5 ms·

I have a commercial tenant who was forced to shut down their business during the lockdown. I just waived rent until they were allowed to reopen. You can't get b

I have a commercial tenant who was forced to shut down their business during the lockdown. I just waived rent until they were allowed to reopen. You can't get blood from a turnip, and I really don't want to force them into default and try to find another tenant in this environment anyway. Almost everybody is taking a haircut this year.

nickff 6y ago
I think that's probably the smart move, at least for commercial property in this situation. The waived rent is essentially an insurance premium against the risk of vacancy coming out of the recession.
londons_explore 6y ago
Isn't the smarter move to defer payment of the rent for a few years? One day, they'll be able to pay, and then you'll get paid.
- beervirus 6y ago
  Smarter? Eh, probably. I dunno though. It's a small enterprise that doesn't do a lot of business even in good times. I'm ok helping them out. It can be my good deed for the decade.
- vkou 6y ago
  If they are a low-margin business, the only way they'll be able to pay up, is if inflation makes money worthless. A high-margin business with low cash on hand, that's temporarily impacted by COVID is another story - they might be able to pay up later.
- thephyber 6y ago
  There are also tax concerns that might affect a decision on whether to write down a loss this year versus some time in the near future.
m4rtink 6y ago
Here in Czech Republic there is a program where government pays 50% of busines rent as long as the property owner agrees on a 30% discount and the tennant pays 20%. The program covers March to June (three months) with most businesses having to be closed for about six weeks from that and restaurants fully reopening only recently. IMHO this is a really good idea while not giving money away due to each party covering a part of the deal.
jeffbee 6y ago
There's plenty of landlords in SF who think turnips bleed. There was a cafe that just closed permanently because the landlord wouldn't lower the rent, in a building bought 20 years ago for $1m where the gross rents are over $60k/month. You do the math.
- thechao 6y ago
  ... 12?
- fyfy18 6y ago
  This has been very much the case in UK high streets for the past few years (on and off since '08). In the county-town where I grew up a Starbucks (!?!) closed because the rents were too high. Even before the pandemic, a number of shops have closed down in the last year, so it will be interesting to see what's left 6 months post lockdown. The only businesses in that town that have been booming are retirement homes... but after this I assume there will be a lot of empty properties.
  - bobthepanda 6y ago
    At least in NY, rising retail vacancies were partially obscured by bank branches spreading like wildfire. The retail market is not particularly healthy if the landlords' only tenants are the people they're paying off the mortgage to.
m463 6y ago
> Almost everybody is taking a haircut this year. I haven't had a haircut since febuary. (cutting my actual hair) :) Some of my friends look a little bushy too. I've paid the lady who cuts my hair anyway, I've been seeing her forever and this is her only income.
- beervirus 6y ago
  I needed a haircut even at the beginning of the lockdown, so it got pretty long in a hurry. My wife finally got sick of it and cut it for me a couple weeks ago. It’s.. ok. Very short though.
  - m463 6y ago
    That is the ultimate test of trust.
ken 6y ago
Yup. "If you owe the bank $100 dollars, that's your problem; if you owe the bank $100 million, that's the bank's problem."
prawn 6y ago
We have small scale commercial tenants and halved their rate and extended terms. Would rather retain tenants we like than play hardball and risk having to find new ones. Over the last couple of months, we've lost one tenant (half rate) but gained two (full rate).

nickff 6y ago

I think that's probably the smart move, at least for commercial property in this situation. The waived rent is essentially an insurance premium against the risk of vacancy coming out of the recession.

londons_explore 6y ago

Isn't the smarter move to defer payment of the rent for a few years? One day, they'll be able to pay, and then you'll get paid.

beervirus 6y ago
Smarter? Eh, probably. I dunno though. It's a small enterprise that doesn't do a lot of business even in good times. I'm ok helping them out. It can be my good deed for the decade.
vkou 6y ago
If they are a low-margin business, the only way they'll be able to pay up, is if inflation makes money worthless. A high-margin business with low cash on hand, that's temporarily impacted by COVID is another story - they might be able to pay up later.
thephyber 6y ago
There are also tax concerns that might affect a decision on whether to write down a loss this year versus some time in the near future.

m4rtink 6y ago

Here in Czech Republic there is a program where government pays 50% of busines rent as long as the property owner agrees on a 30% discount and the tennant pays 20%. The program covers March to June (three months) with most businesses having to be closed for about six weeks from that and restaurants fully reopening only recently. IMHO this is a really good idea while not giving money away due to each party covering a part of the deal.

jeffbee 6y ago

There's plenty of landlords in SF who think turnips bleed. There was a cafe that just closed permanently because the landlord wouldn't lower the rent, in a building bought 20 years ago for $1m where the gross rents are over $60k/month. You do the math.

thechao 6y ago
... 12?
fyfy18 6y ago
This has been very much the case in UK high streets for the past few years (on and off since '08). In the county-town where I grew up a Starbucks (!?!) closed because the rents were too high. Even before the pandemic, a number of shops have closed down in the last year, so it will be interesting to see what's left 6 months post lockdown. The only businesses in that town that have been booming are retirement homes... but after this I assume there will be a lot of empty properties.
- bobthepanda 6y ago
  At least in NY, rising retail vacancies were partially obscured by bank branches spreading like wildfire. The retail market is not particularly healthy if the landlords' only tenants are the people they're paying off the mortgage to.

m463 6y ago

> Almost everybody is taking a haircut this year. I haven't had a haircut since febuary. (cutting my actual hair) :) Some of my friends look a little bushy too. I've paid the lady who cuts my hair anyway, I've been seeing her forever and this is her only income.

beervirus 6y ago
I needed a haircut even at the beginning of the lockdown, so it got pretty long in a hurry. My wife finally got sick of it and cut it for me a couple weeks ago. It’s.. ok. Very short though.
- m463 6y ago
  That is the ultimate test of trust.

ken 6y ago

Yup. "If you owe the bank $100 dollars, that's your problem; if you owe the bank $100 million, that's the bank's problem."

prawn 6y ago

We have small scale commercial tenants and halved their rate and extended terms. Would rather retain tenants we like than play hardball and risk having to find new ones. Over the last couple of months, we've lost one tenant (half rate) but gained two (full rate).