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This is what happens when people drink the deadly cocktail mix of low interest rates and leverage. A landlord who has paid off mortgage can afford his tenant to
by raincom 7y ago
This is what happens when people drink the deadly cocktail mix of low interest rates and leverage. A landlord who has paid off mortgage can afford his tenant to not pay rent for a couple of months. That's not how the world is running now: REITs, individual landlords, partnerships, etc--all of them are profitable when there is a cash flow. The moment rents stop flowing under a certain limit, deleveraging starts. That's what happening in this market.
- hash872 7y agoWhat are you advocating for here- an end to mortgages? Buildings are extremely expensive, and most purchasers need bank financing in order to buy one. They typically have a certain amount of skin in the game because lenders require them to put x percent down, I doubt they're 'highly levered'. They're normally levered- that's how the real estate business works. If you get rid of leverage entirely, the only people who'll be able to buy real estate will be the enormously wealthy who can pay cash. If you're concerned about inequality, I think that this would be a much worse situation....
- raincom 7y agoLow interest rate is the major factor in the inflation of real estate, thereby increasing the inequality. Bump up interest rates, and reduce the risk taking.
- jonmartinwest 7y agoAnd criminals using real estate for money laundering.