America Meet Your New Slumlord: Wall Street

And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.

- Letter from Thomas Jefferson to John Taylor, May 28, 1816

Well they aren’t really your “new” slumlord in the sense you have been debt slaves to the financials system for decades.  What I really mean is that it is now becoming overt and literal.  Literal because financiers are now the main players in the real estate market and are buying all the homes ordinary citizens were kicked out of over the past few years.  Yep, we bailed out the financial system so that financiers with access to cheap credit can buy up all of America’s real estate so that they can then rent it back to you later.

Of course, my opinion is that this will ultimately backfire on all the private equity buyers once they find out multiple generations will start living together and a weak economy will not provide the rental income they envision going forward.  Particularly once we have another severe slowdown…which always happens eventually.  Incredibly, Blackstone has spent $1.5 billion to buy homes in the last 2-3 months alone!

From Bloomberg:

Blackstone has spent more than more than $2.5 billion on 16,000 homes to manage as rentals, deploying capital from the $13.3 billion fund it raised last year, said Jonathan Gray, global head of real estate for the world’s largest private equity firm. That’s up from $1 billion of homes owned in October, when Blackstone Chairman Stephen Schwarzman said the company was spending $100 million a week on houses.

“The market is moving much faster than anybody thought possible,” Gray said during an interview in Blackstone’s New York headquarters. “Housing is much stronger than people anticipated.”

Of course the market is improving.  Not because citizens are buying, but because financiers with access to cheap credit are in a bidding war to become America’s slumlords.

The firm, along with Thomas Barrack’s Colony Capital LLC and Two Harbors Investment Corp., is seeking to transform a market dominated by small investors into a new institutional asset class that JPMorgan Chase & Co. estimates could be worth as much as $1.5 trillion.

No more small banks, only mega banks.  No more small real estate investors, only mega real estate investors.  Get the joke?

It’s bought so quickly it’s “warehousing” more than half of the homes it’s acquired as it completes the purchase and hires staff and contractors to renovate and rent the properties, Gray said. It takes about 30 days to fix each home and then as much as 30 days to lease the property, he said.

“While leverage is currently limited, potential financing options include secured credit lines, lending syndicates, high- yield debt, government sponsored enterprise-provided financing, and securitization,” Jade Rahmani, an analyst with Keefe, Bruyette & Woods Inc. in New York, wrote in a note yesterday.

In the case of the single-family business, Blackstone will rent and manage the homes through Invitation Homes, which it founded last year with Riverstone Residential Group, an apartment management company based in Dallas.

Oh and so next time you go to rent a home or apartment and the leasing company is called “Invitation Homes” don’t be fooled.  It is actually Blackstone; your Wall Street slumlord.

Full article here.

In Liberty,
Mike

9 Comments

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  1. Meet the new boss, same as the old boss…

  2. Recovery? Why the millions of rounds (probably past a billion by now) of hollow point bullets for domestic use, orders for bullet proof mobile check point booths, a frenzied push to dis-arm the citizens and activation and provisioning of the FEMA camps?
    Anybody that believes there is a recovery coming is in a state of cognizant dissonance. The world governments like India are losing control of physical gold sales and Japan just indicated that it will add gold into it’s pension funds, despite the manipulated smack downs and regulatory gross negligence in the paper price.

    “DON’T BUY GOLD, DON’T BUY GOLD! IF YOU BUY GOLD YOUR AN IDIOT” -Munger

    Why do I suspect, with the FED buying mortgage backed securities, open ended (private mortgages) and Blackstone types with government and NWO bankers help gobbling up huge numbers of ‘private’ properties, that with a strategically timed financial collapse, the UN will be handed the properties?
    It would play nicely into the UN’s Agenda 21 plan, the UN is seizing land all over the world. It’s already controlling the USA’s parks and water (google it) through ignorant or complicit elected officials.

    Nah, there’s a bigger plan afoot.

    Maybe Blackrock doesn’t know the plan and is just a useful idiot, we’ll see.

    • Nice, we already had our Alex Jones Mainstream Media moment and now your post. White Men (not all) are funny. Why do you (a) fear the Government (b) Fear UN, NATO, IMF, World Bank? As many have said you guys have a screw loose! These things don’t scare me and here’s why. They don’t own guns like you do. They don’t spread hateful messages around the internet and don’t call themselves bigots/racist. Not that I trust Governments, I don’t FEAR them, big difference.

      • Michael Krieger

        To be fair, you will rarely ever see a single hateful or racist comment on this blog and certainly not EVER from me. When there are such comments posted I address the poster and inform them it is unacceptable. Hopefully, you weren’t referring to this website. Mike

      • the government and the UN don’t have guns? then why are so many of your brothers in prison black man? Could be all the ARMED men on gov’t payroll whose job it is to round them up and keep them in cages… NATO bombing in libya killed a lot of black men too… if your post isn’t a troll, you might wanna read the basic definition of stockholm syndrome and see if it rings any bells

      • Anthony, as already commented, they do own guns and lots of them.

        You might look into the history of the WB and IMF, as told by folks like Michel Chossudovsky and John Perkins. The harm these institutions have inflicted on people of all colors around the world is untold.

        The job of the WB and IMF is to loan-shark people. Only when countries get out of line and try to free themselves from this exploitation do the guns come out, either in the form of assassinations, coups, or invasions.

      • No, because the hundreds of gangster rappers spreading messages to kill and rape White folks is not hate, right Tony? You’re educated & intelligent. Sent to college on a White & Jewish taxpayers dime. Not hate, just fact. And what are you using your education for? In great many instances, African Americans end up where? Sociology or some other basket weaver 101 course. Or better still, Law School! Where they can rack up 90K in student loan debt & struggle to find even paralegal work. Do us a favor, next time you want to discuss ‘hate’ look in a mirror my friend. You are as racist as any ‘cracker’ living in a trailer park.

  3. This is a modern day feudal system I spoke to friends about it 20 years ago about it, but back then it wasn’t quite as prevalent, and I was laughed off the street (especially since I am female…I was suppose to be baking cookies). We’re all going to be supporting this system for hundreds of more years unless someone puts a stop to it. Some people called the 2008 crisis a Coup. I think that could be the case to a degree. Apparently, only a few small banks were having any trouble. It was all these same big banks and the SAME people behind them doing the crimes. Of course, there are always those who benefit from the “trickle down”, and that is why nothing changes.

    We have a massive Government because that ensures the proliferation of these few families and individuals. Big government makes for a big Administrative class that will look the other way because they have good salaries and bennies. It’s a very disturbing situation. Many don’t care, but if you do, pat yourself on the back because YOU are part of the Elite truth junkies.

  4. Single family rental homes has always been a “mom & pop” business that will continue to defy consolidation. It won’t work for a variety of reasons….outside of Section 8 homes, these places won’t cashflow. After repairs, maintenance and vacancy costs….plus taxes….I’m willing to bet that they lose big. When they purchase a house like this one….that was built over an acquifer and floods every time it rains…..it’s a loser: http://youtu.be/LFYM7IOAfZE

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