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'Dogfight' looms as landlords start suing restaurants over unpaid rent

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Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#51

Post by matz1 »

AmVess wrote: post #44
matz1 wrote: post #15

Earlier quoted context omitted.

The mistake is the landlord didn't take payment upfront, 6 month / 1 year.

Do you make your mortgage or rent payments 6 months to a year in advance? If not, why do you expect landlords to do the same?

>Do you make your mortgage or rent payments 6 months to a year in advance

Depends on the situation, yes.

>If not, why do you expect landlords to do the same?

If the landlord want to reduce the risk of non payment, then they better be asking upfront. Of course it could create another risk. Everything has a trade off, so pick your poison.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#52

Post by ethanbond »

Ididntdothis wrote: post #9

I only hope that this won't lead to a situation where people and organizations with deep pockets will take over even more of the housing stock like they did in 2008.

Yep, that’s exactly what will happen.

One crisis closer to having a single mega landlord (or a very small class of landlords) who can charge whatever they want for your right to exist on the face of the planet.

It is time to undo this with the LVT like what Singapore does (almost all land is owned by the state and leased out on 99yr leases). The net effect is that the market sets rent prices, but the revenues not due to the landlord’s actions (I.e. revenues due to nearby employment opportunities, education, or public infrastructure) go back to the state and get reinvested in the community.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#53

Post by FartyMcFarter »

Robotbeat wrote: post #37
FartyMcFarter wrote: post #20

Earlier quoted context omitted.

> Government should take a hit, in my opinion. Government means "everyone who pays taxes". I'm not sure that's fair. I think it's fine to spend taxes rescuing people (including the business owners if they're in personal trouble), but rescuing businesses feels like a very different story.

So we just don’t have restaurants (or people working there) for a year even after the stay at home orders end? I think people saying we shouldn’t bail out businesses haven’t fully thought these things through.

People are free to start up new restaurants.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#54

Post by dahdum »

FartyMcFarter wrote: post #20
dahdum wrote: post #14

Government should take a hit, in my opinion. It's inefficient for every individual and entity to prepare themselves against things like this, especially since government action (stay at home orders) is exacerbating it. The business "bailouts", at least the in US, are mostly just loans anyway. Taking a "too bad" stance and letting businesses cascade fail prolongs the pain and leaves the country worse off when the cris…

> Government should take a hit, in my opinion. Government means "everyone who pays taxes". I'm not sure that's fair. I think it's fine to spend taxes rescuing people (including the business owners if they're in personal trouble), but rescuing businesses feels like a very different story.

If you don't rescue businesses, you end up needing to rescue a lot more people. You can also give loans (not tax dollars) to rescue business. People require grants.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#56

Post by jandrewrogers »

tomp wrote: post #35
papeda wrote: post #5

I find this question hard to think about. Who exactly should be pricing in the risk of something like this happening? On both sides there are agents who have taken on risk. Some of the agents paying rent overextended themselves even before the crisis. Some of the agents renting space did the same. So who should take the hit? Nobody (i.e., the government)? Even that solution seems wrong -- do we really want to incenti…

It's an unprecedented catastrophe, and even if we will weather it, someone (well, many someones) will suffer (we'll all suffer, but some more than others). Besides solving the crisis (to which most of us cannot meaningfully contribute) the main priority is preserving the rest of the society so that we can go on with as little harm as possible when the immediate crisis (virus) is over. In this specific situation, it's…

One of the largest second-order effects of transferring all risk to landlords is that rents will go up because risk has a real financial cost that must be covered by cashflow. That will remain true no matter who ends up owning the property.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#57

Post by paulie_a »

kfrzcode wrote: post #19
echelon wrote: post #8

Earlier quoted context omitted.

Businesses were told to close by the government to prevent spread of the virus, thus effectively shutting off their income. The government should shut off rent income, too. And mortgage payments. We're in survival mode. Nobody gets to make any money right now. We have to wait for the recovery to begin.

> Nobody gets to make any money right now. This is a fantasy, and will never, ever happen... At least in the United States.

People are living in a fantasy world if they don't comprehend how big this is..the concept of getting back to normal in a couple months is completely delusional.

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#58

Post by Eldt »

papeda wrote: post #48
toomuchtodo wrote: post #22

Earlier quoted context omitted.

6-12 months of cash reserves, whether you’re an individual or business. The yield drag is offset by avoiding insolvency.

Is this reasonable to expect from a business where 6 months of cash reserves are not legally required? Can't the restaurant that saves 1 month of reserves instead of 6 months charge lower prices and still turn a profit, thus outcompeting the prudent save-for-6-months restaurant?

Yeah, and then they get ruined by a pandemic or an assortment of other situations...

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#59

Post by hash872 »

raincom wrote: post #18

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'…

What 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....

Re: 'Dogfight' looms as landlords start suing restaurants over unpaid rent

#60

Post by papeda »

FartyMcFarter wrote: post #53
Robotbeat wrote: post #37

Earlier quoted context omitted.

So we just don’t have restaurants (or people working there) for a year even after the stay at home orders end? I think people saying we shouldn’t bail out businesses haven’t fully thought these things through.

People are free to start up new restaurants.

Is this the right trade? When a restaurant goes out of business, we do lose a kind of stock of wealth. It's a tuned machine (suppliers, cooks, customers, an evolving menu maybe) and now we're starting over from scratch with an untuned machine. That's a real cost to everyone.
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