Houses For Rent By Individual Owners - In 2010, with the foreclosure crisis at its peak, the federal government watched in silence as hundreds of thousands of families lost their homes. Empty houses filled the neighborhood, drawn by their colors, the yard was full. Without some kind of intervention, federal officials worry, the housing market will continue to free-fall, prices for existing homeowners, and the economic recovery, which is already weak , is in danger.
But who will fill these empty houses? Few Americans have been in a crisis to buy, and for those who are, getting a loan is more difficult than before the crash. So the government encouraged Wall Street to intervene. In early 2012, he launched a pilot program that allowed private investors to cheaply buy foreclosed homes from the state-owned Fannie Mae. These new owners then rent out the homes, creating more homes in areas hit hard by foreclosures.
Houses For Rent By Individual Owners
"There's been this oversupply in some parts of the country, and there's not enough demand from traditional home buyers and even from traditional investors," he said. Meg Burns, senior associate director of the Office of Housing Policy and Regulatory Affairs, said. "We want to have an impact on demand."
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It worked. Between 2011 and 2017, some of the world's largest private equity groups and hedge funds, along with other major investors, spent a combined $36 billion on more than 200,000 properties in ailing markets across the country. In the Atlanta zip code alone, they bought nearly 90 percent of the 7,500 homes sold between January 2011 and June 2012; Today, institutional investors own at least one in five rental households in some metro areas, said Dan Immergluck, a professor at the Institute for Urban Studies at Georgia State University. . Some of the nation's toughest housing markets have finally calmed down.
Investors say they can be good landlords - better, in fact, than coins. According to Diane Tomb, executive director of the National Rental Housing Council, a trade group founded in 2014, the single-family rental business has "professionalized" a sector that is run by landlords. mom and pop, providing answers 24/7 with them on . demand for maintenance and deep capital they can spend on the house.
They also thought they could make money, which no one did much by renting a house. "We want to save these neighborhoods and create long-term sustainable income for our shareholders," said Frederick Tuomi, president of Invitation Homes, the nation's largest family rental company. (Tuomi is currently taking a short break to take care of a family member.)
Wall Street analysts and potential shareholders, however, were skeptical. Maintaining thousands of homes of varying sizes, ages, and conditions across an entire metro area seems like a nightmare. "How can you work and create scale in this situation?" Sam Zell, the billionaire investor, told CNBC in 2013. "I don't know how anyone can control thousands of properties." When startups began offering shares to investors on the public market in late 2012, the response was overwhelming.
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But the housing trend is on the side of investors: America is becoming a nation of renters. According to Census data, between 2007 and 2017, the U.S. put fewer than 1 million households in owner-occupied housing, while 6.5 million rented homes. -house. Many families wanted to live in a large home in a good school district, but could no longer afford to own it. The home ownership rate fell to 62.9 percent in 2016, down from a high of 69 percent in 2005.
Of course, the trend in favor of these new homeowners is a financial crisis that was created by Wall Street itself. Ironically, some of the investment companies that participated in the housing crisis profited from it. But if the new companies can deliver on their promise to make renting cheap, affordable, and worry-free, it could be a win-win for everyone: Companies could turn a profit, corner the housing market, and house who is weak because of it. tragedy can be a happy home again.
This was not the case. I spoke with tenants from 24 families who lived or still live in company-owned single-family rental properties. I also reviewed 21 lawsuits against three such businesses in Gwinnett County, a suburb of Atlanta that was destroyed by the collapse of the building. The tenants say that, far from bringing efficiency and facilitation to the rental market, business owners focus on short-term profits to satisfy the authorities, at the expense of the tenant happiness and even security. Many of the families I spoke to feel stuck in homes that don't belong to them, begging distant companies for much-needed repairs — and wondering how they ended up gambling on Wall Street again.
In 2011, Rene and Erica Valentin lived with their two young children in a small two-bedroom apartment in New Jersey City. They have been saving for years to buy a house. But then Rene, now 42, was laid off as an area manager at Best Buy, and the couple decided a cheaper deal was the only way they could buy.
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Erica, now 34, applied to be an engineer at AT&T in suburban Atlanta. When he got the job, he took the family and headed south, moving into a two-room house near the center of town. They spent money as Rene's job search progressed into the second year. By the time he got a job in 2014 - again at Best Buy - the family still had no money. But their daughter Sophia is about to enter first grade, and their Valentine wants her to go to a good school district and not live with her brother. So they decided to rent.
A real estate agent showed them around Lawrenceville, a sprawling suburb 30 miles northeast of downtown Atlanta, where the houses are big and the schools are good. All the homes they found were owned by the same company, Waypoint Homes, which the agent told me was a professional rental company, with 24/7 maintenance, quarterly inspections and deep pockets to spend on repairs. .
They lived in a 2200 square meter house on a quiet street. From the outside, it doesn't look like much – vinyl siding, black doors, brick detailing. But there were three bedrooms, two bathrooms, a bathroom, and a large fenced yard, which cost $1,373 a month. She quickly installed tire swings in the yard, hung art on the walls, and put up curtains in the children's bedrooms - dark blue for Antonio, light blue for Sophia. They paid their rent through Waypoint's online platform, which has seen technology evolve since the days of mailed checks. They didn't actually own the property, but in the end they felt they could live.
As the Valentines rolled around, the new owners of corporate America were looking for success. The company has standardized the flooring and accessories, which, in theory, will reduce costs and make life easier for maintenance workers. They set up a call center to handle tenant communications, and installed smart locks so tenants and maintenance staff can access for inspections or repairs.
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Meanwhile, the industry has strengthened. The investment groups created companies to manage the homes: Blackstone launched Invitation Homes; Cerberus created FirstKey Homes; Colony Capital created Colony American Homes. And then these companies started to merge.
In 2015 alone, Colony American Homes merged with Starwood Waypoint Residential Trust, Cerberus Capital Management acquired more than 4,000 homes from BLT Homes, and American Homes 4 Rent said it acquired American Residential Properties in a $1.5 billion deal. In 2017, two major players, Invitation Homes and American Homes 4 Rentals, commanded 60 percent of the market.
In a call with investors, the two companies talked about cost-cutting measures, which often involve pushing responsibilities on tenants. In 2016, Jack Corrigan, chief executive officer of American Homes 4 Rent, told investors that the company hoped to reduce costs for repairs, maintenance and "turnover costs". " - preparing a house for new tenants - from $ 2,500 per house. to $1,600. That same year, Colony Starwood reduced its property management costs by 25 percent compared to the previous year; One of his money-saving innovations is using video and chat software to show tenants how to fix minor problems, so they don't have to call a repairman for a clogged garbage disposal or leaky toilet.
The responsibility placed on the tenant is not only the duty to fix their rent. I reviewed Colony Starwood in 2016; It was 34 pages long and stated that the tenant is responsible for landscaping, "routine pest control", replacing the air filter in the central air system once a month, fixing broken windows (or how broken it is), and the repair and maintenance of drains. backup backups. American house
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