A recent exposé in The New York Times focuses its attention on the unsavory rental practices of such behemoths as Invitation Homes and Colony Starwood Homes, and how their predatory quest for bigger profits are hurting not only their tenants but the rental market as a whole.
The story centers on a Los Angeles-area man, Chad Ellingwood, and chronicles his battles with rapacious landlords since 2012.
“One of the first times he was late, a notice of eviction was posted to his door. He paid the rent — and the $50 late fee. But three days later, there was another pay-or-quit notice — this time because he hadn’t paid a $35 delivery fee for the late-fee notice. The second eviction notice, in turn, incurred a second $35 delivery fee. Over the years, he amassed a stack of late fees, more than 40 of them.”
Before 2010, institutional landlords didn’t exist in the single-family-rental market; now there are 25 to 30 of them. Fueled by a newly created financial instrument -- the single-family-rental securitization -- companies like Invitation Homes (owned by Blackstone, a private equity monster) gobbled up large swaths of homes lost during the Great Recession, fixed them up, and put them on the single-family rental market at inflated prices.
Tenants of these landlords find themselves being nickeled and dimed for everything from landscaping to pipe-snaking; and repairs take months to be resolved.
“For seven and a half years, meanwhile, Ellingwood watched as his home began to crumble. He kept up what he could: He tended his garden, and he made small fixes like snaking the pipes or repairing a short. But he couldn’t tackle the bigger things. The exterior paint peeled and chipped, and the wood underneath began to rot. After a leak in the bathroom, mold grew on the tiles. Invitation Homes would agree only to crudely patch up the walls where the leak was — with Ellingwood’s own supply of drywall. He had to decide whether to live with the mold or spend the money to fix it himself.”
The actions of these companies sully the good name of smaller investors trying hard to be good and caring landlords.
But the runaway train of Wall Street private equity firms rambles on stronger than ever.
Read on HERE.
Mr. Willig engages and coordinates a professional team of real estate brokers, general contractors, leasing agents, and property managers in order to rehabilitate, lease and maintain the properties he acquires for SpringView Investments. He has over 20 years of finance and accounting experience.