Why are owners so set on sticking to the rent values they underwrote when buying a property?

This may sound horribly basic, but why are owners so set on sticking to the rent values they underwrote when buying a property? What happens if they DON’T and they drop rates? What are the repercussions? Asking so that it makes more sense to me when we speak about rates and their inflexibility to drop prices… Thank you!!

A dollar a day in rent is better than no dollar. Example: Rent $1000 = Vacancy Loss $1000 but if you rent it at $800, you’ve gained $800 and only lost $200. LTOL at $200 is far better than Vacancy Loss at $1000. Vacancy Loss is expected but if starts exceeding budget, this is the ONLY way out and you’ll exceed budgeted income every single month until you can get rents back to market. Lenders look at income and if the asset is at 90% occupancy and exceeding income, they don’t care about occupancy and neither do Owners as long as it’s cash flowing. It’s simple math! 💁🏼‍♀️

They have a mortgage note to pay, employees to pay, utilities to pay …. The property is valued by lenders by the rent roll (income) not solely by the value of the buildings themselves…. Dropping rents devalues the asset ….but all of these things are out of the scope of “need to know” in terms of leasing. It would be like the waitress explaining the price of a dish based on the cost of the food. Sell the value of the property based on service, convenience, amenities… leasing a home or an apartment is an emotional decision for the buyer… once they are financially qualified they choose the place they “feel” the best about.

Let's make the math simple. 100 units, $1000 each, with 80% occupancy — that's $80,000 a month gross income, with the potential toward $100,000 gross income with every new lease you get.
Now let's say you drop the price to $800 a month rent, and fill up 100%. You're pulling in the same $80,000 a month gross, and no potential for more, plus you're taking on more wear and tear on the building, and nothing extra to reinvest into the property.
Sure, nobody wants to be at 80%, but nobody wants to degrade their property either. Stand firm, uphold your standards, and know that the leases will eventually happen.

It devalues the property. However there is a breaking point where it makes sense to drop temporarily to gain occupancy but then it needs to go back up again and keep increasing to catch up with proforma

Because those are the numbers they based their financing goals on. They are the set limit on the revenue the property generates to pay back its loans.

In a lease up, can mean they can’t sell because it’s undervalued. It also can make it difficult to refinance, which normally has to be done if they can’t sell.

Find creative ways to generate revenue to offset such as bulk service contracts or find ways to cut expenses. We have a bottom line, most of us are not dead set on how it’s achieved as long as it’s reasonable and sustainable.

Investment capital always requires a return. If the return is too low the capital will go elsewhere.
Lenders require a certain amount of NOI vs the debt payment to be sure the payment is made. This is called debt coverage ration - dcr- typically 1.25 in apartments so $1.25 of noi for every $1 of debt payment (principal and interest )
As your expense go up, which they typically do, your income
Needs to go up to maintain the proper ratio. Your example doesn’t allow this to happen.
So by not keeping up the lender may call the loan, the investor doesn’t get the required return and you may find yourself looking for a job because you haven’t produced the net income that was needed to maintain the value

It is because they promised a certain return to their investors and if they don't hit their rent/income projections then they won't hit the returns needed for the investors. There is also the possibility they underwrote and bought the property with low profit margins, which is typical the 1st 3 years of ownership, and they won't have funds to pay all the bills if those rent projections are not hit.

Cutting prices is a race to the bottom. It takes courage to hold onto value.
It takes talent skill and communications to persuade people to rent at the desired rates. That is what a site team is paid for.