201–210 of 258 posts
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The specific proposal is not great but changing the rules is in fact the correct solution of the current rules lead to systematically bad outcomes.
How is it systematically bad? Is there a banking crisis?
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... who therefore agree with the assumptions of this broken system.
Broken how? The owner/bank are fulfilling their obligations. You just don’t like the outcome.
Say what you want, but a law that lets you pretend that the value of a building is based on what you ask, rather than what you can actually obtain, is a stupid law.
What is a better option? Before your answer, remember it sometimes really is the case that the economy is down and in two years things will recover and everything will rent out again. Your answer needs to smooth that out.
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i am considering what i am proposing. but i can't do that alone. throwing my ideas out there and having them critiqued with counterarguments is the point. if you just say i have no clue and my ideas are bad and i should reconsider then i am not going to learn anything. i can only reconsider if i get new input about what's wrong with my idea. basically you act like the error in my idea should be obvious, and i should…
The error is you think you as a non-interested party you can tell people what to do. No one’s outlined a scenario where the bank or the owner are violating some law/regulation.
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That's another way of phrasing what I asked you to explain, without actually answering.
You’re stating the outcome - the property is worth less - without understanding how people buy/sell said property. And asking why others don’t agree? The article outlines the methods used for the most part to the best of my knowledge, as someone who owns and deals in this space. I think you need to lay out a better argument for why your thesis is the case when what happens in the real world mirrors what the article d…
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Broken how? The owner/bank are fulfilling their obligations. You just don’t like the outcome.
When people are fulfilling their obligations and most other people are not happy with the outcome, that usually means the definition of "obligations" is wrong.
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The error is you think you as a non-interested party you can tell people what to do. No one’s outlined a scenario where the bank or the owner are violating some law/regulation.
Well, sort of. One scenario is to say "it is illegal to let your property be vacant (for more than X months etc. etc.)". Then suddenly all these owners are violating laws. Another is to say "it is illegal to hold more than $100 million of wealth". Then a bunch of rich people are in violation. Laws are what we make them. The point here is that the current laws are inadequate to produce the society people want to live…
Can’t wait for people here to begin arguing Elon should just sell/give up his equity because Starship hasn’t launched successfully yet.
Not everything needs to make sense to a bunch of IT peeps so, politely, either genuinely learn about commercial property or take a hike.
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But how does it help the bank to require that? Suppose the landlord lowered rents to raise occupancy so they could get $700k now instead of after several years of inflation. If all goes according to plan then the bank gets its interest payments either way, and then the landlord would be making $900k with full occupancy instead of $700k with half occupancy. But if the value doesn't recover then the landlord is still o…
The problem is the bank didn’t leave a buffer to meet their requirements, so arbitrage between reality and official reality comes to the rescue. If a bank only loaned 60% of a buildings value, it could be devalued, the operator would eat the shortfall, but the bank could reappraise, with the loan continuing as before. [So a regulation setting a banks maximum loan percentage, at a percentage less than they are require…
They did though. It was a $20M building and they only loaned out $16M, providing a $4M buffer. It isn't possible to require an amount that the value of the building could never fall below under any circumstances because that would require the loan amount to be zero. It's always possible for the value of the property to crash, e.g. it becomes contaminated with toxic waste and the remediation costs more than the property value, or the area's major employer shuts down and the area becomes a ghost town.
Meanwhile increasing the size of the buffer has costs that can exceed the value of a larger buffer, i.e. fewer people can afford a mortgage, which is both economically bad and not in the interests of the bank who wants to make more loans rather than fewer.
> However, another way to look at this from a banks point of view is while they may loan 80%, they might have been happy to loan 100% but for regulations.
The reason banks require a down payment instead of loaning out 100% of the value of the property is definitely because the banks want the buffer to not be zero.
> And for the bank, if the loan payments are made there is no problem.
But that's the issue. If they prevent the landlord from lowering rents to increase occupancy then they may not be able to make the payments anymore, and then the bank is screwed.
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Then why does anybody care if they rent out some of the units for a lower rent?
You keep asking the same question and the answer is the same in all these. You don’t like it. We get it. No one is doing anything illegal. If the bank thought a customer couldn’t pay, they’d get foreclosed, end of story.