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As I understand there are debt-to-income ratios on commercial loans and those are calculated on the rent, so leasing to someone at a lower rent than you used to
by hnav 4y ago
As I understand there are debt-to-income ratios on commercial loans and those are calculated on the rent, so leasing to someone at a lower rent than you used to can bankrupt you since your lender will require you to come up with the cash to bring your ratio back into compliance. Basically like any other optimized system, real estate is not tolerant of transient conditions and it's not clear what's going to happen to commercial real estate. At least for CA housing, the state will prop it up through the junior loan program.
- rightbyte 4y agoOne of my friends is in real estate is complaining about this. His employer wont let him rent out their vacancies to market price since that would lower the nominal value of the estate. They rather have 0$ than what the market can bear as long as they wont have to lower rents.
- zug_zug 4y agoSounds like deliberate price fixing