NYT: 40% of N.Y. Tenants May Not Pay Rent This Month. What Happens Then?
[{"id": "fm2yyo2", "text": "Ya know, over leverage is always blamed when investors get in trouble. Sure, sometimes people get caught with maturing loans in a down market and can't refinance... but these *margin calls* are slow and can be planned for. \n\n\nThe real culprit here isn't debt, the real culprit is lack of cash reserves. \n\n\nAnd if you've studied your history we've seen it time and time again in every crisis. \n\nPeople are ass at cash management.\n\nAnd yet lenders will tighten requirements, because big bad debt will be blamed again.", "replies": [{"id": "fm2zx3n", "text": "When credit guidelines are loosened, it creates a lack of profitability because there are more people competing for deals.  And guess who gets enriched during the times of loose credit?  Lenders.  Sure there are more qualified buyers, but now each of them is now pushing up the prices due to higher leveraging.  The trick is to not hold the bag when the shit falls.  And guess who is holding the bag?  Investors, pensions, and ultimately the tax payers and homeowners that are paying higher PMI.\n\nI still have lenders doing 1:1 dscr!", "replies": [{"id": "fm3czo1", "text": "When the feds bail everyone out, there is no risk. Lend on a fleeting fart and the Feds will bail you out.", "replies": [], "depth": 3}], "depth": 2}, {"id": "fm3d9h2", "text": "The banks will be fine because they have held on equity requirements.", "replies": [{"id": "fm4kxgg", "text": "Except their model did t call for every business maxing out their lines of credit simultaneously", "replies": [{"id": "fm4oy69", "text": "Most of the banks are pretty well capitalized though some have had liquidity issues that were propped up by the fed. The bank I work for doesn't have issues and peer data suggests our competitors are fine as well", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "fm3qdky", "text": "Most people just ignore the emergency fund, to their own peril. But after 2008, nobody really has an excuse for not having one. It's common sense.\n\nIt's not fair for the people who save.\n\n Giving handouts will just make people expect more money for nothing.", "replies": [], "depth": 2}, {"id": "frfccmm", "text": "I just walked away from CRE as an investment due to cashflow. Covid was an excellent lesson if what happens when you don't have enough cash.", "replies": [], "depth": 2}], "depth": 1}, {"id": "fm333k8", "text": "Both happens ya can\u2019t kick em out", "replies": [], "depth": 1}, {"id": "fm373f9", "text": "I have to say the Cheesecake Factory announcement really caused a cascade in retail tenants. I have my top credit tenants like Chipotle sending me letters that say we're taking the next 3 months off rent completely and we'll get you back in the next 12 months probably. Sign here. No thanks. We got deluged today with these letters from many tenants.\n\n&amp;#x200B;\n\nThere needs to be some federal intervention requiring negative amortization to be extended to every borrower. Very simple fix for the short term. Do this now please!", "replies": [{"id": "fm3om12", "text": "Same is happening in Chicago.  Basically when all these companies don\u2019t pay their rent,  landlords will default on their mortgages,  tax burden will be further shifted towards residents who own in Chicago.  Why would the current federal government step in?  If this happens,  big city\u2019s across the country will be decimated by lost tax liabilities from commercial property\u2019s . As it\u2019s shifted to residential more people will leave and the city\u2019s will financially collapse.  Honestly this probably has tons of right wing crazies hand wringing at the possibility of seeing the plight of \u201cliberal, coastal elite cities,\u201d being brought down a peg or 3.  \n\nFederal government in its current state will never step in for the local businesses that will affect big cities.  They will do all they can to prop up the mega corporations who will enslave the remaining earners but let the small businesses that make these communities thrive, go out of business.", "replies": [{"id": "fm50ffe", "text": "&gt; As it\u2019s shifted to residential more people will leave and the city\u2019s will financially collapse. Honestly this probably has tons of right wing crazies hand wringing at the possibility of seeing the plight of \u201cliberal, coastal elite cities,\u201d being brought down a peg or 3. \n\n&gt;Federal government in its current state will never step in for the local businesses that will affect big cities. They will do all they can to prop up the mega corporations who will enslave the remaining earners but let the small businesses that make these communities thrive, go out of business.\n\nThis is too big of an assumption to make too early. Less than two weeks in, they've already released the stimulus which helps small businesses throughout the entire country...to assume additional action won't be taken is rather naive unless you're just gonna take these anti-Republican stereotypes at face value.", "replies": [], "depth": 3}, {"id": "fm6e8n9", "text": "As a right wing crazy myself, the mismanagement of liberal cities is certainly going to have its effects, but it's not something I pine for. \n\nI don't think that a bailout is required to solve this mortgage problem. If the Feds made a law or regulation or executive order or whatever that gave all borrowers a 6-12 month negative amortization option then it basically solves our problem without hurting the lenders too badly or costing the GOV much at all. \n\nIf you don't make interest payments, that accrues onto the balance and most people will refinance after this is over anyway with interest rates super low after the economy stabilizes post pandemic. I have SBA loan apps in for the OPEX items and payroll, so we'll see how that all shakes out. The SBA lending environment could be described as \"wild west\" or \"rubber stamp\" as I am hearing about it, so if you need the support, definitely jump on that bandwagon.\n\nThe cavalier attitude of Cheesecake Factory really did embolden other retail tenants to simply declare that they aren't paying without having to provide any plan to deal with this. I truly hope Cheesecake Factory is done forever now after this. I'll never go there again.", "replies": [], "depth": 3}], "depth": 2}, {"id": "fm65fve", "text": "12 months? Lucky\n\nA client, who\u2019s name rhymes with \u201cHizza Put\u201d told us they weren\u2019t paying for 3 months and we\u2019d get it by the end of the lease (Jan 31st 2025)", "replies": [{"id": "fm68sj0", "text": "Not a bad idea", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fm3ofif", "text": "They get evicted. Plain and simple. You can't let them bully their way into not paying. That's not fair.", "replies": [{"id": "fm41ybo", "text": "Not for a while because the courts are closed and there have been no eviction orders placed. Then when the courts are back, and the tenant can/will pay rent again are you really going to turn them away so you can have an empty building? That would be cutting off your nose to spite your face. \n\nThe good thing is that it\u2019s pretty unlikely that the mortgage holders are going to foreclose while this crisis is happening, so the landlords have some leverage too.", "replies": [{"id": "fm4cgr9", "text": "Ok that's good", "replies": [], "depth": 3}, {"id": "fm6930c", "text": "Ya, if things turn back around those tenants that made no effort to pay can go find a new place to live. \n\nMost tenants I have are decent. We are working together on a plan for then to pay. The small minority that are pulling the \"rent strike\" crap are going down the road first chance possible. \n\nPeople are already saying they will rent strike on thier apartment rent. Like really? You are getting 1200 from the government. What do you think that's for exactly? Rent and food. \n\nPeople have money to pay their rent, the ones trying to do this are just taking advantage of the situation.", "replies": [], "depth": 3}], "depth": 2}, {"id": "fm4jofo", "text": "It's not that simple.\n\nJust as in 2008, we will assess as best we can which tenants are worth helping and what's our capacity to help. If we think a tenant can survive this, and we want them in our space when we are on the other side of the crisis, we'll give free and reduced rent.", "replies": [{"id": "fm4u00r", "text": "My point is: giving or not giving free rent doesn\u2019t really matter much right now if they decide not to pay, since there isn\u2019t much the landlord can do about it in the short-term. \n\nOf course this will make you revalue you\u2019re estimation of the risk the tenant brings and you can weight that against their security.\n\nBut now is not the time to make that decision, wait until after the crisis is over and then decide. There will be cases where an empty building (offset by keeping the security) will be better than keeping a risky tenant, but you really can\u2019t know now. Basically don\u2019t let your feeling get in the way.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "fm4iwvj", "text": "Maybe if there wasn't a housing supply problem and a lack of zoning reform, this wouldn't be a problem...", "replies": [], "depth": 1}]