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By Stewart Levine

Are unprecedented legal changes and scam tenants making it time to rethink rentals as investments?

Even for long-time real estate investors with decades of experience, things have changed.

Social media platforms like TikTok and Instagram seem to be spawning an increasing number of phonies and scams from cryptocurrencies to NFTs, tech startups and real estate gurus.

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For the average investor, becoming entangled with just one of these scammers can bankrupt them and rob them of their life’s work.

So, how are they operating? Who do investors and property owners, in general, need to watch out for? How have recent policy changes negatively impacted things?

NOT “As Seen On TikTok”: Scam Tenants Will Cost You Huge

One of the new catchy fads has been things being advertised “As Seen On TikTok.” It has replaced the old “As Seen On TV” infomercial controversies. For better or worse, the highly controversial TikTok platform surpassed Google as the most popular website in 2021.

One retired doctor and long-time investor recently found out just how dangerous it can be.

This is a medical professional who has been investing in real estate for decades. It enabled him to retire at just 51 years old after running a successful dental practice.

He bucked common advice and the tradition of investing in public stocks with stockbrokers that don’t have their customers’ best interests in mind.

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During a recent interview he shared some of his early lessons in real estate. He did well, and it enabled him to take control of his own future, along with gaining many tax breaks. Yet, he ran into early issues when actively investing in rentals. He discovered the headaches of vetting deals, the costs of management, and both cash and Section 8 tenants that didn’t perform.

Eventually, he graduated to the point where he had built up enough capital that he wanted to spend more time actually relaxing and enjoying life, and began investing through private funds, private money lending, and other passive real estate strategies.

Still, when it recently came time to move from the Northeast to Florida, he ran into a combination of new and old problems.

Like many others he decided to put his home in the Northeast up for sale right during COVID.

It was a great home in Colts Neck, NJ. Boasting 7,000 square feet, and which this doctor had enjoyed living in for many years himself. However, it was September 2020. Lockdowns meant that real estate agents were hardly working, and most buyers couldn’t get to viewings or were too scared.

An agent representing the tenants brought them a prospective renter as an alternative. The agent sold their clients hard. They included a ‘wealthy DJ’. An online ‘influencer’ and entertainer, who supposedly has 3M followers on TikTok, where he recently bragged about being put in jail by his ex-girlfriend, and 275k on Instagram where he likes to show off fake money, and even promote NFTs.

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He was presented under his real name as Anwar Gavilanes, aka DJ Diddy. Along with Adam Zakaria under his business name Pizza Crave, and Frank Baldassare. They were supposedly rich and successful and had a nice car.

After signing the lease, this landlord told us that he never received any rent, after the first payment. On which was supposed to be a two-year lease for $7,300 per month.

Normally, that wouldn’t be a huge issue. Tenants don’t pay, you get an attorney and have them kicked out.

Unfortunately, the government went to the extreme of issuing an eviction moratorium, and shutting down the courts. His attorney simply couldn’t process the paperwork to get them removed. While the president went to extreme lengths to protect rogue occupants like this, landlords paid the price. He says he felt they ruined his life’s work on this property and jeopardized his finances. Those moratoriums were eventually overturned by judges who found them unconstitutional, but many may be asking where the compensation is for landlords.

These tenants continued to occupy the property, without paying any rent for a whole year!

It wasn’t until late 2021, when he was finally granted a Zoom court meeting to get the tenants evicted.

When the landlord was finally able to access the property again, it was a disaster.

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There was a soccer goal set up in the living room. No basic maintenance had been taken care of on the property in a year. The garage door was busted. Plus, broken fencing, damaged landscaping, and scratched and broken wood flooring which had to be completely replaced. The destruction ended up costing Levine $80k in repairs to restore the property to prepare it for sale. They found fake $100 bills in the property and all types of other craziness leftover from parties.

They even found out the occupants had been renting out the house to others on Airbnb, with no permission to sublease the property in their contract, taking their money, and still not paying the rent. They had even been advertising parties on the home on Eventbrite, at which they had been found serving alcohol to the underaged, and possibly drugs, which resulted in a summons from the police. It is unknown whether they have disclosed the income they illegally made from this operation to the IRS or not.

To make it worse, the utility companies started coming after him as the property owner. The occupants had never paid any utilities, and the utility companies had never bothered to cut them off or bill them, because of ‘COVID’.

WANTED: Social Media Con Artists & Real Estate Fraudsters

Thankfully this property owner’s attorneys have been able to track down two of the perpetrators, and have served them legal papers. He estimates they owe $125k in back rent and legal fees. Not including the actual damages, and utilities. He says he doubts the courts will accept those phony $100 bills as payment.

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Anwar, aka DJ Diddy, who turned out to just be a fraud, is still at large, and “hiding out like a rat.” He is still posting on social media, promoting a virtual party online each week on Sundays. The attorneys are very interested in any information that can be provided to track him down, and ensure he is served and brought to justice.

They are also looking for the renters’ real estate agent involved for their role in misrepresenting and failing to vet the tenant. They have been served, but have since been hiding out, without a response.

The Big Takeaway: Things Are Different Now

Most of all this landlord agreed to share his story with us as a warning to all other real estate investors, landlords and homeowners out there.

Be on the lookout for these fraudsters. Don’t become their next victim.

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Be sure you are on the alert for other social media phonies as well. In addition to questioning some of those promoting scams like these, and encouraging others to Airbnb out homes they don’t own, or to try and pull scams to take over people’s properties.

He says he is not excited about renting out his personal homes again.

There is just too much risk. Too much fraud. With the new dictatorship we appear to be living in, there is no more security, and very little private property rights and protections.

If you are going to rent out a property, we strongly suggest using a well-vetted, third-party property management company, and having a great real estate attorney on retainer.

However, he is not giving up on real estate as an investment at all. Though he is certainly doing it differently, and more carefully vetting those he works with.

If you spot these fraudsters, let someone know, and share your stories, and alert others in the business to scammers, so they aren’t the next victims.

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