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Comment by amluto | Hacker News Reader

One solution could be some form of mandatory rent holiday, although it might already be too late.

The sensible landlords should not be charging rent to their small business tenants right now. If the lose them all, then their properties will be worth considerably less when the dust settles.

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Some landlords have mortgages to pay too - so in that case "rent holiday" is basically "landlord pays for tenant". But commercial real estate seems to be a different beast. I've witnessed a large amount of commercial property being empty for years at a time (5+) in a fairly expensive area of NY. Commercial landlords in this case probably owned the buildings outright and were in agreement to keep rents high even if it made it longer to find the next tenant. It probably is not like that everywhere, but I was really surprised that half of the building would just sit unoccupied for so long.

I have heard that with commercial space you can take building depreciation costs and write that off as an expense so it might be not as expensive for a landlord to keep the property vacant as you would imagine. Also sometimes as I understand it is new tenant who has to clean up and bring the building up to code to open, and if there is plenty of other properties to lend they might find something with less upfront costs.

Location is everything in cities like NY, especially for businesses that rely on people traffic so few hundred feet closed to rail station might be a lot more expensive so they just wait for tenant that can utilize that.

Suspending mortgage payments should be looked at also

They have forebearance of 180 days and you can extend another 180. But this will unwind very badly because it's still due yet the renters and homeowners won't be in a position to pay lump sums. From a Planet Money episode, essentially the mortgage servicers will go bankrupt as they are the only ones that can't defer payments in the flow. You have renters, landlords, banks, mortgage servicers, investors and the federal government guarantees a lot of mortgages. It seems most plausible that homeowners who don't pay will end up with longer mortgages versus a balloon payment they won't be able to handle.

Do you also default on all of the bonds that are backed by mortgages?

The current proposal in Congress reimburses landlords and mortgage holders with taxpayer money subject to stipulations. This proposal is actually much cheaper than the UBI esque one.

My naive understanding is that the empty storefronts offset as a tax loss from a more lucrative line of business from the matrixed holding company that owns the property. The empty storefront on 5th Ave. doesn't matter to the owners because the numbers work out on a spreadsheet.

Losses reduce the taxable income, they are not tax credits. If you're paying a 20% tax rate, you still lose 80% of those losses.

The landlords have bills of their own. Very few of them own their properties completely (which doesn't make sense anyway with low interest rates).

If you stop rent payments then you must also help landlords and property owners with their mortgage.

That's a false equivalence. Landlords have huge equity advantages that the renters do not.

That said, I agree, we should be deferring mortgages and canceling rents.

Here’s what I don’t get

Everyone is paying downstream until you hit the lenders.

What are the lenders’ costs? What if they pause repayment for 3 months and tack it on to the end of their loans?

Presumably if all the lenders downstream did this, we could really hit pause.

You think the lenders don't have anyone to pay? Many mortgages are packaged up into bonds [1]. Those bond coupon payments are often times what retired people are using for their fixed income to pay their bills.

[1] https://en.wikipedia.org/wiki/Mortgage-backed_security#Marke...

Alright, but didn’t we send those retired people checks?

By the way this is another reason why UBI is good in a crisis. It creates a floor for people to buy food etc. while we suspend rent payments and mortgages for a few months. And with no disincentive to work like we have now.

Anyway... so who do the retired people need to pay when everything is on pause? Social Security and Medicare cover a lot of the basics. If they have investments yielding enough for them to live on, then they have savings that they can use 0.5% of in three months.

Not to mention, the stock market is down, we can pause bond yields for the retirees for a few months also. The only thing I wouldn’t pause is sovereign debt, since we can print money to service it and confidence in that is paramount.

(Another reason why McConnell’s stance on letting states go bankrupt is dangerous. I would have liked to see states and cities have the ability to issue their own complementary currencies.)

What's false about it? Equity only exists if they paid into it, and is no different than any other savings.

Is it now unfair that some people have saved more cash than others?

That advantage only works at time of sale, and that only happens when there are people around that can buy what is being sold. Houses here were stacked ten high and ten deep for miles with foreclosure signs in front during the last recession; a lot of them stayed that way for a long time.

The property values are not going to be affected by any individual landlord, but keeping a reliable tenant may be extremely valuable during the recovery. Getting a good tenant is often difficult, and getting any tenant at all can be near-impossible in a recession.

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