A Closer Look at the Decrepit World of Wall Street Rental Homes

This new incursion by hedge funds and private equity groups into the American single-family home rental market is unprecedented, and is proving disastrous for many of the tens of thousands of families who are moving into these newly converted rental homes. In recent weeks, HuffPost spoke with more than a dozen current tenants, along with former employees who recently left the real estate companies. Though it’s not uncommon for tenants to complain about their landlords, many who had rented before described their current experience as the worst they’ve ever had.

A former inspector for American Homes 4 Rent who worked in the Dallas office said he routinely examined homes just prior to rental that were not habitable. Though it wasn’t his job to answer complaints, he said he fielded “hundreds of calls” from irate tenants.

– From the Huffington Post’s excellent article: Here’s What Happens When Wall Street Builds A Rental Empire

This is a topic that I have been writing extensively on since the beginning of the year. In fact, I don’t think there’s another topic I have focused so intently on in the whole of 2013, with the exception of the NSA revelations. It all started back in January with my post titled, America Meet Your New Slumlord: Wall Street, which received a huge amount of attention in the alternative media world.

I knew from the start that this whole “buy-to-rent” thing would be a disaster. Over the last decade or so, everything that Wall Street touched has turned into a scheme primarily focused on parasitically funneling wealth and resources away from society at large to itself. This is no different. They call it a “new asset class.” I call it Wall Street serfdom.

What makes this article even more interesting is that it’s not simply greed, it is also obvious that these Wall Street firms have no idea what the fuck they are doing. For example:

Former employees of the companies, who spoke on condition of anonymity because they worry about jeopardizing their careers, said their former colleagues can’t keep up with the volume of complaints. The rush to buy up as many homes as possible has stretched resources to the point of breaking, these people said. 

My advice to people out there in the rental market, is they should try to avoid Wall Street rentals. The three main companies highlighted in this article are: Invitation Homes (owned by Blackstone), Colony American and American Homes 4 Rent. Unfortunately, it appears these companies may try to hide their presence in certain markets so you may have to do additional digging. For example, WRI Property Management is the local agent of Colony American in Georgia.

More from the Huffington Post:

There’s no escaping the stench of raw sewage in Mindy Culpepper’s Atlanta-area rental home. The odor greets her before she turns into her driveway each evening as she returns from work. It’s there when she prepares dinner, and only diminishes when she and her husband hunker down in their bedroom, where they now eat their meals.

For the $1,225 a month she pays for the three-bedroom house in the quiet suburb of Lilburn, Culpepper thinks it isn’t too much to expect that her landlord, Colony American Homes, make the necessary plumbing repairs to eliminate the smell. But her complaints have gone unanswered, she said. Short of buying a plane ticket to visit the company’s office in Scottsdale, Ariz., she is out of ideas.

“You can not get in touch with them, you can’t get them on the phone, you can’t get them to respond to an email,” said Culpepper, whose family has lived with the problem since the day they moved in five months ago. “My certified letters, they don’t get answered.”

Most rental houses in the U.S. are owned by individuals, or small, local businesses. Culpepper’s landlord is part of a new breed: a Wall Street-backed investment company with billions of dollars at its disposal. Over the past two years, Colony American and its two biggest competitors, Invitation Homes and American Homes 4 Rent, have spent more than $12 billion buying and renovating at least 75,000 homes in order to rent them out.

Most who spoke with HuffPost said they moved into their rental homes only to find that renovations they were assured were comprehensive amounted to little more than a fresh coat of paint and new carpeting. Tenants said they immediately discovered major mechanical and plumbing problems: broken water heaters and air conditioners, broken toilets and in some cases even vermin infestations, including fleas, silverfish and rodents.

Several weeks after Rosemary moved into the Raleigh, N.C., house she’s renting from American Homes 4 Rent, her hot water tank exploded. Rosemary, who declined to use her last name for fear of losing her security deposit, said she couldn’t shower for days. It took constant calls and emails to the rental company before they sent someone to replace the tank. 

Former employees of the companies, who spoke on condition of anonymity because they worry about jeopardizing their careers, said their former colleagues can’t keep up with the volume of complaints. The rush to buy up as many homes as possible has stretched resources to the point of breaking, these people said.

A former inspector for American Homes 4 Rent who worked in the Dallas office said he routinely examined homes just prior to rental that were not habitable. Though it wasn’t his job to answer complaints, he said he fielded “hundreds of calls” from irate tenants.

“It’s just a slumlord,” Culpepper said of Colony American. “A huge, billion-dollar slumlord.”

Indeed, and it shouldn’t be a surprise to anyone.

Full article here.

In Liberty,
Mike

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10 Comments

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  1. I’m surprised that massive lawsuits against these companies haven’t popped up yet. Considering that most rental agreements do include the provision that the land lord is responsible for maintenance and repairs. One would have a simple breach of contract case but who knows whats in these agreements when tenants sign them.

  2. law suits?? Colony American says it all….these. Serfs can’t pay a lawyer that can take down a Wall Street giant. Futile !!
    Need a 60 minutes type show perhaps to get some more eyeballs on it.

  3. Blackstone, Colony American and American Homes 4 Rent and the next ‘muppet dump’.

    Beware of the bundling of these new ‘bags of shit’ to be sold to witless investors.

    JPMorgan made mega money both selling then, just before the collapse, shorting these bags of shit’.

    So, what’s in YOUR Mutual Fund?

  4. Hey, mike,

    Good to see the attention on this subject. A friend of mine was working for Texas cash cow investments; I’ve reduced their business model to this concise sentence. They buy foreclosed homes from big banks, hire the gringo to run the illegal wetbacks, then sell the homes to hedge funds and the Chinese. That’s our economy, baby!

    Peace,
    Droid

  5. My husband and I moved into a expensive rental $1725, not including we pay all utilities that was bought by AH4R American homes 4 rent 2months later. We did not move into the house but paid a prorated rent, deposit and $500 pet deposit. We were moving from another state there for paying for 2 places. It has been a nightmare since. AH4R still hasn’t fixed everything noted on the initial walk through. They only fixed the septic pump because of complaints from the neighbors (the alarm went off 2x a day sometimes) and tons of standing water in the yard. They are wanting us to sign a renewal still haven’t fixed everything raised the rent and are now informing us the $500 pet deposit is non refundable. Their lease is 46 pages long and I want everyone I can know this company is worst then living in a ghetto. We would move if wasn’t for a scheduled 3 week trip we can’t cancel as it’s a loss Of $5000. If be pay by the month they raise the rent $250 more making it $2000 and no pet deposit back and I’m sure they are going to try and keep our Deposit $2000. Any suggestions? My husband and I are frustrated, he’s away at work for 9 weeks and I’m retired. They do not answer email or phone calls.

    • Michael Krieger

      I tweeted out your comment to my followers with a link to the post.

      Best,
      Michael Krieger

  6. Ah4r is a nightmare. I worked for them in 2013. They have no idea what they are doing. They promote their own (nepotism, friends, attractive young women) not necessarily on merit or ability to spell or manage people. The Malibu office was run by racists and young girls. Imagine being 40 years old, and having to answer to a manager who works in a cubicle, un – ironically, covered in Justin Bieber posters. This is not an exaggeration.
    Buyers for Ah4r were buying so many houses, they were using pre – printed $25,000 checks as scratch paper. This is also not an exaggeration.
    I was let – go for unspecified reasons, but I was allowed to collect unemployment. Basically, all members of management at Ah4r are scum bags. All of them. Horrible people.

  7. Can we please all band together and completely screw them over. What they are doing is illegal, I have lived here for a week and already want to move out not because of the house but because of the shitty management that is AH4R.

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