EclipseAg said:

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Short story:

Indian immigrants buy apartments, raise rents on poor Hispanic immigrants.

Hispanic immigrants can't afford new rent. Indian investors stop fixing ACs and mowing the grass, then can't rent vacant apartments.

Banks foreclose on apartments. Everyone loses.

Ain't America great?

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The interesting thing is that the bank is going to hold the property for a while, then sell it to an investor who is essentially going to rinse and repeat. Either that, or the new owner is going to have to go in there and fix everything, making the new cost of ownership prohibitive.

The question now is what does the bank really own? A property no investor wants and one the bank has no ability to use themselves.

Guessing they held very little cash and that was the real problem. Otherwise, they should have been able to cover the increase in their loan rates while waiting on rents to catch up.

Also wondering if some of their loans were called at the 5 year mark. Many 5/1 loans are amortized at 15 to 20 years but the bank holds the right to call the loan at the end of the 5 years. You never hear of them doing it but in today's banking climate, maybe they are. With all the other small banks shutting down new loans to small businesses, that would be a death blow.

For the WSJ subscription users - WSJ lets you copy and share a free link.

I use this feature whenever I post articles from there which is why my WSJ links are not pay-walled.

Anybody know anybody that has a bunch of properties leveraged for use as AirBnBs?

Those seem like the canary in the coal mine here.

This last year we hit the point where our property taxes cost more than our mortgage on an annual basis. But in full disclosure, our mortgage is relatively pretty low as we rolled every dime in equity of our previous home (which we are in for 12.5 years) and got a steal on the new house (for reasons). So I kind of take it in stride.

What kills me though is the people that have moved in or built a new home in our development in the last 3 years. For example, the couple that bought the house next door last summer. They paid right at twice what we did in 2016 and for what is essentially the same house and lot. Same custom builder, nearly exact same square footage, same level of amenities. Mind blown.