>Offered >Deferment >We are all in this together. Not quite sure how these square.
What's confusing about this to you? Would you prefer OP to default on their mortgage, in which case the tenants would likely get tossed out anyway?
U.S. retailers plan to stop paying rent to offset virus closures
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Re: U.S. retailers plan to stop paying rent to offset virus closures
#112All rent should be suspended, across the board, for everyone. Rent is a passive expense that businesses and individuals alike who are not getting any income right now will have no hope of paying.
OK, then what do all the landlord do when their mortgage is due? Property taxes?
Suspend those too.
It's turtles all the way down.
Re: U.S. retailers plan to stop paying rent to offset virus closures
#113Earlier quoted context omitted.
Not all rent is giant corporations. My mother is a retiree who basically pays her living expenses every month by renting out the first floor of her two-floor home. "All rent should be suspended" would drive her into bankruptcy, and ultimately leave both her and her tenant without a place to live.
Under the circumstances, the only living expenses should be gas and food. If someone who owns hundreds of thousands of dollars worth of capital doesn't have enough money set aside to weather a bad month, hopefully they've been kind and fair enough to their tenants to receive help, or have supported community efforts to help feed those in need and can receive support in turn. Like, this is why people need to be active…
There is still taxes, mortgage, upkeep, and many other daily expenditures of life to pay.
Re: U.S. retailers plan to stop paying rent to offset virus closures
#114Real estate is next to fall. The bailout will need to be like 10 trillion there. Too much leverage out there on a useless resource (congested land) in a world of remote knowledge work and people scared of physical contact due to ubiquitous viruses. Let all the leverage / bags go to the fed and let it slowly deleverage itself over 10 years.
With real estate, places like India are much less leveraged and their economy more resilient. Most people own their land outright because they didn’t want to get a loan and have to pay tax on it.
Re: U.S. retailers plan to stop paying rent to offset virus closures
#115All rent should be suspended, across the board, for everyone. Rent is a passive expense that businesses and individuals alike who are not getting any income right now will have no hope of paying.
Rent is only one part of the chain. You have mortgages, people/funds depending on this income, people taking loans against their property, etc... Stopping rent will stop these people and you'll have a cascade effect. You need to stop everything.
Everything is stopping.
Layoffs, across-the-board closures, mortgage holidays.
Hyperbole, but the property owners who get paid to stand still are the only ones still expecting to get paid.
Re: U.S. retailers plan to stop paying rent to offset virus closures
#116The economy is effectively frozen. But you have to distinguish the production process from the monetary, contractual and ownership relations that normally control the production process. We can continue to produce necessary , essential good during this crisis and let the rest of the economy stay frozen 'till the end of this mess. The situation should be the equivalent of a war or a different natural disaster. Essenti…
> The economy is effectively frozen. This is a huge overstatement. Certain sectors of the economy are frozen: basically, those sectors which serve demand that is discretionary and non-essential, the sorts of things people have stopped doing because they don't want to get infected. Grocery stores, drugstores, etc. aren't frozen--in fact their sales have probably skyrocketed over the past few weeks. All of the supply c…
I should say, the finance and stock part of the economy is effectively. Even, the prices retailers charge are frozen (because this is an emergency and appropriately so).
Essentially production continues and will ramp up. But the process of market adjustment, basically, is frozen and should remain frozen for a while.
Re: U.S. retailers plan to stop paying rent to offset virus closures
#117“The court system is just going to get flooded with a million of these disputes between tenants and landlords,” I'm absolutely not a big fan of collectivism, but sometimes, individualism just doesn't work. Sometimes, you have to step in and solve problems collectively. No, it won't be fair, yes it will be one-size-fits-all, no you can't please everyone. Suck it up, buttercup. Whether you like it or not, we're in this…
> "we're in this current shit together, all of us." So are you saying that we do not have to pay rent either?
...
No, that's the complete opposite of what I'm saying. Keep paying rent if you can pay rent.
But I understand that it's extremely difficult for some people to accept a solution that's unfair for some individuals, even though it's the solution with the least amount of total negatives. As collective solutions tend to be.
Re: U.S. retailers plan to stop paying rent to offset virus closures
#118>Offered >Deferment >We are all in this together. Not quite sure how these square.
It seems like a pretty reasonable offer — if you understand how rental markets work.
Landlords take on the substantial risk of long-term ownership, maintenance, and uncertain market demand for their product. Operating costs —- that’s excluding financing costs — typically run 45% of rents. Tenants usually, but not always, pay a higher rental rate than the equivalent ownership cost but have no obligations and no capital commitment beyond the term of their lease. Think about the tenants the OP listed — a bookstore and a restaurant. Do you honestly think someone would start a bookstore or a restaurant if their only option was to buy a building to operate in? The time option is of a huge benefit to the typical tenant and, of course, like anything it costs something.
Of course, there are some terrible landlords out there, but if they were all so bad, tenants would band together and jointly purchase property as a co-op. That this doesn’t happen on a broad basis in the commercial property market even in markets where there is availability of small to medium spaces at relatively low cost tells me the tenants are getting something valuable out of the arrangement.
Re: U.S. retailers plan to stop paying rent to offset virus closures
#119Earlier quoted context omitted.
And what about international obligations? What about mortgage-backed securities?
Pensions and institutions people need to survive get a bailout. Speculators lose their shirts.
What’s the difference between a worthy investor and a speculator? Is it sort of like the difference between a church and a cult?
Re: U.S. retailers plan to stop paying rent to offset virus closures
#120Earlier quoted context omitted.
No, there is a one-size-fits-all solution. https://docs.google.com/document/d/1YbtJGn7ida2IYNgwCFk3Sjhs... Stop interest on all loans for 90 days. Defer principal on all loans by 90 days. In 90 days, payments start up as before (and just end 90 days later). Same thing bubbles for all contracts. Leases and rents are free for 90 days. Contracts switch from net 30 to net 120 terms. Etc. You pause the cycle of debt. It w…
This is a recipe for bank failures and a financial crisis.
If a huge amount of small and large businesses go bankrupt at the same time, stop paying salaries and fire all their employees, making a huge amount of people unemployed, and stop paying rent, making a huge amount of real estate companies go bankrupt, don't you think we're already in the largest financial crisis in human history?
If we can pause the economy, preserving all employment contracts, lease agreements, loan agreements, etc, then we're in a much better position for restarting the economy once quarantines and lockdowns can be lifted.
But you would rather let everything burn down because existing contracts must be honoured as-is because won't somebody think of the poor bankers?