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Forget rent control, the way commercial real estate works, many banks give loans based on certain minimum rents being paid, if the landlord lowers the rent the
by nolongerthere 3y ago
Forget rent control, the way commercial real estate works, many banks give loans based on certain minimum rents being paid, if the landlord lowers the rent the bank can call the entire loan to be paid immediately.
- lotsofpulp 3y agoIf there is no rent, then there is a default too. You don’t get to pretend your property is worth $x per sq ft unless it is landing in the bank account. https://www.investopedia.com/terms/d/dscr.asp https://www.investopedia.com/terms/d/dscr.asp
- chii 3y agoWhat the landlord does in this situation is paying out of pocket the expected interest payment to the bank, while deducting this as a cost from their other more profitable portfolios. They hope to ride out the lows.
- roshin 3y agoIn that case, the landlord could rent for a lower rent than the bank is okay with, and supplement the missing amount himself. That would be cheaper that leaving it empty and paying all the rent himself.
- Qwertious 3y agoThat would require the landlord to report the rent as being higher than it actually is, which is fraud.
- lotsofpulp 3y agoNo, the lender or the servicing company will regularly request the P&L and check up on business. Paying out of pocket does not mean the debt covenants are satisfied.