Comment by ABCLAW | Hacker News Reader

Comment by ABCLAW | Hacker News Reader

Parent Full thread

Over the course of a given rental, unless the property was purchased almost immediately before a real-estate crash or rental crisis, the amount of cashflow generated by a tenant will cover the majority of the volume required to generate equity in the property.

In certain cases, the financing for commercial real estate, for instance, will literally substitute the credit rating of tenants for those of the landlords - because ultimately that's where the money is coming from.

If a landlord is rendered insolvent, they aren't even rendered destitute; they sell or refinance the property to generate liquidity. If many landlords do the same thing, the volume of real estate on the market increases, the price of real estate drops, and the market is now on it's way to pricing in the effects of the shock which caused the crunch.

The fact that we've been spewing money at asset holders for over a decade is why real-estate metrics are so out of line from historical cycles.

> The fact that we've been spewing money at asset holders for over a decade is why real-estate metrics are historically crazy.

No, the reason is restrictions on building which have constrained supply.

Which would make sense except there are plenty of metropolitan areas which are not physically constrained or suffering horrendous zoning issues which also have the issue.

The world exists outside the particular clusterfuck that is the SF bay real estate market.

Bad bot, the subject is NYC not SF. Very different places

Why can't it be both?

This ignores the fact that if there were such obvious financial incentives, then restaurant owners would simply just buy said properties.

'Property management' is a real thing and businesses don't want to necessarily own property.

Managing property is a service like any other - and rates for their goods are market based - just like any other market.

"If a landlord is rendered insolvent, they aren't even rendered destitute;" - ? why do you assume that? Property owners are often leveraged like many other businesses. If x% of their portfolio goes bust - they go bust.

There might be opportunities to make things a little bit more fair one way or another, but it's not rational to single out one form of business as being 'better or worse' than another.

What could be reformed is the fact that economic rent is not really valuable for society at large. 'Trading playing cards' benefits nobody, we should be investing in value creating operations.

>This ignores the fact that if there were such obvious financial incentives, then restaurant owners would simply just buy said properties.

They do when they have the capital.

>"If a landlord is rendered insolvent, they aren't even rendered destitute;" - ? why do you assume that?

Because I've been through the books of multiple major banks, REITs, investment funds, commercial owners, commercial tenants, private individuals with residential real estate portfolios, etc.

You have to be incredibly negligent to lose money in an industry where your assets have been skyrocketing in value for over a decade.

> it's not rational to single out one form of business as being 'better or worse' than another.

But it is. If a business decreases social welfare (like cartels enabling coordination to jack up prices) the government should regulate it away. Most of what landlords do is cause friction in the real estate market (and hurting everyone else in the process) in hopes to gain some more mpney from it.

"Most of what landlords do is cause friction in the real estate market"

They provide a service just like any other business.

Reply on news.ycombinator.com