QI am thinking about buying my first rental property. Naturally, I want to buy a house or condo that will be easy to rent and that will become profitable as soon as possible. I am looking throughout my area, but I have this feeling that most real estate agents would just try to sell me something in their specific neighborhood whether that area is good for rental properties or not. Then last night I saw a real estate expert on television advising that the best deals are on rental properties in other parts of the country. I am confused and don't know which advice is right.

How can I get unbiased information that could help me decide where to buy?

AProperty manager

Griswold replies:

You are facing one of the most common dilemmas for new real estate investors. First, your concerns about your local agents are valid. However, understand that real estate agents often specialize in specific neighborhoods and cannot be experts in all areas of town. So it is natural that they feel most comfortable showing properties that meet the clients' general needs in those specific neighborhoods where the agents have the most knowledge and experience. This is actually in your best interest as well.

My suggestion is that you need to get feedback from a variety of agents about different areas of your region and narrow down the potential areas to ones that you feel have the best long-term prospects.

The best due diligence information would be from local sources, such as the Chamber of Commerce, the local planning or building department, and any economic development agencies in the area whose primary mission is to attract new businesses and industry. These resources are readily available in most places. You want information on jobs and population growth as well as future development.

I always advise to determine the areas in the "path of progress" rather than the areas that are mature and even declining. While redevelopment areas can also be quite promising, new retail and commercial properties are clearly good indicators of future prosperity. For example, a new building improvement center, major warehouse retailer or even a fast-food chain can be a catalyst and an indicator of where growth is and will likely continue.

Once you have identified the general geographic areas that are promising, you should check the neighborhoods for "For Rent" signs and call the owners and ask them about rents, frequency of tenant turnover and length of vacancies. Look for a tenant profile that is stable and likely to continue to rent even when there are many new homes in the market. For example, the military, major corporations and medical care providers often have employees with good incomes, but their job requirements do not allow them to make the commitment to homeownership. You should also talk to several property managers to determine their perspective and experience with the local rental market. I am not a proponent of investing in out-of-town properties no matter what the potential, so I would suggest that you buy in an area that you know well, ideally one that is within a one-hour drive of where you live.

I have a lease that runs for nearly eight more months. I needed to break my lease because I got laid off from my job. My landlord has re-rented the flat to other tenants; they move in the day after I leave. My landlord rented the flat for $130 less per month and he is trying to collect the difference from my $3,900 security deposit for the rest of the lease, nearly eight months, or $975! I know I owe him for the costs of re-renting the flat, but according to the lease and state law he can't collect double rent. Can he do this?

Landlords' attorney Smith replies:

When tenants break their leases, they are responsible for rent for the balance of the term. As a landlords' lawyer, I am going to give the landlord the benefit of the doubt on the facts. It appears that $130 per month on the shortfall is the best he could do in the present market at the time of your move-out. Consider the landlord's dilemma. He could hold out for the same rate or higher. This could take some time. Or, as here, he could re-rent the unit immediately for $130 a month less. If the landlord can prove that, after diligence, that was the best rent he could get, then you're going to be responsible for the difference. While it may be true the landlord can't collect double rent, holding you responsible for the shortfall is not collecting double rent. You'll need to pay this amount to avoid further legal proceedings.

This column on issues confronting tenants and landlords is written by property manager Robert Griswold and San Diego lawyers Steven R. Kellman, director of the Tenant's Legal Center, and Ted Smith, principal in a firm representing landlords. E-mail your questions to Griswold at rgriswold.inman@retodayradio.com. Questions should be brief and cannot be answered individually.

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