Looking to Lease

If you're hunting for the ideal residence to rent, you're probably feeling the squeeze - as in increased competition from other renters, fewer vacancies and rising rent costs. But fear not: If you do your homework and your timing is right, you stand a better chance of landing your desired unit, say the experts.

U.S. apartment vacancies plunged to a two-year low in the fourth quarter of 2010 as rents increased, and the country's apartment vacancy rate fell to 6.6 percent from 8 percent a year earlier, according to New York City-based property research firm Reis, Inc.

Why the change? The high rate of foreclosed homes is a significant factor, as families have been forced to surrender their properties and rent. Also, demand for apartments that was pent up during the recession is outstripping supply now that the economy and labor markets are beginning to recover. Additionally, the housing market remains weak and mortgage underwriting standards are more stringent, pushing many people who would have become homeowners in the past to rent, says Ryan Severino, a senior economist with Reis.

Before jumping in the rental pool, you need to know how to swim. While the perception may be that landlords are desperate for tenants, many rental property owners are extremely cautious about whom they rent to in this economy.

"Tenants should make sure they have a current copy of their credit report, verified income, copies of pay stubs and other documentation which would support making a good case for them as a renter at a property prior to completing an application," Barry Saywitz, president, The Saywitz Company, Newport Beach, Calif., says.

Additionally, be prepared to put down a heftier security deposit in years past, and don't expect freebies like a month's rent. Incentives likes these are almost non-existent, Saywitz says.

When it's time to start apartment shopping, check out the newspaper, a local apartment rental magazine/guide or Craigslist, drive around your chosen neighborhood or consult with a licensed real estate agent specializing in rentals. Research your property of interest carefully, and find out if the owner is current on their mortgage, property taxes and HOA fees. Scrutinize the lease carefully so that you know what's included and who is responsible for maintenance and repairs.

"All too often, renters get overzealous once they find what they think is the perfect property, only to find out after the fact they have singed a lease agreement that makes them responsible for paying more than just the rent," says Cheri Luckhardt, agent with Coldwell Banker-Del Mar Village, Del Mar, Calif.

Severino says Reis anticipates rents to increase annually at an average rate of 3.4 percent over the next five years. Nationally, asking rents as of the first quarter of 2011 are at $1,047 per unit, on average.

"Sign the longest term lease you can right now to avoid rent increases occurring any sooner because they will likely go up on your lease renewal," adds Julie Clark, a broker with Commercial Space Advisors in Seattle.