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Posted On: 11/19/2008

If you're not ready to buy a house or take on the responsibilities of home ownership just yet, renting a residence can be a smart choice - provided you do your due diligence and research lease opportunities carefully.

Indeed, smart tenants know that terrific rental units rarely fall in your lap. To prevent renter's remorse, you have to dig a little deeper into the lease agreement fine print, poke around the property for red flags and ask the right questions of your prospective landlord and future neighbors, say the experts.

One of the most important things for first-time renters to consider is overall value, says David A. Wieland, managing principal at Mission Residential in Oakton, Va. "Ask yourself, what are you getting for your dollars in terms of the size of the rental unit, location, access to transportation and services, amenities, and quality of the rental space."

Rob Harrington, founder/chairman of OptHome in Southborough, Mass., says that's it's essential to inspect the rental unit and overall property thoroughly before committing to a lease.

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"It is important to make sure that the unit and building is well-kept and clean," Harrington says. "Look out for signs of pests and check common service areas like the garbage area to see that they are clean. This will give you an indicator of how well the property is maintained."

Additionally, "check that the appliances are working correctly, and look at the condition of the paint and carpets. These are signs of how the landlord takes care of the property," says Kraig Kast, managing trustee at Atherton Trust Co., Redwood Shores, Calif.

When fine-tooth-combing a rental residence, pay close attention to the bathrooms and kitchen, says Bryant Katzen, CEO, Real Umbrella, Laguna Hills, Calif. "If the areas around the tub and shower have mold growth or the caulking is turning yellow or black, this is a sign the landlord is not maintaining the unit. Also, check all faucets for leaks and make sure the windows all seal properly and no water has intruded. Looking for discoloration on the drywall is the trick. And be sure to test the dishwasher, air conditioner, heater, oven and stove, too."

It's also a good idea to introduce yourself to potential neighbors to gauge their experiences as tenants, says Alejandro Riocabo, a Realtor with Majestic Properties in Miami. "This is a must. Ask them what the positives and negatives are and get as much information as you can."

Keep in mind, however, that most landlords will not facilitate conversations with other tenants, says Kast, so you may have to do this covertly.

When it's time to examine the lease, studying the fine print and reaching a deal on favorable terms is crucial, says Wieland. Scrutinize your lessee obligations carefully, such as the lease term, monthly rent, any recurring fees and charges, termination provisions and costs associated with early termination, the landlord's lockout rights for nonpayment, and standards of behavior (cleanliness, noise, etc).

Harrington says to double check that there are no escalators or surprise fees embedded in the lease. "An escalator might be something that says that the landlord will raise your rent if heat prices go up, when heat is supposed to be included in the rent. Surprise fees include automatic cleanup fees or fees for painting, after you leave the unit."

Prior to signing the lease contract, be prepared ask the landlord plenty of questions, says Wieland, including "what is your typical response time for service requests? What is the average time that your maintenance staff has been at the property? Do you have 24-hour on-call maintenance numbers? And, ultimately, Why should I live here?"

Harrington says that one stipulation you should probably request be added to the lease is an opt-out clause in the event of an unforeseen job transfer, provided you give the landlord ample (60 days or more) notice.

If possible, "even if you are not anticipating moving anytime soon, try to negotiate a month-to-month deal. That way, you are free to come and go if you give a 30-day notice," says Riocabo. Katzen adds that the best time to negotiate a new lease with a landlord is after the 10th of the month.

"Many landlords will hold out on their price through the first week of the month, as this is when the majority of tenants move in," says Katzen.

"After the 10th, landlords begin losing lots of money and the unit is less likely to be rented until the end of the month or the beginning of the next month."

In addition, first-time renters need to remember that they are signing a binding contract, which the landlord expects you to comply with, says Kast.

Lastly, be prepared to put up some sizeable good-faith money in the form of a deposit and more, says Harrington. Upon signing the lease, "usually a renter is required to make some form of payment, either a security deposit, first and last month's rent, or some combination of the three. Be sure to inquire what happens to this money after you pay."

Kast says that, contrary to some people's belief, it is not a strong renter's market currently due to the collapse of the housing market and the rise in foreclosures.

"The rental demand is likely to increase through 2010 as the housing market continues to soften," Katzen says. "It's a case of supply and demand."

"More people are renting and the good properties are in high demand," says Kast. "If you see a nice place you want to live in, put down a deposit and submit an application."

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