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[–]thefirststone 3 insightful - 1 fun3 insightful - 0 fun4 insightful - 1 fun -  (0 children)

In short, he's saying that: commonly, commercial mortgages allow owners to defer payment on empty units (non-producing assets), yet the loan holder may demand compensation when producing assets' revenues dip below agreed levels which were used to value the asset (not sure if that's a one-time cushion or ongoing). This produces the perverse incentive that owners prefer fewer units paying high rent over receiving more rent income, because it's cheaper than default or the loan terms under cheap rent.

I guess that could be it. I wonder what the terms to break or buy off the loans are. At some point they are just paying themselves to not generate cashflow from aging assets.

[–][deleted] 1 insightful - 2 fun1 insightful - 1 fun2 insightful - 2 fun -  (2 children)

better to have an apartment vacant than let undesirables into it, they'd wreck the place and likely not pay. They raise rents to keep out the riff raff. commercial or residential, same idea.

[–]Chipit[S] 1 insightful - 2 fun1 insightful - 1 fun2 insightful - 2 fun -  (1 child)

This has nothing to do with the topic.

[–][deleted] 1 insightful - 2 fun1 insightful - 1 fun2 insightful - 2 fun -  (0 children)

nah it's the exact point