4 ms·

If you are big enough theres some weird accounting incentive to keep it vacant. You can keep claiming it as an asset that brings in 10x dollars, even though you

If you are big enough theres some weird accounting incentive to keep it vacant. You can keep claiming it as an asset that brings in 10x dollars, even though your cash flow is 0x, so actually renting for 8x really hurts your asset value or some nonsense that im probably getting the details wrong about.

enchiridion 6y ago
Right, which is why commercial lending is a farce in my opinion. It's more or less built on wishful thinking of future gains, leading to a lot of vacancy.
- bobthepanda 6y ago
  At least in residential lending the problem is that the FHA has specific rules on what it will and will not guarantee, distorting the market in favor of mostly single-use residential. Really we should pull that and the mortgage deduction, because at this point both distort the market in favor of people who can afford to own property.
  - bluGill 6y ago
    I suspect mortgage deduction will be gone in a few years. With Trump's tax reforms very few people take it, and so they won't be for it. If they eliminated it entirely now too many people remember it as good, but give it a few years to sink in that only the rich (or those living in California, which is itself a point against it elsewhere) take it, not you can get rid of it.
    - Ericson2314 6y ago
      Let's hope!
dodobirdlord 6y ago
The answer is more boring than financial conspiracy. Rents are sticky and both evictions and finding new tenants are a pain in the ass. Especially for a commercial space, better to wait a while for the 10x tenant than to settle for the 8x one.
- Spooky23 6y ago
  It's not a conspiracy, just a murky business. Real estate is the most "advantaged" businesses out there. They tend to support local political figures heavily and get heard.
mensetmanusman 6y ago
Real estate is its own beast. https://www.theatlantic.com/magazine/archive/2019/03/how-kleptocracy-came-to-america/580471/ https://www.theatlantic.com/magazine/archive/2019/03/how-kle... tl;dr: post 9/11 criminal money laundering activity switched from banks to real estate

enchiridion 6y ago

Right, which is why commercial lending is a farce in my opinion. It's more or less built on wishful thinking of future gains, leading to a lot of vacancy.

bobthepanda 6y ago
At least in residential lending the problem is that the FHA has specific rules on what it will and will not guarantee, distorting the market in favor of mostly single-use residential. Really we should pull that and the mortgage deduction, because at this point both distort the market in favor of people who can afford to own property.
- bluGill 6y ago
  I suspect mortgage deduction will be gone in a few years. With Trump's tax reforms very few people take it, and so they won't be for it. If they eliminated it entirely now too many people remember it as good, but give it a few years to sink in that only the rich (or those living in California, which is itself a point against it elsewhere) take it, not you can get rid of it.
  - Ericson2314 6y ago
    Let's hope!

dodobirdlord 6y ago

The answer is more boring than financial conspiracy. Rents are sticky and both evictions and finding new tenants are a pain in the ass. Especially for a commercial space, better to wait a while for the 10x tenant than to settle for the 8x one.

Spooky23 6y ago
It's not a conspiracy, just a murky business. Real estate is the most "advantaged" businesses out there. They tend to support local political figures heavily and get heard.

mensetmanusman 6y ago

Real estate is its own beast. https://www.theatlantic.com/magazine/archive/2019/03/how-kleptocracy-came-to-america/580471/ https://www.theatlantic.com/magazine/archive/2019/03/how-kle... tl;dr: post 9/11 criminal money laundering activity switched from banks to real estate