Property 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 they cannot be experts in all areas of town. So it is natural that they feel most comfortable showing clients properties that meet the client's general needs in those specific neighborhoods where they have the most knowledge and experience. This is actually in your best interests 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 to the area. These resources are readily available in most areas and 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, the areas where new retail and commercial properties have been developed are clearly a good indicator 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 to continue to occur.

Once you have identified the general geographic areas that are promising, you should check the neighborhood 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 home ownership. You should also talk to several property managers with properties in the area to determine their perspective and experience with the local rental market. I am not a proponent of investing in out-of-town properties regardless of the potential, so I would suggest that you buy in an area that you know very well and ideally is within a one-hour drive of where you live.

Question: 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 another tenant and 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 8 months, or $975! I know I owe him for the costs of re-renting the flat, but according to the lease and state law it says 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 the landlord's attorney, 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 out 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, author of "Property Management for Dummies," and San Diego attorneys Steven R. Kellman, director of the Tenant's Legal Center, and Ted Smith, principal in a firm representing landlords.

E-mail your questions to Rental Q&A at rgriswold.inman@retodayradio.com. Questions should be brief and cannot be answered individually.

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