of millions of dollars buying up foreclosed properties with the intention of renting them. Since it's now more expensive to rent than to buy in the vast majority of housing markets, turning foreclosed properties into rentals could be $100 billion industry this year, according to real estate tracker CoreLogic.