Image: Family hunting for an apartment © Eric Raptosh Photography, Workbook Stock, Getty Images

One effect of the housing market's collapse has been to turn thousands of homeowners into renters. With owners losing homes to foreclosure or selling properties they can't afford, the homeownership rate has plunged; it now stands at 66.2%, lower than any time since 1997. But this has created a huge demand for rental apartments and houses. The rental vacancy rate fell to 9.5% for 2011, the lowest level since 2002.

Even so, all markets are local, with cities on the coasts generally seeing the lowest rental vacancy rates. At the bottom is New Haven, Conn., with a rate of 2.1%, according to Reis, a provider of commercial real estate data. Nationwide, that tight market drove up rental prices almost 2.5% last year.

But competition for apartments can trap renters into the scarcity mentality that helped fuel the housing bubble in the first place. "If I don't act now, I'll never find another place this good at this price," goes the thinking. And while you may have to look longer when rentals are less plentiful, it's still better to think about the long term. Though all state rental laws vary, and single-family home rentals can differ from large apartment complexes, in general, here are some costly mistakes to avoid when renting:

1. Signing a lease without reading it carefully

No matter how frenzied the market, don't rush into a rental agreement if something doesn't feel right. For example, does the fine print stipulate that you have to pay extra for utilities, water or parking, or were those costs sold as "included"?

Take the document home and have an attorney, or a friend or family member who has more renting experience than you, read it over. To ensure the lease doesn't violate your tenant rights, check out the Department of Housing and Urban Development's website, which provides a state-by-state list of what's legal. Eric Feinberg, a tenant lawyer in New York City, says, "I can't tell you how many people knew when they were signing that it felt wrong and how much more it cost them in the end."

2. Signing a lease that doesn't fit your life

Think you might want to sublet in the future? Do you have pets or frequent visitors? Think about your lifestyle and what you need in a rental. Some leases will charge you extra for guests who stay more than two days, forbid subletting or make the cost of repairs your responsibility, including problems that pre-date the term of the lease. These are details you'll want to go over carefully before signing, and if there are items on the rental agreement that you don't like, try negotiating with the owner to have them removed.

3. Not taking pictures when you move in

Almost everyone has a digital camera or cellphone these days. You should use yours to document the state of the property before you move in. You'll also want to note pre-existing damage on the landlord's move-in checklist. If the landlord doesn't have one, make your own list and send it to the landlord, signed and dated. And before signing a lease, get in writing any major repairs the landlord has promised to make.

Renter Laurel LaFlamme of Charleston, S.C., says her landlord promised to fix the backyard pool when she and her family moved in. Two years later, the pool is a murky breeding ground for mosquitoes and frogs and has made her backyard unusable.

4. Not checking out the neighborhood

Mitchell Weiss, a professor of finance at the University of Hartford in Connecticut who advises student renters, recommends that if you're serious about a rental, knock on the doors of a few neighbors to ask about the building's upkeep and neighborhood safety. You also can check into crime patterns with the local police department or on websites like CrimeReports. And come back to visit the property at night: That quiet street corner could look quite different after sundown.

5. Not getting renters insurance

A landlord's insurance policy doesn't cover the tenant's personal property. So if there's a flood, fire or water-line backup and your valuables are damaged, you're usually responsible for the costs unless the landlord was aware that a dangerous condition existed and failed to correct it. After you sign the lease, make getting a renters policy the first item on your to-do list. Policies are relatively inexpensive; premiums usually range from $100 to $300 per year.

More From The Fiscal Times:

6. Paying too much in rent

Apartment evaluation site has tips on ways tenants can save money. Those include renting from individual landlords, who value long-term tenants and are less likely to raise rent quickly; searching in the middle of the month when there are fewer people out apartment-hunting; and signing the longest lease you can afford, because landlords often discount for long-term tenants.

7. Not taking action if your landlord breaks the law

When few apartments are available, some landlords believe they can get away with letting repairs go, allowing unsafe conditions to persist or increasing rent more than local regulations allow. Most often, landlords count on their tenants being ignorant of the law.

"Tenants give up rights and fail to assert rights all the time" because they don't know what they're entitled to, says tenant lawyer Feinberg. Don't be one of them. Local governments and nonprofits often provide booklets and online materials to educate you on the basics. There's also, which has links to legal information on tenant rights in all 50 states. You can also check your phone directory for government agencies whose names mention housing, consumer affairs, or tenants.

The best landlords know the law and follow it. Those who don't shouldn't be able to count on your ignorance.

8. Passing up possible tax benefits

When landlords pay local property taxes, they usually pass on part or all of the cost to their tenants in the form of higher rent. But they also benefit from the road, school and sanitation improvements that those taxes pay for. Some states -- California, Missouri and Maryland, for example -- have tried to correct this by providing a tax credit to renters. Contact your state tax department to see if yours does, too.

9. Eliminating rental prospects based on square footage alone

A great layout can make an apartment with less square footage feel bigger than one with more, says New York City real estate agent Brad Malow. He recently showed a 750-square-foot apartment that felt tiny because it included a long hallway that served no function, while a smaller 600-square-foot unit seemed spacious because it had an open layout. "Renters miss opportunities because they merely are looking at numbers on a page," Malow says.

10. Not taking your roommate to appointments

Finding a place can consume hours, days or even weeks, and it's tempting to save time by splitting up visits to prospective apartments with your roommate or significant other. But in group or couple situations, Malow says it's a waste of time not to have all parties at the initial appointment. In a hot rental market, by the time you get the second person to look at the apartment, it's already gone.

Click here to become a fan of MSN Money on Facebook

More From The Fiscal Times: