[quote=davelj]CRE investors don’t stop paying simply because the price of the underlying collateral declines. They stop paying when the cash flow from the property declines to the extent that the debt can’t be serviced (which generally also coincides with a drop in the property’s value). [/quote]
For a residence, I consider “cash flow from the property” to be equal to what it would cost the owner to rent the same house. I see no difference.
You say the homeowners should use income from other resources to cover the mortgage on a property that is not longer servicing the debt based on equivalent rent.
Shouldn’t businesses then use revenue from other cash-flow positive properties, (or personal income in the case of individuals) to do the same – which is what you are saying with the REITs. Why is that different from any regular RE investor?
You are trying to split hairs and it isn’t making sense, as far as I can see.
