Small-scale rental home investors need to be aware of a new campaign by the nation's largest apartment owners that could have the effect of scaring away potential tenants.

The National Multi Housing Council is mounting the campaign to warn consumers about what it considers the imminent dangers of renting with landlords who don't own many properties and don't offer "professional management."

According to the council, "nearly 40 percent of today's foreclosures involve a single family house, condominium or other housing rented out" by private, small-scale owners, including investors.

"People who choose to rent these properties put themselves at risk for losing their lease, losing their security deposits, and having to move on short notice" if the owner cannot pay the mortgage and taxes and the unit goes to foreclosure, said the council in announcing its nationwide "rent from the pros" publicity campaign.

Douglas Bibby, president of the council, said the problem is serious, but heads-up tenants can get "peace of mind in a volatile housing market" by "renting at a professionally managed property," such as a large apartment complex.

The council, whose members own and manage hundreds of thousands of apartment units across the country, is the principal lobby group for the industry on Capitol Hill.

In a brochure prepared for the "rent from a pro" campaign, the group warns that "even renters aren't necessarily safe" from the foreclosure epidemic. "(I)f you choose to rent from a private individual, the risk of losing your rental home is very real," it says.

Asked by Realty Times for documentation of the "nearly 40 percent" figure used centrally in the campaign, a spokesman for the council said it came from a report "based on data from Realty Trac" that was cited on the CBS Evening News last March.

But the actual 38 percent foreclosure figure released by Realty Trac related to all non-owner occupied housing units, including second homes - many of which are never rented out or only rented seasonally.

Meanwhile, the largest private company in the U.S. involved in rental home investing, Dallas-based Home Vestors, whose 230 franchisees have bought over 36,000 houses in the past 12 years -- many of them rented out -- called the Multi Housing Council's campaign "a scare tactic" with no statistical basis.

John Hayes, president and CEO of Home Vestors, told RealtyTimes, "in our experience, we have not to my knowledge had a complaint or even heard of a franchisee ending up in foreclosure with a rental (home) property."

Published: September 19, 2008

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.