Bed-Stuy Beware of the Overpriced Rental

One of the first things to strike a neighborhood on the upswing, such as Bed-Stuy, is what I call the dreaded Aggressive Rent Syndrome (ARS). It's when either longtime or new landlords in a community over-appraise the market value of their rental property.

The downside of ARS for the potential tenant is obvious. But it is a risk for the landlord as well: If not enough renters bite, a property may sit empty for months, or worse, cause a highly leveraged landlord to lose his/her building.

The thinking behind ARS for the landlord is usually one of the following:

1.) My friend told me that she rented her floor-through on Stuyvesant Avenue for $1,750. So why can't I do the same?

or

2.) I bought my house for $800,000 and I need the (*enter aggressive rent here*) to help me pay back the mortgage.

Response to # 1:
Did your friend also tell you that her apartment is a two-minute walk to an express train on a brownstone block, while your rental is on a block with empty lots and is a 15-minute walk from a train few people use (My apologies to those who love the G train)?

And did she also mention that her apartment was in mint condition, with a brand-new kitchen, bathroom and polished original wood floors? In addition, did she happen to mention that she let's her tenant use the washer and dryer in the basement?

Response to # 2
How much you paid for you home has NO bearing whatsoever on the rental market. As a tenant, I could care less about how much you need to make your mortgage payment-- Particularly in a market like Bedford Stuyvesant, where there is usually plenty of rental inventory to choose from. So, if yours is overpriced, I will move into an apartment that is priced correctly.

Also, as far as the tenant is concerned, there is no amount of stainless steel appliances, granite countertops or bathroom sinks with Kohler fixtures that can induce a tenant to pay hundreds of dollars over market.

The other tragic result of ARS is, in the landlords' moment of desperation to meet the asking price of their rent, they accept an unqualified applicant whose financials and credit score are not in line with the asking rent.

So FYI: As a general rule, the applicant should make 40 times the asking monthly rent in your annual salary.

So beware Aggressive Rent Syndrome! I have seen landlords who have put themselves in this position lose a great deal in rental income and attorney fees.

If they had just marketed the property at a reasonable rate, they would have been better off.

To avoid ARS and access an accurate rent, research what apartments are renting for in the surrounding area, not what landlords are asking for.

Streeteasy.com is a great site to use. Or if you want a more personal touch, call an agent you trust to do a walk-through.

Stay tuned for the next column where I will talk about "Bed Stuy's looming retail boom: Are the days of the bodega numbered?"

Martin Tkalla Keaton is a senior associate and Multi Million-Dollar Club member of the Corcoran group