I saw RealPage's crappy rent-jacking-up software so you don't have to

Re:I saw RealPage's crappy rent-jacking-up software so you d... by cjbgkagh on Friday February 24, 2023 @01:41PM (#34928175)

I’ve heard from non-authorities sources that loans for the comercial properties have covenants that would severely financially punish the landlord for lowering the rent. Enough of these restrictions in a single location would have a monopolistic effect on pricing paid for by landlords who now have to carry these loans without tenants. Usually it’s expensive to distort a market enough to maintain monopoly pricing but not if you can get someone else that is optimistic, naive, or desperate to pay for it.

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Re:I saw RealPage's crappy rent-jacking-up software so you d... by onlyrealcuzzo on Friday February 24, 2023 @01:47PM (#34928239)

IIUC, this is an expansionary accounting trick.

Your revenue in commercial real estate is imaginary. If your building is vacant 100% of the time for the year, your revenue is 12 months x your desired rent.

Then you have an expense of 12 months vacancy.

You can get loans based on your revenue.

Additionally, it's the reason you see concessions of 1-2 months free all the time - but landlords will never reduce the rent.

concessions are expenses. Revenue is 100% of their desired rent.

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Re:I saw RealPage's crappy rent-jacking-up software so you d... by cjbgkagh on Friday February 24, 2023 @01:54PM (#34928344)

Would that be a covenant on revenue vs a covenant on rental price? Wouldn’t that amount to the same thing. I’m not in that industry nor have I paid particular attention to it, just going by a rumor I head from a friend.

Perhaps instead of a covenant it could be more implicitly enforced by suggesting if there is a revenue drop they’ll revalue the property and force the landlord to make up the difference which could be financially ruinous for some.

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Re:I saw RealPage's crappy rent-jacking-up software so you d... by 8note on Friday February 24, 2023 @03:15PM (#34929499)

Claiming revenue that you never actually had sounds fraudulent?

Can't they extend the trick, so that they have one unit that rents at $100B that always has the vacancy expense of $100B? Then they can set the other rents as they like with little impact to their revenue

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Re:I saw RealPage's crappy rent-jacking-up software so you d... by VHRanger on Friday February 24, 2023 @02:13PM (#34928621)

Having rented commercial properties, the way around this is to agree to the lease rent, but then negotiate a bunch of rent vacations, financed renovations, etc. which even out to having a much lower lease.

The commercial landlord financial infrastructure is broken, but gameable.

Also, a land value tax would fix this (and many other real estate market distortions)

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