Reluctant landlords

With housing prices still stubbornly low in much the country, many Americans are holding on to their homes and renting them out. But the decision to become a landlord may not always be the wisest choice.

The number of people who are renting out homes because they couldn't sell them is hard to pin down. But according to The Wall Street Journal, there's evidence of an uptick this year.

More homeowners are converting their homeowners insurance to landlord policies that cover the additional risks of leasing out a home. Allstate Corp., the second largest home insurer in the U.S., reported a 27% increase in conversions in the first quarter from the previous year.

The National Association of Residential Property Managers has local chapters that may be able to provide data on the rental market in your area.

The downside for these new landlords is that demand for rentals is low. The vacancy rate hit a record 10.2% in the second quarter. One analyst suggests the tax credit for first-time homebuyers may push the rental vacancy rate even higher.

What reluctant landlords are able to charge in rent often doesn't even cover the mortgage. Experts warn that it could take years for a home to recover its lost value. And there are costs involved in renting: maintenance, repairs, insurance and possibly management fees. Owning a rental home can also raise complicated tax issues, and as Melissa Blasius of KPNX in Phoenix reported, novice landlords can make major mistakes. "Common ones include skipping over background checks and waiving security deposits in order to get tenants living in homes and condos right away."

With more people offering homes for rent, it's probably inevitable that scams are popping up, especially online. Foreclosed properties and homes that are actually for sale are turning up on Craigslist as available for rent. The Atlanta Better Business Bureau and BBBs elsewhere warn that would-be renters should beware if landlords only communicate via email and ask for wire transfers.

Vacation rentals also are subject to online scammers, as WUSA-TV in Washington, DC, reported:

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