> A lot of these projects are financed with rent projections as part of their valuation to lock in loans and attract investors
I would like to see proof of this. All the commercial backed mortgages I have been privy to come with debt service coverage ratios, which can trigger default if total cash flow is not as expected.
Some rent is always more than no rent. Lenders aren’t fooled by property owners earning less money, but advertising higher than market rate rents to prospective tenants.
The only question is if the lender wants to trigger the default and take over dealing with the property, and many times they don’t, and prefer to renegotiate the terms of the loan.
I would like to see proof of this. All the commercial backed mortgages I have been privy to come with debt service coverage ratios, which can trigger default if total cash flow is not as expected.
Some rent is always more than no rent. Lenders aren’t fooled by property owners earning less money, but advertising higher than market rate rents to prospective tenants.
https://www.investopedia.com/terms/d/dscr.asp
The only question is if the lender wants to trigger the default and take over dealing with the property, and many times they don’t, and prefer to renegotiate the terms of the loan.