I don't understand this attitude that someone who decides to invest their money into real estate instead of the stock market should be derided as a plague on society, as if it's not much more work to be a landlord than a stock market investor. When you are a landlord, you have to worry about tenants that don't pay (and threaten you with physical violence when you try to collect), tenants that damage your property, having to fix the property (some even do their own work to save money). You might not even be able to evict a problem tenant easily without some long dragged out court case, during which time you are collecting no rent. When tenants move out, you worry about how long it will take to find another tenant, as mortgage payments and taxes and repairs don't stop when there is no tenant. You have to worry about the local market situation changing, perhaps some new construction like a factory might make your property less desirable, perhaps young people just think that the area is played out, and so you will have to try to sell your property ahead of the change while looking for a new one. You have to constantly track possible changes in other neighborhoods as potential places to buy if needed. This information is not available online, you have to beat feet and constantly talk to other people and track down rumors, trying to get the big picture over all the little neighborhoods in your city. And if you are actually forced to sell and buy somewhere else, you have to spend months or years going all over the city to find another property (good real estate are just not on the market that often). Mistakes have a huge cost, and a poor choice could wipe you out as you are locked in to a property that doesn't bring income and have no buyers. You have to worry about tax laws and real estate laws changing, maybe forcing you to sell at a loss just to avoid a bigger loss later. Landlords are not people sitting on the porch, drinking iced tea and twirling their mustache while the money gets delivered in big bags. There's a lot of work and stress that goes into it, just like most other jobs.

I don’t think it’s derision, just the attitude that people in power ought to defend themselves.

Banks have no shortage of money, lawyers, and friends in high places. They do not need you or I also apologizing their actions. If anything we should be extremely suspicious of ant bailout and scrutinize it to ensure it’s well deserved, and will result in a better society overall.

I was referring to landlords, which many of mine have been just small time business owners who scrimp and save to make a living. One lived in the garage of the house he was renting out in order to make ends meet. Technically they have the power since they own the properties, but laws are very tenant friendly, and often landlords get left with the short end of the stick if there is a dispute.

This is not a useful anecdata-driven analysis of the commercial real estate market. Yes, landlords like the ones you know do exist. They do not own substantive commercial real estate, and certainly not the stuff the Neiman Marcus or GNC have been renting.

You are right about Neiman Marcus, as they occupy huge spaces in shopping malls. However, GNC stores are very small, and many are in strip malls, which can cost only a few million to purchase, not out of the range of small business owners with some collateral. At a cursory search, I can't find any numbers on the percentage of CRE owned by institutions and corporations, do you have any data you can share?

In any case, my point was not to discuss how much CRE is owned by individuals and small businesses, but rather the dismissive attitude that sweeps individual and small business landlords into the same bucket as giant CRE corporations.

"small business owners who scrimp and save to make a living", to me, is not really aligned with "a few million to purchase". Perhaps it is for you.

It seems like you are assuming that the few millions used in the purchase are 1. liquid, and 2. all from the owner. Many owners take out a loan to purchase property, so they are paying monthly mortgage. Also, the millions are locked up in the property and is inaccessible, so they have to live off of the rental income from the property. A $3M property with a 5% CAP, which is not bad for the US, nets the owner $150k a year, hardly Rich Uncle Pennybags' level of income. Subtract mortgage and any taxes/insurance/repairs not covered by the tenant, and also self purchased health insurance, and you are basically living a middle class lifestyle. If things go awry, such as a few bad tenants or unfavorable changes in local rental market, and you're in a situation similar to being "house poor", where you have a high value asset, but not a lot of cash for day-to-day expenses.

150k a year is nearly 3x the median household income. I'm sorry, but I don't regard this as someone who "scrimps and saves to make a living". Yes, they are not part of the 0.01%, but that level of income puts them in the top 15% or so, and talking about such landlords as if they are representative of an average person is misleading. They are not wealthy mega corporations, that is true. But they are people in vastly more fortunate positions that the vast majority of the population, and although there's no reason to be punitive towards them, I don't find their situation incredibly demanding of sympathy.

You are correct. Such earnings are above the median. Note that typical incomes are heavily based on salaries, and will not have the expenses of a business owner (such as the ones I listed earlier), and thus the $150k income of the business owner does not equate to $150k of a wage earner. Since business expenses can vary widely, it's hard to put an estimate on what the equivalent wage is, but consider it more like a $75k salary -- definitely above average, but still clipping coupons and waiting for sales and applying for financial aid when the kids go to college.

I'm glad you agree that there is no need to be punitive towards them. This is a reoccurring issue I often find on HN which I find surprising, the derision towards lines of business that people don't have much understanding of. There are no free lunches in the world that will not get optimized out quickly, and any business you believe are simple are likely to have hidden complexities that you did not consider.

I think you missed my point, that eventually the pain will trickle down to the rest of us at the bottom. I should have continued the domino metaphor to this conclusion to avoid misunderstanding, I'm sorry.

And to be fair, I and likely many other "regular Joes" benefited initially from the 2008/9 downturn; I was able to buy my first home, humble as it is, at less than half its usual market value. I'm still enjoying that benefit today, with a monthly house payment less than most people's car payment even on a used vehicle.

I think this time around it will be much different; this is approaching a true depression, not just a downturn. We are at 30 million jobs lost due to the pandemic, on top of the existing unemployment not related to it. We are on a dark road.

There is a lot less pain tricking down if the lenders and real estate owners take the brunt of it.

I think you vastly underestimate how over-leveraged everyone is.

The real estate owners are no more resilient than a sheet of paper when it comes to the guillotine that could be coming for the economy. And, while I'm sure a lot of people aren't feeling any particular love for real-estate folks in general due to the current administration - letting them get liquidated and then trying to build up a replacement is harder and more damaging than just propping them up.

But I, personally, am seriously done with this slap-on-this-wrist for endangering the economy during clear weather BS. Engaging in unsafe business practices can cause massive loss of life - whether you're Wells Fargo inflating fake accounts and leveraging them as assets, the wolf of wall street or just committing some plain old accounting fraud we need to come down hard as a society and stop glorifying it as if these clowns are sticking it to the man.

You are right, sadly Schadenfreude (gloat?) would mean a non-trivial relief to the pain of many people

My point was someone has to bear the losses. Forcing the owners to bear those losses means the rest of us don’t, which is a while lot less pain in general.

It’s like this. Suppose a real estate speculator in your town buys a mall, leverages it with debt to afford it, and becomes rich. They buy the biggest house in town, drive a Bentley, in general live well for a decade.

Then the pandemic happens, and some of their tenants stop paying. They personally signed for the mall mortgage, and are now in default.

They need $10M to recapitalize their loan, avoid foreclosure, and ride out the rest of this. So they come to the city council and ask it to raise property taxes by an average of $100 a year per person in the town so the city can loan them the $10M.

They explain by doing this they will keep the mall open, be able to work things through with the tenants, saving jobs, the mall, the bank, the city, even goddamn America! The speculator then sits back smoking a cigar to await his bailout.

Then the (secretly libertarian$”) mayor points out if the city doesn’t step up, the bank will sell the mall to a new owner, who will work with the tenants to keep the mall open, and sell the speculators mansion, Bentley and jewelry to help recoup their losses. And the citizens of the town will all be $100/year ahead.

Then he slams his gavel down and screams, “and there is no smoking in public meetings you arrogant leach!”